Foreclosure in Los Angeles>Question Details

Zaphod, Home Owner in El Cajon, CA

When does my second loan get notified of a short sale?

Asked by Zaphod, El Cajon, CA Thu Mar 8, 2012

Home under contract. I am current with second loan. My main loan is still considering the paperwork for a short sale. Should my second loan get the same package now or wait until I get a response (approval) from my main loan?

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Your real estate agent would be able to direct you on the process of the short sale, but just in case you are obtaining a second opinion - yes you must notify 2nd lien of the short sale request. Both first and second should be notified of the short sale request from the beginning. Lenders have different requests and processes, so it is best to contact each lien and find out what their short sale package consists of and their timelines. Best of luck
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0 votes Thank Flag Link Tue Apr 3, 2012
It does depend on the lenders. I would recommend that packages are sent at the same time. However, keep in mind the 1st and 2nd are like two children. Although you want to treat them the same, they need to be treated according to their personality type. The loans have different requirements and often require a few specific lender driven documents even if they are both of the same bank. That sometimes is like twins who don't get along! :)
0 votes Thank Flag Link Tue Apr 3, 2012
It depends on who the lenders are because some 2nd lenders are quicker to give you an approval than others. I usually start both around the same time, but try to see how much the first will approva to the second before I finalize the negotiation with the second.
0 votes Thank Flag Link Fri Mar 30, 2012
You need to be working with both of these lienholders at the same time.
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0 votes Thank Flag Link Wed Mar 21, 2012
The listing agent should have ordered your PreLim Title Report at the time of taking the listing. At that time... any and liens would be revealed and each one should immediately be notified of a pending short sale attempt. It is difficult enough to get one loan to give an approval within a reasonable timeframe but to get the 2nd on the same page... well, they should have gotten their short sale package at the same time as the 1st. I close hundreds of shorts and would be happy to assist if it doesnt work out... If you have a broker already handling it, please disregard. Good luck.
Richard "RJ" Kas (SFR, SRES)
"Representing the finest properties from Los Angeles worldwide"
KAS Properties - Coldwell Banker Previews International - Beverly Hills South
166 N. Canon Dr, Beverly Hills, CA 90210
310.859-5334 office - 310.488.9826 mobile - 310-273-0690 fax ATT: RJ - - DRE: 01352771
Sellers Buyers Investors Leasing Consulting
0 votes Thank Flag Link Fri Mar 16, 2012
Hopefully you are not doing this on your own, which I doubt.
Your agent should submit packages to all the lenders you have at the same time. The packages for short sale can usually be downloaded from your lenders website.
The secondary lien holders will typically wait until the first provides them with a letter outlining what the terms of the first acceptance are and how much they are willing to pay them.
Sending paperwork in advance will reduce processing of the second and will likely prevent you from losing the buyer due to no updates or delayed response.
0 votes Thank Flag Link Thu Mar 8, 2012
Hi Zaphod;
Ron's answer is incorrect. Your agent MUST contact the second lien holder AND deliver a full package to them, because, whether or not you are delinquent, they will need to approve the short sale. Why? Because the First Lien Holder controls how much payoff is offered to the second (and third, etc.) lienholder to get them to release the lien and grant clear title.
In order for the second lien holder to approve the (deeply discounted) offer they will receive from the first lien holder, they must review the short sale package, do their own BPO (Broker Price Opinion of value) and perhaps even an interior appraisal.
The second lien holder will usually receive between $3000 and $6000 from the first TD, regardless of whether you are delinquent or not.
As to when you should start, start IMMEDIATELY, because second (and third) liens can take longer and be harder to release than the first, because you must have an offer from the first to take to the second, and because you don't want the first to be waiting for junior lien approval after you have approval from them.
One last point: Don't think that if your first and second liens are both with one lender (say, Bank of America, for example) that you don't need to process two packages. You do. Each lien is handled by different departments, usually in different parts of the country, and often are different investors.
Start your package NOW!
Best of luck,
Deborah Bremner
The Bremner Group at Coldwell Banker
REALTOR, 00588885, ABR, CDPE, eAgent, CSP, SFR, HRC, CRE
(O) 310-571-1364 DIRECT
(D) (310) 800-2954
Accredited Buyer Representative|Certified Distressed Property Expert |Pre-Foreclosure Specialist Certified
0 votes Thank Flag Link Thu Mar 8, 2012
Hi Zaphod. If your home is currently under contract, then your Realtor should be working with your 2nd loan or mortgage as well. Your 2nd loan will also need to be paid off in order for the sale of your property to be complete. Usually, I send short sale packages to both lenders (1st & 2nd) so that they are both informed. Sometimes, the 2nd loan may respond quicker than the 1st loan on the short sale. Other times, the 2nd lender may wait for the short sale response from the 1st lender before they respond on the 2nd. If both loans are with the same lender, most of the time they will handle both loans on the short sale. Good luck.

Visit my website for short sale information

Sara Mehrpouyan CDPE
Specializing in Short Sale & Foreclosure
Rodeo Realty
Direct: 818-903-2040
Dre License #01712757
0 votes Thank Flag Link Thu Mar 8, 2012
Pebble Singha

Hello Zaphod,
Regerdless of how many liens you have and if you are current on them or not, everyone has to agree to a short sale. As a certified Distressed Property Expert and having closed 100's of short sales , I can certainly tell you that the first thing I do is Negotiate with the 2nd , 3rd Lien Holders and work my way up to the main loan.

MOst of the money from this Short Sale is going to go to the 1st and they are usually the easisest in this deal cuz they get maximum money. You should absolutely submit the same short sale package to the 2nd lien and find out what they are willing to accept as a minimum balance. Once you know that you have to go to the 1st loan and see if the 1st lien holder will agree to give them that much. Get yourself a CDPE to do your short sale. We are trained and experienced Realtors in Short Sales. I wish you luck. If you have any questions , you can call me or go on to my website. 818-919-5656.
0 votes Thank Flag Link Thu Mar 8, 2012
Contact the second lender, get their short sale packahe requirements in hand and submit the package, even if they say to wait until you have first lien approval. Submit the package and bug them every week. Good luck
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0 votes Thank Flag Link Thu Mar 8, 2012
The deal requires the approval of both lenders, why would not get feed back from the second?
0 votes Thank Flag Link Thu Mar 8, 2012
I generally send a package to the second as an accepted sale will require their consent too.
0 votes Thank Flag Link Thu Mar 8, 2012
Either the First Lienholder will contact the Second,
or the Title Company will call them to get a "pay off" figure.
You do not have to worry about the creditors coming out of the wall:
The Liens MUST be taken care of; they MUST.
You've got enough to worry about.
You may be in for a long wait, so try to relax and don't stess out any more than you already have.

Good luck and may God bless
0 votes Thank Flag Link Thu Mar 8, 2012
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