Home Buying in Adelanto>Question Details

Fran Chevali…, Real Estate Pro in 92345

What can me done if the 2nd Lien Holder on a Short sale insists the seller give a cash contribution that they cannot give?

Asked by Fran Chevalier, 92345 Thu Nov 25, 2010

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8
If they cannot give a cash contribution as most short sale sellers cannot, then you go back to the lender and insist that they have no means to contribute to the closing. Have the seller write another hardship letter justifying their position. Make it VERY clear to the lender that this is not possible and hopefully (good chance) you will receive a second approval letter without the need for a contribution. That's about all you can do.

Diane Wheatley, Broker
diane@moveupproperties.com
(909) 981-5400
1 vote Thank Flag Link Fri Nov 26, 2010
I agree with the first answer the 2nd makes the deal much tougher to get done, Unless the second is with the same lender.
1 vote Thank Flag Link Thu Nov 25, 2010
Tell the sencond lien, if the bank forecloses on the first they don't get a penny.
0 votes Thank Flag Link Sun Jun 5, 2011
If you're working with a Short Sale Expert, they will likely be able to have this requirement removed. This is assuming the agent is educated in negotiation and has a history of success in working with banks.

It seems you're beginning to learn the importance of agent selection. Hopefully it's not too late.

You may be able to salvage the negotiation if you contact the bank directly.

Good Luck,

Cameron
Corona Short Sale Agent
Corona, California
0 votes Thank Flag Link Sat Nov 27, 2010
Yes Gina, just be careful with disclosure and be sure that all parties are in agreement on work around terms such as those. Don't ever pay any closing costs outside of escrow that are not reflected on the HUD-1. But if the lenders are ok with it, then go for it.

Just my two cents......

Diane Wheatley, Broker
diane@moveupproperties.com
0 votes Thank Flag Link Fri Nov 26, 2010
Sometimes the "buyer" will be willing to pay towards that, or the whole amount, if they are getting a great deal on the property. I have had that work out.
0 votes Thank Flag Link Fri Nov 26, 2010
Hi Frances,

Is the contribution stated on the HUD1? If not, it's illegal.
There cannot be any money distributed without being on the HUD1.
Just a suggestion. Will the buyer pay the second off?
They can add the buyers contribution on line 105, "Buyer Contribution to seller payoff, lien," etc.

Check with your broker or manager.
If this helps give me a thumbs up.

Best regards,
Jes Sierra
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0 votes Thank Flag Link Thu Nov 25, 2010
Depends how their financials that were submitted to their lender look. If they really cannot contribute based on their financials they need to say no immediately. If they continue to play hard ball (maybe the 2nd is now with a collection company?) they can pay the seller contribution in payments through promissary note. Keep in mind the liability on these seconds may not go away after the house is sold. There may be a benefit in seller contribution by having the lienholder agee to release the seller from any liability from the defiency balance.

Otherwise if you are the buyer or buyer's agent it is best just to avoid putting any offers on properties that have 2nd liens. It is work enough just to deal with short sales on first liens.
0 votes Thank Flag Link Thu Nov 25, 2010
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