So we’ve had a contract on a SS since last Novemeber.
The Property is a 4-plex and is currently occupied.
The Negotiation between Seller/Bank on Lein 1 is complete
Bank #2 isn’t budging on the Second Lein.
BoFA Sent us the Buyer Disclosure/Short Sale Addendum.
Our Real Estate Agent (That we have on this deal) dislikes SS and is not helpful.
We’ve kept the property on the hook for awhile because prices continue to climb.
It’s in a good Neighborhood, where all the other 4plexes were snapped up quickily because of ease of rent.
With those bullets out of the way, does any have some advice on how to massage this deal to the closing table?
I have not seen the amount that the 2nd Mortgage is for. But the purchase price is right at the sweet spot that we are looking for. I’ll throw it back to the negotiator and see if we can wiggle on the price enough to pay out the 2nd mortgage.
See what is the hold up on the 2nd. The biggest obstacle in short sales is that the 2nd lien holder wants more than what the first is willing to give. For example, BofA is giving the 2nd 3k and the 2nd lien holder wants 10k. Most agents do not know how to handle this situation.
If that is the case, let me know and I will tell you how to overcome it.
1st lien holder can not tell the 2rd lien holder what to accept. Buyers in the pass tried to bond around the 2rd and it landed them in court. If there is equity in the property the 2rd can kill the deal. Be careful of shady title companies that say they can wash the 2rd because they are committing fraud.
Like I said to get a clear deed you need the 2nd lien release. Who told you that the 2nd lien holder need to take what the 1st lien holder say? You must be new to the real estate business.
Well I have done a little bit in the Short Sale Industry. I even worked for a major lender doing Loss Mitigation training for 4+ years… And I tend to agree with Real Estate Seller while you can get them to accept next to nothing they still want something. And yes there are times where the 1st will take a lower amount as long as the 2nd will accept a lower amount. Keep in mind that every deal is different I have seriously done HUNDREDS of Short Sales and no two deals were the same.
In instances where both lien holders are being shorted, the 1st lien holder can dictate one of the following:
2nd lien holder to get x amount only. No third party or borrower can contribute to any difference between what the 2nd wants and what the first is willing to give.
2nd lien holder to get x amount from 1st lien holder. Any difference between what the 2nd wants and what the 1st is willing to give can come from a third party, such as the buyers or the agents or whatever.
Number 2 is easy as all contributions can show on HUD. Number 1 is tricky as it can lead to mortgage fraud.
What’s worst, these real estate agents are messing things up as they treat them as retail listings. They have no idea that a lender is mitigating a loss, not conducting a real estate transaction.
I went up against a few CDPE real estate agents and shot them down. I even had an interesting exchange with the founder of CDPE:
The way I conduct short sales is like a hybrid investor/real estate model. In an investment scenario, the investor finds a distressed seller and low balls their lender while finding a high end retail buyer. Once complete, they pocket a portion of the spread. So you have a typical A to B and B to C model.
The way I do it (as a licensed real estate broker) is I find a distressed seller and tie them up with a listing agreement. I then find a high end retail buyer using the MLS (or whatever) and then ask that buyer to re-write their offer to a lower number that I know I can get approved. I then have the buyer contribute to my commissions owed to me by the seller. In this scenario, it is a simple A to B transaction.
satarnag you are wrong. Provide verified proof to everyone on this board that the 1st lien can dictate what the second lien holder will get no matter if it is a SS sale or not. The 1st lien holder can discount their lien but the 2nd does not have to agree to a SS. Waiting on your verified proof not some hear say.
You can go ahead and play with your own straw man.
I said in instances that both 1st and 2nd lien holders are being shorted (if it was just the second, we wouldn’t be talking about the 1st), the 1st lien holder CAN dictate how much the second is to receive. The 2nd doesn’t have to agree, but then there is no short sale!
"Once in a blue moon, first lien holders will not allow additional cash contributions on the HUD-1. Remember that any attempt to circumvent the HUD-1 could be perceived as an attempt to defraud the first lien holder. "
So, after pestering the Sellers Agent, here’s the reply about the current situation:
Honestly, these two lenders are unbelievable to work with. I am more frustrated than anyone on this file. IndyMac is the first lien holder and it took us more than seven months and finally got approval from them. I thought it would be much quicker (by March) and I submitted everything to BOA (2nd lien holder) for approval back in Feb.
It went smoothly with BOA and we got approval in March. However, we just couldn’t get IndyMac’s approval that time and after two extensions, BOA closed the file. They asked me to resubmit everything when we get the first lien holder’s approval. I did it at the end of June and I couldn’t get anyone to respond this time. I called, messaged and emailed the negotiator and managers several times.
Finally they responded last week. It only took me 3 weeks to get BOA approval last time and I really hope I can get BOA’s approval soon. IndyMac’s approval will be expired on 8.10.12. I asked Renton to see if you want to start the mortgage process first, just in case IndyMac doesn’t give us enough extension to close. I understand it is a bit risky but since I haven’t heard from Renton, I assume you prefer to wait till we get both approval letters. I understand that completely. Sellers have been cooperative so all the issues are from the lenders.
After a little more investigation:
The only thing is that BOA approved $3000 previously and IndyMac is only willing to give them $2,180. (10% of the balance) Keep our fingers crossed and I hope to get the approval soon!
So, currently we have IndyMac’s approval and are waiting on BofA to approve it. But there’s the $820 discrepency. If it is possible for us to wrap up the deal by throwing down another $820, then :beer
What can we submit to BofA to get them to speed up the process?
OK, incompetence is what is stalling this. BofA 2nd line only takes less than 2 weeks for an approval.
One West Bank does take a few months to get an approval.
Do not spend a dime until you get two approval letters. They want you to start doing your loan, but I wouldn’t do so.
Also, One West will allow you to contribute to the 2nd lien holder. So you are fine if BofA wants 3k and OWB gives them $2200. I just hope your agent knows how to pull it off.
Yeah, just tell her to agree to what BofA wants and what OWB is willing to give. Then you have two routes:
See if OWB is happy with just the seller side of the HUD. If they are, then you put your $800 contribution on the buyer side.
If OWB is asking for both sides of the HUD, then just verbally confirm with the negotiator if it is OK if a third party contributes more to the 2nd lien holder (BofA) if need be. If the negotiator says yes, then you are fine to disclose. If the negotiator says no, let me know and I will tell you how to move forward.