Financing in Woburn>Question Details

Nola, Home Buyer in Hartville, OH

One lender in a short sale, the 20% of an 80/20 deal. What percentage of what they are owed are they most likely to approve?

Asked by Nola, Hartville, OH Thu May 24, 2012

We just signed a P&S for a short sale. There is one lender, the first mortgage will be paid off for a 80/20 loan with what we offered. The remaining lender is citimortgage. What percentage of what they are owed are they most likely to approve? From what we offered there will be 16k leftover to cover what I estimate to be 56k. Thanks!

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Heath Coker’s answer
The second will ask for as much as they can get.
The primary lender will direct the transaction, however.
The primary usually has an amount that they "allow" for the second if they are not getting paid off 100%.
The second company will be smart to take what is available / offered and move on - and they often do after a little foot stomping.

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0 votes Thank Flag Link Sun Jun 3, 2012
Banks in the 2nd position seem to differ on what they will accept on a short sale. I think that it would even vary based on the negotiator. Regardless of the amount owed I've had some take a flat amount like $1,000-5,000 and others want 10% of the balance owed on the lien.

If your calculation is correct I would think that they would take the $16k but they will probably ask for more just to see if they can squeeze more out of the sale. If they can't come to an agreement and the property goes into foreclosure the 2nd lien will probably end up with nothing so I doubt they would reject it but you never know.

Good luck on your purchase!
0 votes Thank Flag Link Thu May 24, 2012
The second lien holder will request anywhere from 6-10% of the principal loan balance as a payoff depending upon whom the underlying investor is on the loan. If you are pursuing a HAFA short sale, the 2nd lien holder can receive up to $6,000 as a total payoff. As long as you are accounting for the seller paid closing costs, real estate commissions, deed stamps, seller rep fees, tax adjustment, etc, you should be in good shape.

Andrew N. Coppo
Greater Boston Short Sales, LLC
Tel (617) 264-0376
0 votes Thank Flag Link Thu May 24, 2012
If it is HAFA, and our offer is over that $6000, what happens to the extra money we offered? Can we use it towards closing costs, because we will be paying those.
Flag Thu May 24, 2012
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