Foreclosure in Boynton Beach>Question Details

Susan Browner, Home Buyer in New Jersey

Hi its susan asking one more question, I have a sign contact The seller excepted my ofer for the short sale,

Asked by Susan Browner, New Jersey Sat Jan 5, 2008

My agent gave them 90 days to answers, there's two lein on the property ,Her first loan is $126 the second is $90 I have offer her $168 which she excepted. What are my chances the bank s .will go for this. this is a short sale!

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All participants in a short sale must be diligent and above all tell the full truth about how much the short fall is. It is more than getting a buyer, seller and lender to agree to a price. The issue that is now showing up is that while the lender will take the loss on the mortgage, he is not fully releasing the distressed seller from the obligations of the Promissory Note. Remember the Mortgage pledges the property as collateral for the loan, while the Promissory Note is a separate document that gives the Promise of Repayment. Two different documents that are signed when a house is purchased. For instance, if a lender agrees to writes off $60,000 there has to be specific language in the contract that the lender will give the seller a Release of all monies owed and not show that amount on the sellers credit as an outstanding debt. Best advice I can give is to make sure before any contract is executed that a Real Estate attorney be consulted. The seller should before doing anything speak to their Realtor and get a Short Sale Package . All of the major companies have them. It explains the entire process and provides specific disclosures and lists the all the documents the seller should bring with him when meeting with his attorney.
1 vote Thank Flag Link Sun Jul 6, 2008
In my opinion, whether or not an offer is accepted by a mortgage company (or mortgage companies), is soley dependant upon the Current Market Value of the property being purchased. IT DOES NOT MATTER WHAT IS OWED ON THE PROPERTY!

If a home is about to go to foreclosure, and the home is located in a new development where the Builder has severily slashed prices, then the Current Market Value of properties in that development are tied into the Builder's prices.

It doesn't matter if the home owner put 0% or 10% or 20% or 25% down. It doesn't matter if the home owner obtained a 1st, or a 1st and 2nd mortgage.

For example:

The home owner purchased a home and paid $500,000 for the home. The home owner put 10% down. The home owner obtained financing for $450,000. The builder is now selling the same home for a net of $300,000. If an offer came in somewhere between $290,000 and $325,000, then the banks will probably accept the offer.

Why do you ask, would a bank accept that offer?

Now, let's say the home owner obtained a 1st mortgage for 80%. That would be $400,000. There would have to be a 2nd for $50,000.

Now, the builder has to appease it's stock holders and salvage any profits, and cut losses, and needs to dump it's inventory, at the expense of current home owners within the subdivision. They are just doing business and we cannot blame the builder.

So, the home owner can't make any more payments, the 1st or 2nd mortgage is about to foreclose. When the mortgage company forecloses, they put the home on the auction block, nobody bids on the property, and the bank will now own the property. And they paid a great price (legal fees, advertizing fees,carrying costs, etc) to now own a home that they will have to sell at an even greater discount (to compete with the Current Prices that the Builder is Selling the Same Property for).

Would the 2nd mortgage company foreclose on this property? Probably not. Can anybody guess why they wouldn't?

There are subtle "Other Conditions" that need to be considered.
1 vote Thank Flag Link Tue Jan 8, 2008
It depends on the bank's motivation and the quality of the package your agent puts together. And an important factor is what the property is actually worth. Actually, though, and I don't want to overly concern you, but your offer may have been too high. Usually in short sales the holder of the second just ends up with pennies on the dollar, if anything. So the holder of the first will do just fine, and there will be $42,000 left (excluding expenses, legal fees, interest, penalties, past due amounts, etc.) to take care of the second. So, the holder of the second is getting nearly 50 cents on the dollar, and the holder of the first is coming out whole. It's a great deal for both of them...again, assuming the owner actually is upside down (owes more than the house is worth).

Question: Is the house worth at least $168,000? Did your agent do a CMA (competitive analysis) for you? You'd hate to pay more for the house than it's actually worth.

Hope everything works out.
1 vote Thank Flag Link Sat Jan 5, 2008
Don Tepper, Real Estate Pro in Burke, VA
MVP'08
Contact
I sold my home & will be going to closing next month I think So i will be living in florida full time
i think this is good. Of cause my home sold for a lot less then I wanted but time are not good.

Yes the home i got is worth a lot mor e then $168

thank everyone for your answers
Susan
0 votes Thank Flag Link Sun Jul 6, 2008
Hi All,

Susan posted another update at the link below.

Best Wishes,

Emily Gibson
Customer Service Representative
0 votes Thank Flag Link Wed Jan 9, 2008
Quote:

[[Would the 2nd mortgage company foreclose on this property? Probably not. Can anybody guess why they wouldn't?]]

With the number you have described, the second mortgage holder position is wiped out (300,000 < 400,000, and second mortgage holders position is below the 400,000 of the first mortgage holder).

If the second mortgage holder decided to foreclose, there will be no bidders. Why?

Any bidder on a foreclosure action initiated by the second mortgage holder would have to satisfy any other lien holders that are AHEAD of the second mortgage holder.

Those include:

- real estate taxes owed (most likely, in most states), and
- the first mortgage.

So suppose someone bids $1 on the foreclosure. In order to obtain the rights for the property, that bidder would have to satisfy the $400,000 owed to the first mortgage holder FIRST. So bidding even $1 on that auction means having to spend at least $400,001 to get the title on that house. But recall that the going market rate is around $300,000 - so effectively any bidder in that situation would be grossly overpaying for it.

So foreclosure by the second mortgage holder would not attract any rational bidders. Plus the process of going into foreclosure costs money and resources.

[[[In my opinion, whether or not an offer is accepted by a mortgage company (or mortgage companies), is soley dependant upon the Current Market Value of the property being purchased. IT DOES NOT MATTER WHAT IS OWED ON THE PROPERTY! ]]]]

That SHOULD be the case, but may not be. Several reasons:

- that current market value might be hard to determine, or put in other words, different participants might have a different view on what that value should be,
- would the bank rather keep an asset that has a paper value of $350,000 or accept a cash payment of $300,000?,
- accepting a lower payment might mean booking certain losses right now, which will be included in the current quarters earning report. I know the right, ethical thing to do is to come clean and do the rational thing, but I am sure we will see bad news come out from many banks in the next few quarters, indicating that even the losses that have already been declared were not ALL the loses.
0 votes Thank Flag Link Tue Jan 8, 2008
Hi All,

Just want to let everyone know that Susan posted additional information about this topic at the link below.

Best Wishes,

Emily Gibson
Customer Service Representative
0 votes Thank Flag Link Mon Jan 7, 2008
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