Hey Short Sale Experts, what are the second mortgage companies thinking

Real Estate Agent with The Payne Group at Keller Williams Success Realty

March 31, 2008 02:28 PM

This is a question for the short sale experts here in Active Rain. When you submit a short sale package on a property with a first and second mortgage, how much are you offering the first mortgage and how much are you leaving over for the second on the HUD-1? I have been putting 90% of proceeds to the first and 10% to the second. I just got a first approved and they approved the sale with only leaving $1500.00 for the second mortgage. I now am faced with the task of getting the second to settle for $1500.00 which is merely pennies on the dollar.

How do the experts do this?????

For short sales in Panama City, check out my website at www.knowpayneknowgain.com

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Jennifer Horton

Trin Hong Real Estate Inc. - Novato, CA

I am finding more and more lenders are leaving us as agents responsible for negotiating with the second. I already had one denied for $3000 for a second. I'm looking to gain some knowledge off active rain before "going to battle" with them. Any information is much appreciated!!!

Jennifer Horton

Realtor

May 14, 2008 05:38 AM

Anonymous

Cathy

I am trying to negotiate with country wide as the second. I offered 7,000 on 125,000 loan and they denied it. I just dont get it. They want 30,000. Because they are saying that the first is getting a prepayment penalty of 23,000. So they want that 23,000 on top of 7,000. They say they will walk instead and let it go into forclosure and get zero. I dont understand these banks. Then they wonder why they close down.

Jun 06, 2008 03:33 AM

#10

Anonymous

chuck

I have a 1st willing to take 208,000 of 225,000 and give the 2nd 3,000.00 on 85,000.00. The 2nd is telling me they will approve the short sale and take the 3,000.00, but they are not releasing me from liability. They have offered to send me a 1099 for the balance, so I am confused. Can they take the sale, send me a 1099 for the rest and still chase me for the balance after the sale? Should I not sign the purchase agreement until I have a workout in writing from the 2nd, and take the chance I will lose the buyer? I'm in Michigan and have been trying to sell for 4 years, the RE agent claimed to have short sale experience, later his secretary told me they have never closed one before, but had worked on some. I am just hiring a real estate/loss mitigation att'y to try and get this worked out with the 2nd. All I hear when I talk to the 2nd is I should get professional advice and she talks in circles about coming after me later, so I'm not comfortable signing the closing papers. Any advice on this?

Jul 08, 2008 02:18 PM

#11

Esko Kiuru

Bethesda, MD

Jeff,

The second mortgage holders generally can hold up everything, and often do today. In a standard short sale they would lose almost everything, so they wouldn't agree to a short sale like that.

Jul 08, 2008 04:03 PM

Anonymous

Danville

We have a first of 1,500,0000 with Nat'l city and a 500,000 with B of A. We have an offer for 1,600,000. Any suggestions on how to apply?

Also we owe 10K in property taxes. How is this applied?

Jul 22, 2008 03:05 AM

#13

Edie Lomason

Michael Saunders & Company - Venice, FL

BA, ABR

I have a buyer on a short sale. The 2nd bank with a loan of $65,000 has said they will accept $16,000. We adjusted the HUD to the first loan by $16,0000 and are waiting for a response. I still there is room for the 2nd to come down.

Jul 22, 2008 03:13 AM

James Armstrong

Expert Real Estate Advisors - Mount Dora, FL

I handle everything from contract to closing

Second mortgage holders have been a thorn in the side on some deals, on others they are happy to get 'something' instead of the 'nothing' they would get if the property goes into foreclosure and/or the mortgagor files bankruptcy. Depending on the size of the second loan I have seen them take anything from $1000 to $5000 to settle, and they still sometimes ask for the borrower to sign an unsecured loan for the deficiency amount.

Danville- In your situation with the $10k in property taxes, they need to be paid out of the purchase proceeds and shown on the preliminary HUD you submit to the lender when trying to negotiate a short sale. The title company you are working with should make you aware of the taxes and let you know that they need to be paidat the time of sale in order to convey 'marketable' title. (assuming you are working with a title company to search the property to see what else is on title and to prepare your preliminary HUDs for submission to the lender for consideration for a short sale). If you have any other questions on this or any other short sale or title questions please let me know.

Jul 22, 2008 05:07 AM

Anonymous

Tom Stravecky - CleanSlate Home Foreclosure Solutions

Typically the second gets $1000 to $5000 with $3000 being the average we have used. The second lienholder knows they get zero if it goes to foreclosure so something is better than nothing. Also, Bank of America looks for a MINIMUM of $5000 or 10% of the balance owed on the mortgage for their credit lines.

Jul 22, 2008 05:08 AM

#16

Anonymous

Is it possible to get a second mortgage lender to refinance for a lesser amount "new value" to keep from a short sale or foreclosure where the property has lost considerable value?

1st 199, 2nd 75, Value is ~ 225. I'd rather keep house but paying a second mortgage where 66% is going to nothing is borderline insane. It's like throwing away $50,000.

Jul 22, 2008 04:02 PM

#17

Roland Woodworth

Blue Cord Realty - Clarksville, TN

Blue Cord Realty

Jeff: Great Question.. I'm working a short sale with Litton now. They used to hold a Jr lein and sold it to another company. I'm still waiting the out come of this one. I will update when I see what they are going to do.

Jul 22, 2008 04:25 PM

Anonymous

rich

I google this subject and found this thread, as Suntrust is holding up 2 deals for me. The want $11,000 & $26,000 on $46,000 & $100,000 2nd mortgages, respectively. The 1st lienholders will only give them $1000 & $3000, respectively.

