While I'm not a big fan of government involvement in much of our lives at all, especially private sector business, I hope this issue resonates with banks. Short Sales, one of the largest categories of Real Estate Transactions right now are extremely difficult to complete in most instances because second lien holders refuse to admit they have an unsecured loan.

The linked short article below speaks directly to the point of having these second and other junior lien holders admit their true position. If the first mortgage forecloses their lien gets wiped out anyway! So perhaps if they are able to openly admit they loaned too much money against some homes, they would be able to convert more of these second mortgages and HELOC's into signature loans and recoup more money than they will with a foreclosure.

That's my two cents but it sure makes a lot of sense to me. More homes will be sold, more troubled families will have money to make small payments for deficencies on first & second mortgages or HELOC's. Maybe some of the banks will take the suggestions to heart.

We will see...

http://www.realtor.org/RMODaily.nsf/pages/News2010031102?OpenDocument