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Bank owned bob lachance chris bowes debt negotiating foreclosure auction foreclosure class foreclosure course foreclosure mortgage foreclosure property foreclosure training foreclosures investing in real estate loss mitigation patrick precourt Preforeclosure Real Estate real estate foreclosure investing real estate investing real estate investing beginner real estate investment real estate investors real estate short sales REO short sale mortgage short sale training Short Sales
On this week’s Preforeclosure Daily Grind we cover the hot topic of whether or not it is legal to give a 2nd mortgage holder more money then the 1st mortgage holder will allow on a short sale transaction. Nationwide there is a huge controversy brewing and the fact is that in today’s short sale environment 2nd mortgages are requiring that, in order for them to release there lien position. The question is it legal or is it illegal to do so even though you are trying to help your seller avoid foreclosure. Listen in at we cover this and much more. Visit www.PreforeclosureDailyGrind.com for more videos from North Shore Enterprises.
Just a question:
How do I pursue a short sale so the seller gets the $1500 and get them fully released from the debt?
Thanks!
Bill,
They would have to be HAFA eligible. To find out if one of your sellers are cut and past this link: http://www.realtor.org/government_affairs/short_sales_hafa
Bob & Chris:
Very good info. Our title company attorney told us long ago that it was fine to give the 2nd more money and we could do it a couple different ways. One was to put the extra money on the buyers side of the HUD. The other was to simply make two HUD’s, since technically we had two different deals and two different closings. The first HUD went to the first mtg. co. with what they allowed, and we closed on that deal. The next HUD went to the second, showing what was paid to the first, but the FULL amount they wanted on this HUD. Over time we’ve just put it on the buyers side to make life a bit simpler.
All attorneys are not “created” equal. So are you suggesting those ambiguous deal squashers are born.
I agree that if the 1st is going to dictate a position that the 2nd will not tolerate then the seller should be able to do what they can to avoid the foreclosure. We always put the extra in the 100′s on the buyers side, assuming the buyer is wiling to pay if of course, and tell the 1st. So far they have not retracted their approvals. A another award winning nuance from our “friends” at BOA is no seller concessions unless it is an FHA or VA buyer.
I’m a Nevada Attorney with an LL.M. in Real Property Development. As for putting the extra payment on the buyer’s side of the HUD, that is a violation because if the buyer paid it—it is part of the proceeds of the sale, which must be reflected accurately and as dictated by the 1st mortgage.
However,—a true ‘seller contribution’ to the 2nd is not “proceeds from the sale,” and, therefore, the 1st mortgage has no right to dictate or complain about the arrangement.
The payoff to the 2nd should be listed on the HUD with two line items: the first should say “payoff to 2nd from sale Proceeds — $3,000″ the second line should say “Seller’s separate non-proceeds contribution to 2nd — $5,000,” etc.
Mind this: It is illegal if the proceeds come from the Buyer because it would be proceeds from the sale, which the 1st must agree to and which must be reflected as part of the sales price. But it can’t be illegal if it is a true “seller contribution” from separate funds because the 1st mortgage only has the ‘real property’ as collateral—not the seller’s personal bank account!
Please pass this information around because the confusion and controversy over this issue is entirely unwarranted—as the simple logic above proves.
I would think that if you disclose all details of the transaction, it is legal. But if you do not disclose, it makes it illegal.