Just let the 1st and 2nd talk directly to each other

Foreclosures, Short Sales, Tax Foreclosures
1

On our most recent Short Sale, we have a 1st and 2nd mortgage. We have an offer that isn’t even for the full amount of the 1st. Essentially, the 2nd will get nothing; even more nothing when it goes to foreclosure. Still we’re working on negotiating with the 2nd to have them issue a release letter for the lien on the property. Someone we were discussing all this with suggested that we just put the 1st and 2nd mortgage companies in touch with each other and let them work it out. Has anybody ever done this? What were the results? Thanks.

Dean

2

i would to know as well.

i have a shortsale where i haven’t contacted the 2nd yet. i thought, why waste my time if the 1st won’t even give me the pay off i need. plus the 1st will only allow the 2nd to get only so much…so i’m told.

3

When I read your post, it is hard to distinguish whether you are the investor, the seller or a real estate agent?

As an investor preparing a hardship package for the lenders, the package should be prepared in duplicate, one going to the 1st and one going to the second.

Your the investor, your in charge, you have to offer something to the second just to get them to play ball! If the second will not agree to a deal, the first is not even going to work the numbers or get serious about agreeing to a short sale, it is as plain and simple as that.

Generally speaking the first mortgage company will be happy to except a deal where the second is offered roughly 5% of the outstanding balance of there loan and the balance of the offer goes to the first lender.

You don’t want to give away the barn, but you want to offer enough that the second feels a little respect! If most seconds are offered nothing, they feel insulted and figure “screw it” we just won’t approve and force the property to the trustee sale because it hurts the borrowers credit, and allows the second lender to seek a defeciency judgement.

Do not upset the second trust deed lender!

Trying to put the first and second in touch with each other is like throwing two needles in a hay stack and hoping both will find each other, it is just impracticle and very difficult to get two parties who are each authorized to except an offer on behalf of the lender they represent.

Most short sale approvals are done in committee.

You will find your first lender will not get serious unless you are able to get consensus from your second lender because the first can work till there blue in the face and when it comes to the day of the “Trustee Sale” if the second did not make an approval, the house goes to auction anyway!

When I do a short sale I start working both lenders at day one, but I concentrate my efforts on recieving approvals in writing from the second, and generally if I am talking to the right rep’s on the phone, I can get a general consensus early on to know if the numbers work.

4

This short-sale is one of those stubborn lenders scenarios. Like I said, the offer doesn’t even cover the 1st. The offer is $233,000; owed is $240,000. Obviously the 1st wants it all to cover their loss as much as possible. Thus, they want the 2nd to just give a release of lien. I spoke with the 2nd and told them all of the standard foreclosure bullet points. They responded that they either want their entire amount - about $63,000 - or they will just write the whole thing off as a loss. I tried fishing around for them to give me some kind of bottom line number, but the call center rep mostly said all or nothing. The call center rep finally said that they won’t be able to assign a negotiator until they get a HUD-1 showing how much the 1st will release to the 2nd. Therefore, I sent them a HUD-1 showing $0 going to the 2nd. Oops, maybe? Anyways, this should get a negotiator assigned so that I can at least get some kind of number to work with. I’ll follow up in a couple of days to see what they think. Any strategies to formulate between now and when the negotiator is assigned?

Dean

5

does this change if both mortgages are from the same lender? i’ve heard in the past that sometimes the lender is unaware it has both mortgages even if it is the same company.

i just got off the phone with a servicing company in which the service rep said “is this in regards to both morgages with us?”. looks like they are completely aware. i didn’t submit duplicate submissions…only to the first

anyone have an insite as to proceed?