Home Buying in Deerfield>Question Details

ChicNotGeek, Other/Just Looking in 60015

2nd lien holder short sale question

Asked by ChicNotGeek, 60015 Tue Jul 28, 2009

My husband and I have been at the end of a short sale negotiation, with final details agreed upon just 3 days ago, and we're just waiting for a closing date. We just received notice today that the 2nd lien holder sold their lien to a 3rd party, and now the 3rd party doesn't want to negotiate on it at all, and that the sale contract is 'null and void' now. The first lien holder approved the sale months ago. Can the 2nd lien holder sell a lien like that while the property is under contract/in negotiation? The seller of the property is also the seller's real estate agent ... i.e. the seller's agent is the OOR for the property ... which has always seemed fishy to me since they never disclosed it officially, I just happened to 'find out' that the seller's agent was also the OOR. I know this sounds conspiracy theorist-like, but it almost feels like they could be calling our bluff in the 11th hour in order to get more money out of us. Does anyone even have any experience with this?

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6
I agree with Eric, they can do what they want unfortunately.
Web Reference: http://www.lennyfrolov.com
0 votes Thank Flag Link Sat Feb 6, 2010
I'm hoping your atty is an expert in short sales & foreclosures...luckily because this is becoming more & more normal in our world, and I've been fortunate to find a few good ones.

You'll realize you Don't have a good real estate atty when 1) you never get to a negotiated deal or 2) you get to the closing table and the other team's atty, lender & agent are explaining to your atty how the whole thing works. As crazy as this sounds, it has has happened to a buyer client of mine who wanted to hire "his guy" (not practiced in real estate) and we all suffered painfully through the process.

I have not yet heard of a 2nd lien holder selling their lien to a 3rd party, because who would buy it? The 2nd lien holder's paper in a SS is essentially useless/worth very little. Being 2nd lien position means that any overage after the 1st lien is satisfied, might go to you. In a SS, there is little chance of the 1st lien being satisfied, so why would someone buy the 2nd lien position paper that likely has no ROI? Doesn't sound very smart.

Verify the story via the tax records, and if you get fed up waiting, there's 20 other single family home options that are currently short sales or foreclosures in Deerfield IL as of this writing.
Web Reference: http://www.wilsonliving.com
0 votes Thank Flag Link Sat Feb 6, 2010
Unfortunately this is a downside of purchasing a short sale. The lien holders can do anything they want. Many times the junior lien holder will agree to a small settlement payout as the alternative will be nothing from the foreclosure....but they can sell it, reject it, they can do whatever they want.

The more liens on a short sale, the less likely the home will close.
0 votes Thank Flag Link Wed Feb 3, 2010
Thanks, we're trying to figure all this out. I spoke to the attorney yesterday, who also didn't seem to be aware of the seemingly 'final negotiation'. I guess that 'final negotiation' was between the agents, so it may have been worth as much as the hot air it was spoken with, at least on the seller's side. Our agent was very upset/angry about the letter that the seller's attorney faxed over because our agent was also under the impression that everything was worked out and that we were just waiting for a closing date, too. THis is so frustrating. We're in a rental, and now are expecting a baby, and we really just want a permanent place to live. When we started this short sale process, we didn't know that we were pregnant, so we may not have gone this route when attempting to purchase a property.
0 votes Thank Flag Link Wed Jul 29, 2009
The agent's previous answer pretty much covered everything. You need to discss all of this with your attorney, especially the part regarding disclosure.
0 votes Thank Flag Link Tue Jul 28, 2009
The answers to your questions depend on the details contained in your contract and written communications with the other parties. Only your attorney or short sale facilitator knows enough about those details to answer your questions.

Illinois License law requires anyone with a Real Estate license to disclose that fact when entering into a contract to buy or sell property. Contact the Illinois Dept. of Financial & Professional Regulation (IDFPR) in Springfield regarding that alleged violation.
0 votes Thank Flag Link Tue Jul 28, 2009
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