Sub-2 1st Mortgage, Short 2nd Mortgage

I am attempting to take over a first mortgage via SUB-2 and short a 2nd mortgage. The 1st is Countrywide/BoA and the 2nd is Wachovia. I am at a loss as to how to fill out the HUD-1. The 1st is owed approximately $24,000, while the 2nd is due $30,000. The house is worth $42,000. I am willing to pay Wachovia $6,000, but will start at $1,000.

I do not know how to fill out the HUD-1. I am not contacting the 1st, just taking that loan over and re-financing it at the beginning of next year. The 2nd, I am shorting, so I know what to put on the HUD for them. How do I fill out the HUD and is there anything special I need to know in this type of scenario?

P.S. The owner is planning on just walking away from the property, so he has told me I can do whatever I want, as far as purchasing it. I figure if I can SUB-2 the first, then short the second, my out of pocket at close would be under $7,000 for a house worth $42,000.

The owner has also told me he will accept a deficiency judgment. If he receives it, he will file bankruptcy to get it off his record, so I only need to get the Release Of Lien, although I will attempt to get a Waiver of Deficiency, also.

I would fill out the HUD-1 to show all the funds being disbursed to the appropriate recipients. Show the full amount you are planning to pay each lender, as well as the projected closing costs and title recording fees. Make sure the bottom line that says Cash Due Seller is $0.

BTW, Wachovia is now Wells Fargo.