Working a US bank 2nd - Stubborn folks (not a good place to get a mortgage?)

Here’s the deal. I have a Citimortage 1st who is saying the most they will allow for payoff to the 2nd is 10% of what is owed on the second. US Bank summarily rejected my first offer, for $2,500 (wouldn’t even counter), and they didn’t smile on my second offer - at 10% – which was around $2250 – $250 less!

They seem bound and determined to punish the borrower for ever having taken out a loan in the first place, although the sheriff’s sale could take place anytime after Dec 28th. I suppose I could raise the offer to the 2nd, but without knowing in advance “here is what it’s going to take to get a partial release”, it’s a crap shoot. And, of course, any overage to the 2nd will have to come out of the settlement to the 1st, or another turnip in the transaction. (The Realtor is out - don’t even think about it! I’m not working this file as the investor, I’m just a lowly Realtor. :lol: )

Anyone have any experience working these 2nd mortgage liens with US Bank? Maybe my next step is to show them the inventory listing for a soon to be executed BK-7 filing?

There isn’t enough information to answer the question. It depends on the equity in the deal. If there’s no equity in the deal then i wouldn’t waste the time, but if there is equity the way it sits it may be worth making up the back payments and cashing out of the house.

Some more background may be in order. First, there is no equity in the deal, except perhaps for the buyer, and that would be only a couple thousand because of the power of a cash offer.

The property is worth $132K, at best. With an extra motivated buyer, on a sunny day and flowers blooming in the lawn, it might sell for $135K.
The 1st is owed about $122K and the HUD nets them about $112. It’s a Freddie Mac loan, and CITI states the most they will allow the 2nd (the US Bank loan) is 10% of their loan because it’s under 30K. They’re sitting on a 2nd which is right at $22.5K, thus creating the basis for my offer of $2250.

There’s no equity in the deal. I’m not working this one as the investor, only as the listing agent. I think we’re very close but what I can’t understand is why this isn’t a slam dunk deal. The first takes a hit for $10K, the 2nd grants a partial release for 10% of what is owed and will hold a deficiency judgment that will attach to every other piece of RE the borrower tries to sell, or to purchase, and they can chase them for payments.

Why do banks try to be such a pain when they know that in very short order, this property will be foreclosed on, the 2nd will be wiped off with no proceeds, and the 1st will probably lose AT LEAST another 10-20K should the property sell as an REO?

This makes no sense to me. Why wouldn’t US Bank counter and say, “this is what it’s going to take for us to release our lien”? Incidentally, the next move is a BK-7 filing, and it seems US Bank wants to force that move. Why wouldn’t they take the 10% now rather then zippo through a BK-7? There are no assets in this equation; no equity to be had.