Buyer to contribute to 2nd Lienholder - Does location on HUD matter?

Okay, so it's established that if the buyer is going to contribute to the second to get them to release their lien, it must be on the HUD.

 

However, where does it need to be on the HUD? Does it matter and what are the different implications? Does it have to be in the dollar amount field or can it be written as a line item in text "Seller contribution to 2nd lienholder $8,000.00 POC) just like if an appraisal etc were paid outside closing?

 

Seems fully disclosed to me... Your thoughts? 

 

SEE THE ATTACHED SAMPLE HUD FOR A CLEAR EXAMPLE OF WHAT I MEAN

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Permalink Reply by Bryant Tutas on August 21, 2010 at 10:30am
Sean. If the buyer is paying money towards the 2nd then it would just be on the buyer side as an additional closing costs. Probably on page 2 in the expenses. It looks likeon the HUD yo have provided the seller is giving money to the buyer an then the buyer is using these funds to pay towards the lien. That's a different scenario and may or may not fly with the lender.
Permalink Reply by Wendy Rulnick on August 23, 2010 at 1:08pm
The POC is strange to me on this. It should be paid on the HUD, not paid outside of closing. I've also seen the buyer contribution on line 105, "Buyer Contribution to seller payoff, lien," etc.
Permalink Reply by Wendy Rulnick on August 23, 2010 at 1:09pm
I love the fake HUD, where did you get a good blank like that, Sean?
Permalink Reply by Sean Crosier on August 23, 2010 at 1:40pm
http://www.hud.gov/offices/adm/hudclips/forms/files/1.pdf

Got it from HUD. Here's the link. It doesn't do the math for you though. Here's an excel version attached.

Have you had any issues with the bank when the money actually goes into escrow? I mean bc they don't want to allow the second to get too much from "sale proceeds". However, they'll allow it if it is POC by buyer.

My thinking is that loss mitigators a partially judged on their ability to mitigate losses. They probably have numbered goals and if it's structured such that it isn't sale proceeds, they are okay with it. Your thoughts?
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Permalink Reply by Wendy Rulnick on August 23, 2010 at 11:53pm
Sean - I am not sure what you mean by "when money actually goes into escrow"? Sorry, don't use the same procedures in Florida.

Sean Crosier said:
http://www.hud.gov/offices/adm/hudclips/forms/files/1.pdf

Got it from HUD. Here's the link. It doesn't do the math for you though. Here's an excel version attached.

Have you had any issues with the bank when the money actually goes into escrow? I mean bc they don't want to allow the second to get too much from "sale proceeds". However, they'll allow it if it is POC by buyer.

My thinking is that loss mitigators a partially judged on their ability to mitigate losses. They probably have numbered goals and if it's structured such that it isn't sale proceeds, they are okay with it. Your thoughts?
Permalink Reply by Nelva Crawford on August 26, 2010 at 10:19am
Something to remember is that Fannie Mae and Freddie Mac HAFA do not allow buyers contributions toward any second lien so be careful not to put them anywhere as they are illegal.
Permalink Reply by Sean Crosier on August 26, 2010 at 10:36am
Only if it's a HAFA deal though right? My 1st is with Freddie but the deal isn't HAFA.
Permalink Reply by Wendy Maltby on August 31, 2010 at 6:35am
I am in the same situation and my buyer's lender does not want the buyer contribution to the 2nd on the HUD? When I call and talk to him . . . he just says this is a conversation we did not have. Why should he care if the buyer pays the 2nd $2,000. If we have to do a POC . . . do you give it to the title company or do you send it directly to the 2nd lien holder?
Permalink Reply by Sean Crosier on August 31, 2010 at 7:46am
Did your buyer's lender tell you why they don't want it on the HUD? Is it because they will have to update their Truth In Lending disclosures? I've heard that sometimes the buyer's lender isn't okay with it and I was advised to notify their lender right away to avoid a last minute deal breaker.

Wendy Maltby said:
I am in the same situation and my buyer's lender does not want the buyer contribution to the 2nd on the HUD? When I call and talk to him . . . he just says this is a conversation we did not have. Why should he care if the buyer pays the 2nd $2,000. If we have to do a POC . . . do you give it to the title company or do you send it directly to the 2nd lien holder?

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