Banks Defrauding Banks

In short sale negotiations, we often run into a very difficult situation when there is a 1st and 2nd lienholder on a property: The 1st agrees to provide a small sum to the 2nd from the proceeds of the short sale, but the 2nd tells us that they will not agree to release the lien unless they get thousands more. The 1st refuses to provide any additional funds and tells us that they don't care where the money comes from for the 2nd, but it isn't coming from them. The seller is broke, the buyer wants a bargain, and consequently the property cannot be sold without the 2nd getting more funds. If the purchase price increases, the funds to the 1st increase, but the amount for the 2nd stays the same. No deal = Foreclosure.

These funds have to come from somewhere, and the 2 lenders are asking us to work within some very challenging and grey areas. We work for the seller and we need to get the home sold, so this requires creative solutions and, very often, financial sacrifices on our part to get it closed. If only the lenders could be cooperative and honest with each other to get these off their books.