It is not uncommon for sellers to have more than one mortgage on their home. Sellers often ask us "Can I do a short sale if I have two mortgages?" The simple answer is yes!
Sellers attempting to do a short sale with more than one mortgage on their property fall into two categories.
1) Those that have a first mortgage that will be paid in full but a second mortgage that will be deficient. This occurs when the market value (what a ready, willing and able buyer will pay in the current market) of the home is enough to pay off the first mortgage and costs associated with the sale (i.e. Realtor commissions, pro-rated property taxes, title insurance and attorney's closing fees), but not enough to pay off the second mortgage.
2) Those that have two mortgages, neither of which will be paid in full by a market value offer.
Regardless of which category you fall into, a qualified short sale Realtor can navigate the process of negotiating with one or both lenders to successfully complete a short sale.
The bank that holds your second mortgage is often very motivated to complete the short sale. They understand that if the property goes into foreclosure they may get NOTHING. Therefore, they are more likely to accept the short sale even if they are only receiving a small percentage of the deficiency. I have seen second mortgage holders accept as little as a few thousand dollars in a short sale situation, although they prefer to get at least 10% of the outstanding mortgage balance. It is important to keep in mind that every lender is different and their policies are constantly changing.
Sometimes the investor that holds the first mortgage has strict guidelines as to what they will pay a second mortgage holder in a short sale situation. In the event the first mortgage holder isn't willing to give the second mortgage holder anything (this rarely happens) or they are only willing to give the second mortgage holder a small amount, it is up to the second mortgage holder to determine if they are willing to approve the short sale. If they think they stand to recover more of their proceeds by letting the property go to foreclosure, they may decide not to approve the short sale and take their chances on a foreclosure sale. However, banks statistically recover over 30% less from a foreclosure than a short sale. Therefore, they are motivated to make a short sale work!
Make sure you contact a Realtor who is a short sale expert to help you successfully complete the short sale process whether you have one or multiple mortgages.
To find out more about the short sale process or set an appointment to further discuss short sales, visit us online at www.Avoid4ClosureTN.com or e-mail info@armstrongrealestategroup.com.
To search all properties listed in Middle Tennessee and find amazing deals on short sale listings and other great homes, visit www.TNRealEstateSearch.com
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