Home Sales Held Hostage by Junior Lien Holders: Mortgages

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Home Sales Held Hostage by Junior Lien Holders: Mortgages

Home Sales Held Hostage by Junior Lien Holders: Mortgages

Bloomberg-

Tom Axon’s mortgage-collection firm gets about 25 calls a day from delinquent homeowners’ brokers seeking approval to sell their houses for a loss and avoid foreclosure. We’ll help, his staff tells them, as long as we get paid enough.

Axon, working with co-investors, buys distressed U.S. home- equity loans and other junior real estate liens, often for pennies on the dollar. Investors like Axon have to be dealt with whenever a home is sold in a short sale, a transaction in which the lenders agree to accept less than what’s owed on the property.

“The short-sale brokers know us — they know we’re not cupcakes,” Axon, 60, chairman of Jersey City, New Jersey-based mortgage-servicer Franklin Credit Management Corp., said in an interview. “At the end of the day, my friend, you signed a contract. You owe money and we’re willing to reach an accommodation that is commensurate with your ability to pay.”

Tough bargaining by second-lien holders is delaying deals and killing some short sales, even as …

[BUSINESS WEEK]

image: Realtor.com

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