Negotiating short sales with a second lien HELOC can be tough. The second lien lender typically wants a lot more money than the first lien is willing to give them. That may be true just to secure a lien release, much less to secure a full release of liability.
If the HELOC loan has been referred to a third party collection agency, the going gets even tougher. These groups get paid to request outrageous amounts, and are very aggressive and demanding. They will tell you that the lender simply will not take any less than what they are proposing, take it or leave it. (They will also conduct themselves in ways that are likely very threatening – for a description of your legal rights, see this link.)
One avenue to circumvent this challenge is to contact the investor directly. Going above the head of the servicer, or escalating within the servicer’s loss mitigation department, is an absolute must if you want to get your deal done. Typically the decision makers will be much more receptive and rational than the hired guns.
It is important to show them how they will really net zero after the property is foreclosed upon. Inform them that they have to either approve the offered amount or take zero. You can also get in touch with their client directly and report how the aggressive posture caused them to lose money on an otherwise collectable account.
Combating the aggressive posture of a HELOC negotiator with aggression and persistence is the only way to get the short sale approved. For more tips, visit our blog.