Bill would speed second-lien decisions in short sales

Second-lien holders are being blamed for derailing many short-sale transactions.

However, the Fast Help for Homeowners Act, if approved, would require second mortgage lenders on federal mortgages to report their final decision on a short-sale agreement within 45 days. If the second-lien holder does not make a decision within that timeframe, the deal would automatically be approved on the 46th day.

Some in the housing industry aren’t in favor of legislation that might push a second-lien holder to make a faster decision on a short sale. Critics argue that first-lien holders need to be more willing to work with second-lien holders on an agreement that favors both parties.

“I am always hesitant to force second lien holders or any lender to do something that they didn’t contractually agree to upfront because ultimately that will add to the cost of future credit and reduce its availability,” Mark Zandi, Moody’s Analytic’s chief economist, told HousingWire.