Mortgages are a bitch:
[I]n addition to the $300k that we already knew was still outstanding on their mortgage…they had another mortgage on this place. And so the reason they’ve been inexplicably stalling and quibbling over how much they’ll pay to do the repairs that are doubtless going to be required by the VA assessor is because, after dropping their price by $168k already, they are in serious danger of actually losing money on this house at this point.
Which of course isn’t our problem, and if the place isn’t worth what they need to get to cover their outstanding debt, well, that [isn’t good] for them. But I admit I had a moment of “what…were they thinking taking out a second loan on this house?” Which really isn’t in good shape and couldn’t have been in good shape when they moved away less than a year ago. Did they take out that loan to come up with a down payment on their new place, or did they take it out ages ago and just spend it all?
No idea, really. (And to boot, their realtor says there are health problems in the family.) But regardless, the facts are that if they ought not to have been [engaging in]with second and third mortgages, their lender sure…ought not to have been approving them.
In any case. I feel sorry for them. But if this house, in the condition it’s in, isn’t worth their minimum price (which I suspect we’re getting very close to finding out), well. My pity isn’t going to save them. [edited to conform to the Angry Bear Style Manual]
Read the whole thing, which explains, indirectly, why it would have been much preferable to just refinance properties at 7% or somesuch than to “bail out” highly-leveraged and leveraged securities without any support for the underlying assets.