Home equity lenders faced with losses from the U.S. property slump are holding out for more money in distressed sales, slowing transactions needed to support a recovery, real estate agents and analysts say.
These secondary lenders are gaining power in negotiating payments from “short sales,” a growing part of the market where homes are sold for less than the balance of outstanding loans.
Short sales are often cheaper for the primary lender than foreclosure and a solution for homeowners who cannot get their payments reduced by federal loan modification efforts.
But the push by these lenders to recover more of their loans is complicating short sales which agents complain can take several months to complete.
