December, 2010:

Is it possible to do a short sale when there is a second mortgage on the property?

Yes it is possible, but there can be twice as much work to do and more time required to get the short sale approved. Additionally, it is very important that the second mortgage not go more than ninety days in arrears. That is because as a matter of policy, many lenders will assign their seconds to a collection agency after three months of missed payments. These collection companies can be extremely difficult to work with and have been known to kill many a short sale.

If the first mortgagee in a foreclosure sale is “upside down”, meaning the value is less than the first mortgage balance, then the mortgageee in second position gets absolutely nothing.  Even so, many of these collection companies will make insane and unreasonable demands. As a typical example, one such collection company recently demanded $30,000 on a $60,000 second mortgage from the short sale seller who was basically destitute. This seller had lost his job, had spent every dollar of savings trying to keep up his payments. He had nothing left. He could no more come up with $30,000 than the man in the moon.
In that case, the first mortgagee was already taking a huge hit, writing off nearly $100,000. The first offered the collection agency in second position $5,000 to settle. The collection company would not agree, the property went to foreclosure and the collection company received exactly what they deserved, which is nothing.
In another case … We recently sold a  short sale condo across from the Gulf of Mexico. A collection company was involved and hindered the sale for 26 months!  Yes, we had the property under contract on five separate occassions over a 26 month period of time. Even funnier? We originally had the property under contract for $325,000. 26 months later when the collection company finally agreed to the terms, we sold and closed the property for $209,000.  Effectively, the collection company cost the first mortgagee $116,000.  Even funnier still?  The first morgagee also owned the second mortgage and had assigned it to the collection company.  The collection company was negotiating against their own client!!
Some day we will look back at all this and laugh …??

Are the holidays a good time to list our house for sale?

Your personal need or motivation to sell should be the biggest determining factor as to timing. The Housing Affordability Index reached a new high this October at 184.2.  The index is based on several factors including average wages, real estate prices and interest rates. For comparison, an index of less than 100 means it is difficult to buy.
Simply put, homes are more affordable now than at any other time since the index was created. If you need to sell now, you need to list now.  You never know when that perfect buyer for your home may come knocking!