After 10 minutes of politely "discussing" the "some is better than nothing" scenario, the negotiator saying they would rather it go to foreclosure, blah, blah, blah, she finally said they would do the $1000 if the owner signed an unsecured loan for the deficient amount...how much sense does it make to extend ANOTHER loan to someone who can't pay on the first 2????

Long story short, I did see another site that claimed the 2nd lienholder will be more apt to sign off if the seller presents a letter from a bankruptcy attorney saying they (the seller) qualifies for bankruptcy which will negate any future deficiency judgements. That's my next angle and I'm waiting on the letter as I type this.

Can anyone expound on this method?

Aug 07, 2008 02:43 AM

#19

Jeff Payne

The Payne Group at Keller Williams Success Realty - Panama City, FL

Panama City Real Estate

Suntrust plays dirty!! They sold the mortgage on a short sale that we had approved for closing in the middle of the closing period.

I have been asked for the unsecured loans before and simply told them NO and they accepted the $2500 that the first was offering the second.

What would happen if the homeowner signed the unsecured note and did not pay it? What is securing the loan? Their credit is already bad from the short sale, what would it hurt if they took the note and did not pay?

As far as the bankruptcy letter, I would try that, it is a great idea. Either way, foreclosure or bankruptcy, the second loses.

Aug 07, 2008 02:51 AM

Edie Lomason

Michael Saunders & Company - Venice, FL

BA, ABR

The second mortgage will get nothing in a foreclosure so they are lucky to get $1500 in a short sale. Also, I hear they justify it by considering that sometimes they are the first mortgage.

Aug 07, 2008 09:19 AM

Sidney Jimenez

Keller Williams - Miramar, FL

CDPE, Short Sale Expert, 954-665-9449,

The best technique to combat this scenario is to negotiate the terms of the Short Sale with the second lien holder first. Let them know that the could either get $3,000 or nothing. The problem with negotiating the deals in order is the following. Once you agree to terms with the first mortgage holder, the second just got themselves a bargaining chip. They know the chances of them getting a deficiency signed just skyrocketed. What is their gamble at this point $3,000 at the most? Don't let them get that leverage, start with the second.

Aug 07, 2008 02:41 PM

Eva Armstrong

Environmental Visions - Tallahassee, FL

Environmental Visions

Jeff- in one I handled recently, I let the first mortgage holder deliver the bad news... The first is going to get what they want anyway, and while you need both to sign off, the 2 banks should be talking to each other from the time you notify them you have a short sale. If the 2nd gets some cash in lieu of risking nothing through foreclosure... they may take it...

Aug 07, 2008 10:49 PM

Maya Thomas, Broker

Tampa, FL

Please see my client recommendations.

Always negotiate the 2nd first! Always put something on the HUD for the 2nd! When the 2nd says they would rather go to foreclosure put the file on your back burner and out stall them. They get more flexible with time. And if they don't you haven't wasted your time. You can't get many 2nds to budge until some time has passed. It's like the lenders have some "protocol" and maybe they look like they haven't tried hard enough if they agree too quickly to a deal. Which is really stupid since buyers walk away sometimes when something better gets listed for a better price.

I noticed an unanswered question earlier about getting a 1099 and a Deficiency Judgement. There is no double indemnity here. It's one or the other. Refuse to sign off unless you get the 1099 and a full pardon.

Sep 23, 2008 01:24 PM

Anonymous

EDH

WE have a first with Wells Fargo for $1,000,000 and a second with National City for $250,000.

We have a solid offer (putting 50% down) as well as a back up offer for $1,100,000.

Wells will get all of their money, and National City will get $55,000.

National City is trying to get us to pay them more in addition since they are taking a loss of approx. $200,000.

What are our options? We want to close this deal quickly and don't want to lose the buyers.

We also have $130,000 in credit card debt, so we are also considering bankruptcy?

Sep 25, 2008 05:15 AM

#25

Anonymous

I was told by the first lien holder Wells Fargo, they will approve the second to be paid the lesser of $3000 or 3% of the 2nd mortgage amount.

My first short sale, the second took the $3,000, the realtors contributed $1000 out of the commission and a $3,000 interest free note from the seller. The second settled for $7000.

My second short sale we are still negotiating. For a $70K second they are asking for $37,000. We offered $7,000 ($3,000 from the first and a $4,000 cash settlement from the seller). Waiting for a reply.

Mar 27, 2009 01:31 PM

#26

Anonymous

JOHN ?

TRYING TO UNDERSTAND MY SHORT SALE ANY USEFULL INFORMATION WILL HELP:

HAVE CONTRACT; 1ST = COUNTRY WIDE: 2ND= CITI MOTGAGE TOTAL: 335

JUST GOT THE OK FROM 1ST MUST BE CLOSED IN TWO WEEKS, CALLED UP 2ND MORTGAGE ASKING WHATS GOING ON. THERE GIVING US THE RUN AROUND. THEY WHERE OFFERED 3000.

WHAT SHOULD I EXSPECT? I lost my job after 20 years. have family. health went down hill.

do you think I will close in time or am I looking at foreclosure?

Apr 11, 2009 06:15 AM

#27

Tony and Suzanne Marriott, Associate Brokers

Serving the Greater Phoenix and Scottsdale Metropolitan Area - Scottsdale, AZ

Haven Express @ Keller Williams Arizona Realty

It's unfortunate that we are now seeing untrained new agents claiming to be Short Sale experts when they have never listed, sold or closed even one Short Sale!

Oct 31, 2010 02:01 AM

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