I got the second approved but ???

I’ve currently got approval from the second lien holder but the first demands that the second should only net 1k. The second would be willing to let go for 3k. How would you handle this situation?

If the loan is a gov backed loan like VA, or if it is FHA, Fannie Mae, Freddy Mac, ETC. It is required that all Jr. lien holders accept a $1k payoff. If you explain to the second that the requirement for a $1k payoff comes from FHA (or whoever it is) then they are more able to understand the reasoning. IF it were their company who held the note, they would be requiring the same thing.

If it is NOT a gov backed loan then you would be better off having the HO cough up the extra $2k. Having to come up with $2k to get out of the total mortgage note is a very small price to pay. If they are unable to get the $2k from someplace…anyplace then there might not be much hope.

At the same time, because it is ONLY $2k the second may come off and accept the $1k if you ‘stroke them the right way’!

GooD Luck! :beer

Thanks, i will be closing on this next week, will keep you posted.

Did the 2nd review the BPO? If they stand to make nothing in a foreclosure, they will have to accept the 1st’s allowance of $1k. Perhaps you can have them give a “release of lien” for the $1K? They will then tell the homeowner that they will need an additional $2k for “full settlement.”

Technically, this means that although the property is approved to short sell, the 2nd can still go after the homeowner for the $2k. It might be the only way to get the thing closed. Just make sure your homeowner is aware of this potential “snag” to the future of their credit.

So does that mean the second took the $1k?

GooD Luck! :beer