HELP: How to tackle this short sale with 2 mtgs

Foreclosures, Short Sales, Tax Foreclosures
1

Bought in 12/05, so basically no equity

  1. Select Porfolio Servicing - $361K, 11K arrears
  2. HSBC - 91K, was 4 payments behind but paid off the arrears as of last week and is current
    Total is $452K

How would this work if he’s behind on the 1st, but yet paid off the 2nd’s arrears?

2

Is he in pre-foreclosure now? If so, who’s foreclosing, the 1st or 2nd?

If the 1st is foreclosing, then this doesn’t change your strategy, really. The 2nd mortgage will be dismissed in the foreclosure and they will lose everything.

If you get a big discount (90%) on the second and a moderate discount (~30%) on the first, then you’ve created quite a bit of equity for yourself.

Of course all this depends on repairs, actual ARV (with SOLD comps, not listings), your local RE market, etc.

Good luck!

3

Yes, he is in pre-foreclosure.

I didn’t think about the 1st being in position.

So what you’re saying is that say if the 1st is in position and that the 2nd is in position, the 2nd would theoretically accept a discount because of the fact that the 1st is foreclosing?

4

Exactly.