How do you negotiate a Short-Sale with 2 loans?

:banghead I need help on how to negotiate a Short with two loans! I have two short sales and need find out how to put it together, i’ve only successfully done one SS but it only had one loan. :help

Send the entire short sale package to both lenders. On the HUD-1, offer the second $1K.

Communicate. First you will have to get seperate authorization on each loan to negotiate on behalf of the HO. Tell the 2nd that the home is in foreclosure and will soon be sold at auction. They know that if it goes this far they will not get anything, unless they purchase the property. Tell the 2nd that you need a payoff of $xxxx before the first will accept the short sale. If they give you a hard time tell them that you just want a release on the lien and if they want to pursue the homeowner for the balance they still have a right to do so. In most cases the HO is indigent and near bankruptcy anyway so they don’t have to worry about this. In one of my deals the HO had his wages attached by the 2nd before the SS went through. Prior to that the 2nd sent me a letter accepting $xxx to release the lien. As a negotiator you have to create win/win for everyone involved. Once you have a payoff or release from the 2nd now you approach the first for the SS. At some point they will tell you that they will only accept an offer if the 2nd agrees to a release, this is when you present them with the letter from the 2nd that they will release. GOOD LUCK!!!

Thanks Gwhiz and Dealhunter. Great advice.

Oh…by the way. I didn’t mention that the HO is not even behind yet… I read an article online somwhere that the HO “needs” to be behind to accept a SS. A few days later i read here somwhere someone saying you don’t need to be behind??? what gives? Personally, I think i can still do it because he’s upside down! No equity at all. I mean he’s under like 30-40K! He just bought and paid overpriced and you combine that with the turn of the market… Help

That is Short Sale Myth #1!

The HO does NOT have to be late to commence a short sale. They can even be continually paying so that they never get a “late” on their credit all throughout the short sale process. NEVER advise an HO to stop paying their mortgage while you negotiate a short sale. Disclose to them that they WILL get dings on their credit showing the 30-60-90-120 late if they stop paying.

Be sure not to say anything to the lender about the HO being upside down and “wanting” to get out. The HO must be in a legitimate hardship situation that leaves them no choice but to short sale.

The key to getting approval is to DOCUMENT THE HARDSHIP. A true and legitimate hardship, like showing dwindling reserves or proving a loss of income, divorce, medical disability, etc. is what the lender needs to see. Also make sure you include all back up documentation: recent paystubs, tax returns, bank statements, doctor’s notes, divorce papers, etc.

Good luck!

Your da man DealHunter thanks. Yea I actually read online in an article at (where i get all my mtg news) that you HAD to be late for a SS to work. I will proceed with SS. Total bal is 290K, the first is 250K (citimtg) and the 2nd (countrywide) is for 40K and it’s only worth 245K, so he’s upside down about 40K. Should i start with the 2nd and offer only 1K (they’ll accept this? isnt’ it too litttle???), How much should i offer the 1st? He is going through a Divorce and he’s ex is giving him 3 months to do something. Should i have her deed the property to him? Should i have him deed the house afterwards? Does the H/O HAVE to deed the house to me for a SSj to work? I’ve only done one SS and had the H/O deed it to my LLC, than the LLC hired me as the agent to the sell the house (ahh the beauty of an LLC!) anywho, to summarize i NEED to know if the H/O needs to have his dearly beloved ex wife deed her half to him for this to work? and second, does the H/O need to Deed the house for me to be able to sell it once i’ve negotiated this SS??? :anon

Divorce not final yet? The problem is deeding the property over to a spouse does not satisfy the lender’s need to get paid. If both are on the mortgage, both are liable for the debt. You’d have to send the divorce pettition to the lender if there is anything in there that says the ex does not want the property or that she specifically wants him to sell it. The lender may need to have both of their financial statements in order to satisfy the hardship documentation. However, if the divorce were final and the judgement awarded the house soley to your guy, then only his hardship would need to be documented.

Regarding how much you should offer - the first thing to do is get comps. If the property can show that it has equity or can break even, then your short sale will be denied. If it is upside down, try to get comps to show it REALLY upside down. I would first offer $.50 on the dollar and wait for the lender to deny or counter. Then you could come back with more. Offer the 2nd $1000.