In a Short Sale situation, if your client has 2 mortgage liens and the current market value exceeds what is owed to the first lien holder by at least 8%, which lien holder will you submit your Short Sale package to first? Why?
In this situation, what if the first lien holder is aggressively pursuing foreclosure? How does this effect your strategy and what do you do with both lien holders?
I would immediately get authorization to communicate with BOTH lenders. I would ask the first for more time and that we may be able to get close to full payoff if they allow us to find the buyer, but still would ask for a short sale package just in case. I would tell the 2nd that time is running out and also ask for a short sale package - explaining that the 1st is chompin at the bit to repo this thing and they stand to lose everything if they can't work out a deal.
Another option is to get the 2nd to release the lien with the borrower still owing the note so that the home can be sold and the 1st will be paid off. Then they can work on getting out of the remaining debt by having discipline, a plan and a budget.
When I have dealt with 2 lien holders, the first would not even consider the offer without a letter from the second stating that they would accept $1,000 or less for payment. I'm sure it depends on what lender you are working with. I always send the offers to both lienholders, though, so that we get the process started.
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