When to submit short sale to second?/

I am still fairly new to the short sale business. I have been able to negotiate one short sale with a second but the second was very easy to deal with. As a rule, when do you submit the short sale to the second mortgage? From what I understand (if I understand correctly), the first normally has a max that it will allow the second to collect in the event of a short sale. How do I find out what that amount is so I don’t go over my limit in negotiating with the second? Do I get an idea from the first if they are going to negotiate before I submit my short sale to the second? In the short sale mentioned above, the second agreed to my short sale before the first and wanted to close before the first or they would call the whole deal off. That was “not fun”. Thanks so much for any help anyone out there can give me!!

I am also looking for an answer to your question. And to piggback, do you negotiate the first and second simultaneously, or is one supposed to be worked before the other?

Work them both at the same time. I have seen 1st positions take less than 3 weeks start to finish. I have also had them string me along for 4+ months. Its best to start as early as possible with both just in case negotiations hit a snag or financing becomes an issue.

2nd can be the same way even though 9.9 out of 10 times they will get nothing after auction. You would think it would be in there best interest to settle as quickly as possible, but often they delay. If the 2nd wants to settle before the 1st get their settlement conditions and tell them that you are working with 1st. Even if the 2nd has a time limit on there offer most will accept your new offer once you have negotiated a price with the 1st.
I once bought a 2nd note on a foreclosing property with the intent of shorting the 1st. Guess what happened? The 1st would not come off the price. So I ended up eating the note. Do not fall into that trap.

Great info. I am a bit unclear on exactly how paperwork is submitted to bank with 2 loans. Do you submit two separate shortsale packages? And how do you convey to the lender on paper the offer for both loans?

Thanks, Gregg

Call the lender and ask how they want to handle it. Most likely they will treat both as 1 loan with the 1st loan# being the reference. At this point you treat the transaction as if you were dealing with 1 loan.

Bovine is correct. You should be working both deals at the same time.
Most first lenders will only allow the 2ns lien holder to collect between $500 - $1,000.
So there is no need to hold back to see what the first will allow, just get the package in.

when putting your package together make sure the HUD 1 reflects the first and second pay offs so there is no mistakes.

I have been taught to send a full package to the second as well as the first.
This helps build rapport with the lender as they could be the first lien holder on your next deal.
If you build a professional package it makes a difference to the mitigator who will favor your deal over any uncomplete or unprofessional packages.


Thank you…thank you…I unfortunately have already fallen into the trap of paying off the second before the first came to an agreement and need I say more…that is why I am trying to find out exactly how to do this correctly. I am running into more and more loans that have a first and second. Thanks again!

Excuse me for being thick here, but just to clarify, can you short the second and pay whole on the first if time is of the essence? Do you have to inform the first about the second being shorted at all if you are not shorting them?

I don’t normally do foreclosures. My first short sale was only dealing with one mortgage and went rather fast.