Good morning everyone. I’ve not done a SS with a 2nd mortgage until now. From what I’ve read, I negotiate with the 2nd and then the 1st. Does the 1st have to know what the 2nd is doing or are these two independent processes? I’d be grateful for any words of wisdom.
Depends who you talk to.
If the home’s value is less than the first TD I can only offer the second a token sum to agree to the SS. The value has to be documented to the second and they have to buy in. I then try to get the first to see reason.
If the home’s value lies between the first and the second TD I deal with the second and tell the first I am attempting a SS. The first has been willing to come down in this situation, other times not.
Sara,i would not tell the first that your trying to short sale the second,because if you do then you probably want be able to discount the first(according to whats owed).Post your info.#'s and lets see what you’ve got.
Thanks for your help guys…here are the particulars:
1st is $147,222
2nd is $17,000
Payoff is $160K
ARV is $155K - $160K
How would you recommend proceeding? Negotiate the 2nd to 1 or 2K and then go after the 1st? Thanks again!
If the owner isn’t behind in payments then neither lender will be open to a short sale. The catch is, as soon as they are behind in payments the first will know about it. Either way you’re going to have to notify the 1st lender of the situation. Most likely they won’t do anything until they see foreclosure is unavoidable. Then you have negotiating power to get the first lender to reduce what is owed and then offer the remainder to the 2nd. The 2nd won’t give up until the final hour when they realize the 1st is going to auction. Then they’ll take whatever they can get. Follow the same procedure as when dealing with only one lender (get low appraisal & BPO, high repair estimates, etc.)
Thanks Jason!! The homeowner is $6000 behind in payments and the foreclosure sale is scheduled at the end of next month. I’ve done a successful SS with one lender. So, I just let the 2nd know that the first is going to foreclosure and see if they’ll settle on a nominal amount such as $1K (and provide them all the documentation I would for the 1st)? Thanks for the advice everyone!
Exactly.