HELP! 80/20 Loans -- Short Sale + Subject-To Combined

Hi guys, I need some help from anyone who can offer. I have a short sale on a home with an 80/20 mortgage setup, and I’m trying to payoff the 2nd and take the 1st subject-to. Chase is the 1st position, Litton is the 2nd.

I caught this one 13 days before Chase foreclosed, made an all-cash offer, and got it stopped the day before the sale.

Last purchase: $120000
ARV: $115000
Current Mortgage Payoffs: $105000 1st / $35000 2nd (these guys are WAY behind)
MY SHORT SALE APPROVALS: $80000 1st / $3600 2nd

I could write a check to Litton for the 2nd and get the lien released, and then start making payments to Chase on the 1st, but would that really keep Chase from pursuing a foreclosure again, considering all those late payments stacked up? I just don’t want to spend the money if they’re going to pursue foreclosure anyway.

Anybody who can explain / instruct / guide would be most appreciated. Thanks!


Out hear in California if a lender accepts payment then the preforeclosure process is stopped… The lender cant continue. They can start all over again…

I wouldn’t spend any money until you have received a formal written acceptance on the second and then try and worked out a modification on the first. They most likely wont reduce the principle amount for the borrower however may reduce the interest. Then take title before you give anyone money…

Depending on your exist strategy this may not make sense to buy sub 2… on a flip it doesn’t at all…

BTW on a SS the first may not allow that much to go to the 2nd… Find out their guidelines first.

Congrats on your deal.

I’m not sure what you mean…
Did Chase agree to allow you to take the $80k approval subject-to? I doubt that they would allow that.
Otherwise, get financing for the $80k in place, confirm that you’ll close as scheduled, and THEN pay off the 2nd mortgage.

***Question: do you plan to live in this home, rent, or flip? Why are you buying at $83k?