I have 2 loans and am considering a short sale.

Asked by CN, Los Angeles, CA Mon Mar 8, 2010

The house is currently worth LESS than the 1st. Would the 2nd even bother to consider the sale in this case? Seems like they might not get anything so why would they agree to it?

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greg, , Boston, MA
Mon Mar 8, 2010
Yes, if you are having difficulty keeping up with the payments, you should consider a short sale. I would suggest you list your home subject to 3rd party approval. Get a broker experienced in Short Sales. Once an offer is received you can submit a package to both lenders. The second lien holder will typically seek 10% of the outstanding balance. Best wishes!
1 vote
Mike Linkena…, Agent, Jacksonville, FL
Mon May 16, 2011
The 1st place to start is to find a Bakersfield CA Short Sale Realtor! Check out -
0 votes
Bob Movin-On, , Hartford, CT
Wed Mar 10, 2010
I do not see that you have attempted a modification the banks are mandated by the government to work with distressed homeowners and the programs even deal with the second's. Realtor like to push Short Sales because it is their only source of income in this distressed market but they fail to tell you all the ramifications of it. Yes you are going to have an issue with the second if you short sale and the seconds are getting ever more difficult to work with as short sale become the norm rather than the backup, Start to get proactive and call your bank for a modification, I deal with victims of foreclosure and short sale every day and getting someone that has gone through these life changing events back on track financially is a nightmare with many having trouble with everyday life as well. Try to get a job after one of these events!!

Ramifications of Foreclosure, Short Sale or Deed-in-lieu-of-foreclosure

Here are some of the ramifications of foreclosure, short sale or deed-in-lieu-of-foreclosure, there are many more like your job, yes employers are checking credit records these days.

Your credit score will be reduced by 200-400 points, short sale a little less 100-200 points.

All forms of foreclosure stay on your credit report for 10 years.

After you have gone through foreclosure, short sale or deed-in-lieu-of-foreclosure there will be what is known as the "waiting period", this period of time varies for each and can be reduced if you had some type of extenuating circumstances that caused the foreclosure:
Waiting Periods to Buy After Foreclosure
* Buying After a Foreclosure
The waiting period is 5 years up to 7 years.
* Buying After a Foreclosure with Extenuating Circumstances
The waiting period is 3 years up to 7 years.
* Buying After a Deed-in-Lieu of Foreclosure
The waiting period is 4 years up to 7 years.
* Buying After a Deed-in-Lieu of Foreclosure with Extenuating Circumstances
The waiting period is 2 years up to 7 years.
* Buying After a Short Sale
The waiting period was just upped from 2 to 3 years. However, if a seller does not have a 60-day late pay, that seller may immediately buy another home. It's a reason to stay current on your payments while the home is on the market as a short sale.
In addition to the waiting period, most loans require a minimum down payment of 10% and a minimum FICO score of 680. The home purchase must also be the principal place of residence, not a rental nor a vacation home.

Lastly, most loan applications will ask the dreaded question "Have you ever been foreclosed on?" this stays with you for life, many think that because it will not show up on the credit report after 10 years they can answer "no", well lying on a loan application is a felony that carries a major jail term, so be aware.
0 votes
CN, Home Buyer, Los Angeles, CA
Tue Mar 9, 2010
Thank you for all of the insightful answers. I am so glad that I found this site. I've spent countless hours researching all of my options, met with two attorneys, and have attempted a loan modification with both lenders, without success. I've exhausted all other options and am at the point where I am looking for a highly experienced professional in the short sale arena with which to work. I will not get too deep into the particulars at this point but the two lenders are not the same. Thanks
0 votes
Joanna Jensen, Other Pro, Livermore, CA
Tue Mar 9, 2010
Hi CN,
A few questions,
Most importantly whom ever you decide to use should be very experienced with Short Sales.
Lenders in Second position who are under water know they will not get anything if your home forecloses, so they may tend to negotiate to get at least some money instead of no money... If your realtor is a good negotiator they will offer at least a percentage to the 2nd.
Who is the 2nd lender? Are both lenders the same?
One options is to settle the 2nd loan before you even short sale the home.
Lenders are really getting smart these days, they dont want to take homes back as a foreclosure they really would prefere to work with you so depends on who your lenders are.

