Working with a homeowner who can just barely make the 1st position mortgage payments. She has stopped making the 2nd mortgagor(Ocwen) payments for the past 6 months. When I got in touch with Ocwen they said they were in a ‘holding pattern’, meaning that they were going to wait and see what happens. They have charged off the loan but say they will not release the mortgage.
The 1st position, Fremont, originated both loans. I think they simply sold the servicing rights to Ocwen, given Ocwens 6 month wait and see attitude.
What is my best strategy for shorting this home? 120k 1st, 30k 2nd, 1k cosmetic repairs. FMV 140k-150k. I see there is little reason to short the 1st and if the 2nd is with the same lender they should’nt short as well. Any way I can make some $$$ from this.
Sounds like Ocwen bought the second mortgage note from Fremont and has now charged the loan off. This means it has zero value on their books and they don’t expect to recover anything. A very realistic lender. Assuming Ocwen is out of the picture you still have a $120k first position outstanding on a $140k value property. This seems pretty tight.
Ocwen is not out of the picture. They said they would not release the mortgage, they are just waiting to see what happens. Ocwen does not seem receptive to a short sale. The H.O. misses payments regularly on the 1st and does not want the property anymore. The H.O. already has a foreclosure on her record. Due to market conditions in the neighborhood the house is not worth what is owed. I would like to approach the lender with a short sale offer right now but since she is still making the payments semi regularlly I do not think they would go along. Maybe I should have her write the lender and tell them she can no longer pay them.
Well if you are going to do a short sale, then she should stop paying. Part of a short sale is that the lenders will not let the seller walk with any money, so might as well save what money she has.
Contact the Loss Mitigation Department and ask them for their Package. You also need to do create some things yourself. You need to snap photos (ones that show how BAD the property is). Also you need to have her write a hardship letter. etc.
Ocwen has charged the loan off from a financial standpoint but still hold a valid lien against the property - you can’t do a short sale without their cooperation so I suspect they will want some nominal amount for lien release. And the senior lienholder will want Ocwen to get zero - or next to nothing. Hit up the Loss Mit dept as 4R said and start building a case.