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I am waiting words for my offer for a client on a short sale property. Pulled
the prelim and found out that there is a 2nd loan on this house. What does this mean? Does this short sale wipe out both first and second? I hope we don't have the deal with the 2nd loan!
The Seller most certainly will have to negotiate with the second.
Actually the only one who can deal with the second is generally the first. And if he won't it generally means foreclosure. It is however reasonably normal for the first to allow five or ten cents on the dolllar to the second to secure his cooperation. The agent can try and facilitate this transaction...
Actually the only one who can deal with the second is generally the first. And if he won't it generally means foreclosure. It is however reasonably normal for the first to allow five or ten cents on the dolllar to the second to secure his cooperation. The agent can try and facilitate this transaction...
In my experience the seller usually gives permission to their agent to try to negotiate a short sale with the lenders. I have had on company wait more than a year to file a foreclosure notice without payments, where they had the first and the second, and I submitted 4 offers in six months without response, even the lenders normal foreclosure attorney couln't get a response. I've had another lender wait 4 months to give an approval - where they lost $5,000. A foreclosure would have cost them at leat $15,000, for court, holding, commissions, winterizing...)
Sometimes the best thing to do is to get an investor to write an offer, before it goes into MLS, and submit the offer to the lender (all of them) with a seller information package (assests, hardship letter, w-2's, tax returns...) The seller may have tax implications on the forgiven part.
That article is pretty good. Covered all the bases.
I would note that there are official bank guidelines for a short sale. Among other things they require that an offer to pruchase be in the package before they look at it. Some banks are considering shorts without an offer but many require it.
In general somebody has to buy off the second. Cheap...but it has to happen or the second simply forces foreclosure. Normally the first has to do it. They are not going to allow the seller as that would indicate money that should go to pay the mortgage.
If the seller is not behind they likely cannot get a short sale. They may however be able to do some sort of a refinance. That is not what the agent wants to hear but is pretty close to gospel. Nobody who can pay their mortgage is going to get a short sale. Their only out is foreclosure.
Thanks all, so the fact that the property is on MLS for short sale means the agent had already negotiated with the first and made arrangement? I just want to make sure if my buyer buy this property (if bank agree on the price, I offered 10% less than asking), there will be no cloud on the title.
Absolutely not. There are many properties on MLS that the agents have no clue what they are doing or the bank (first) will not even considering negotiating without a contract/offer in place. Some banks require a history of the listing being on MLS before they will consider anything...they want to know that something has been done to try to offload the property.
The seller does not have to be behind on their mortgage. They do have to prove financial hardship through verifiable documentation that proves inability to continue paying the mortgage for a short sale to be considered. (i.e. Loss of spousal income) Most loan mitigation departments will supply the paperwork that asks for this information in explicit terms. The short sale scenario is established because the person does not have the funds necessary to close. Part of the criteria which makes a short sale acceptable to the bank is the persons credit and recent willingness to pay as well as an absence of liquid assets.
The seller does not have to be behind on their mortgage. They do have to prove financial hardship through verifiable documentation that proves inability to continue paying the mortgage for a short sale to be considered. (i.e. Loss of spousal income) Most loan mitigation departments will supply the paperwork that asks for this information in explicit terms. The short sale scenario is established because the person does not have the funds necessary to close. Part of the criteria which makes a short sale acceptable to the bank is the persons credit and recent willingness to pay as well as an absence of liquid assets.
True - But practically that tends to be the way it is. The source was a Countrywide Loan Mitigation guy explaining short sales to a couple of hundred realtors. Basically his view was that if you are current there are likely other routes to fix your financial problems and you may well have resources that don't show on paper.
The bank cares first about whether the seller has the resources to make the mortgage payments. If so...no short. Having made the mortgage payments in the past is a good indication that they may well be able to in the future.
Might also note that many Banks Loan Mitigation Departments are running hopelessly understaffed and behind. So finding out whether a short will work may be an impossible problem.
True - But practically that tends to be the way it is. The source was a Countrywide Loan Mitigation guy explaining short sales to a couple of hundred realtors. Basically his view was that if you are current there are likely other routes to fix your financial problems and you may well have resources that don't show on paper.
The bank cares first about whether the seller has the resources to make the mortgage payments. If so...no short. Having made the mortgage payments in the past is a good indication that they may well be able to in the future.
Might also note that many Banks Loan Mitigation Departments are running hopelessly understaffed and behind. So finding out whether a short will work may be an impossible problem.
lol...this is finally, probably true.....in the past they have just been notoriously difficult to reach.....phone tag experts....
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