You need to search for successfull negotiators make sure they have dealt with homeowners in your positions and that they are not just giving you lip service.

JoAnna Jensen
Home Retention Specialist
Principal Reductions
Debt Settlement
925 699 5041
0 votes
Hannah Flieg…, Agent, Larkspur, CA
Tue Mar 9, 2010
Hi C,

They may not agree to short the property. However, lets look at the benefits of a short sale. FOR FREE a short sale costs you nothing someone (realtor) on your behalf will negotiate a with the lenders to get you out of that property and you can then get on with your life. Also you can return to home ownership quicker after your short sale than any other distressed sale situation.

I wrote a book on the subject if you would like I can send to you. Good luck!

Hannah Fliegel
The Credit Repair Expert
Web Reference:  http://www.HowDoYouScore.com
0 votes
Darrell Muha…, Agent, Bakersfield, CA
Mon Mar 8, 2010
Great question. I like to follow up from what the previous agent stated. I have been working short sale and I am connecting my clients to experts. Such as for legal, credit, and tax advise. This will assist you in your short sale discussion. The more information you have the easier the process will be. Let me know if you need any local support.

Have a great week!

Darrell Muhammad, Realtor
Avalar Real Estate & Mortgage

0 votes
Darron Mason, , Bakersfield, CA
Mon Mar 8, 2010
The 2cnd lien holder will demand some return in exchange for issuing a short payoff acceptance. They have some leverage to do so because they know that the 1st is likely to recover more if they settle the account with a short sale.... even taking into account the payoff to the 2cnd. The 2cnd must agree to the short sale in order for a foreclosure to be averted.
In my negotiation of short sales, I start with a predetermined percentage of what the 2cnd is owed. That amount is deducted from the payoff to the 1st. These amounts are presented as a net return, and the negotiation begins.
Hiring an experienced short sale agent is imperative.
Contact Darron Mason @ Karpe Real Estate / Bakersfield. 661-847-4800
0 votes
Shar Rundio, Agent, Mesa, AZ
Mon Mar 8, 2010
Yes, the second will typically work with a short sale. If the property goes to foreclosure they get nothing. If they work with the short sale the first will typically offer them a token payment of anywhere from $1000 to several thousand dollars. They may ask you or the buyer to contribute as well. A couple thousand dollars is better than nothing!

If you decide to pursue the short sale route make sure that you are working with a competent short sale agent & that you seek legal, tax and credit advise from the appropriate professionals in your state. If you'd like assistance in finding a knowledgeable professional please don't hesitate to call or email me.

Best of luck with your decision!

With Your Success in Mind,


Shar Rundio
Professional Realtor
Thompson’s Realty

480.560.7255 (cell)
480.212.5450 (e-fax)
@SharRundio (twitter)
Shar@SpeakingofPhoenixRealEstate.com (email)
0 votes
Ritaflood, , California
Mon Mar 8, 2010
Usually the second will take between 1,000 to 5,000.00 but the first has to agree to it. Most home do not have the value they did when you purchased it, therefore the reason for the short sale. You can call your bank and find out what they will accept, see if they will tell you regarding the first and what they will allow for the second. You should find an experienced agent to list your property, they will then in turn help you with your sale and work with the banks.
0 votes
Karen Vande…, , Bakersfield, CA
Mon Mar 8, 2010
The bank in second position will often get a meager $1000. or so from the bank in first position to sign off on the lien. If both loans are with the same bank, it is not as cumbersome.

A short sale is definitely better than a foreclosure.

Please feel free to call and discuss your situation.

Karen Vanderhurst
Roberson Real Estate
0 votes
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