Please help. 

1st is FHA w/ MI and we have the ATP. Allowing $2500 to the 2nd.

2nd is Compass (recently released to LTD). Approx. bal is $56K.  They won't accept less than $30K to participate in the short sale.  Previous to file moval to LTD, Compass stated $30K.  I was actually relieved when I found out it was now with LTD because I was expecting different hands in the mix.  But, LTD had to submit to Compass - the same person, in fact, that supposedly told the Compass negotiator that they wouldn't accept anything less than $30K. 

Sales price is $155K.

Thank you for any suggestions.

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Escalate and provide them with the HUD PFS Rules - You're not making this stuff-up.  Play tough and tell them that you'll close the file and will go to foreclosure.  Also, if you got a fair appraisal in the ATP, market the property so that a buyer is expected to contribute $xxx to the 2nd.....

Ron, I can agree with what you are saying here but what options are there really?  $30k is a large bridge to gap with buyers and brokers commissions, especially in a $155k transaction.  The job of the 2nd negotiators is to hold out for as much as possible, the sooner they realize the reality and how few dollars there are to go around, the sooner it all gets done.  Chances are no one has anywhere close to $30k....

Hi Ron,

You and I are very aligned here.  We are missing critical pieces to this equation to be able to assess it properly.  I agree that Compass doesn't have to accept anything, but everyone in this industry should understand the limitations of junior lien allowances in FHA PFS.  I assumed from the original question that Compass is not aware of those limitations and just hitting it with a hammer...of 50% UPB. Yes, deficiencies are a possibility but they can still accept an amount for a lien release only and preserve those rights.  Most juniors still won't pass up money, even if it is a nominal amount at closing.  If it is Charged Off, they aren't expecting to receive anything!

Also, I should clarify that "playing tough" and rude are very different things.  It is more of the lack of real options that make this a tough play rather than the stance, attitude or confrontational conversations.  Kindness and respect are they only ways to really make headway on a transaction like this.

A lot to consider, Kristy?  :-)

When the negotiator told me $30K to participate in the short sale, the first thing I thought of was that I must have the wrong department.  I even looked through the financials and returns for any trace of money that would support $30K - not there.  True hardship = yes (check). 1st lienholder is FHA, so that limits "play."  With a $155K sales price, any "hit" that a realtor would consider taking wouldn't even make a dent in $30K and 3% of $155K is a mere $4650, anyway.  And, we all know that is NOT what the realtor gets after working through their broker.  Our firm charges reasonable fees and we aren't interested in paying Compass to process the short sale.  The offer is not a low-ball offer.  What Buyer (btw, not an investor) wants to, or can, pay $30K OVER market value? 

I am in the process of seeking help by an individual at a higher level, but he has not yet returned my call - voicemail message.

Compass owns the loan - no investor.

 

Yes, we are invested now!   :-)   Please keep us posted....

Compass Bank originates FHA loans.

Escalate that 2nd Mtg file using homeowner initiated and signed complaints to the OCC via the FHFA, HUD and direct to FHA.

My prediction is you will experience SHORT SALE JOY with Compass accepting the $2500 in less than 30 days.

 

What some of you fail to understand is that, #1, The second does not have to accept what the first is allowing them, period. And #2, They do not care if it goes to foreclosure. HELOC's are consumer debt, therefore not wiped out in a foreclosure.  They can and will come after the sellers.

What you should have done was anticipate the need for a cash contribution in the beginning, then found a buyer that would agree to do it, even if that meant lowering the offer to make it attractive to the buyer.

www.ssprocessors.com

Joseph,
We are aware that the 2nd doesn't have to accept what the 1st dictates, but reason would lead us to believe that the 2nd would understand how foreclosure goes down. The 2nd doesn't have to release the deficiency, just the lien, for participation in this short sale. Compass wants $30K ($56K principal balance) for the lien release ONLY. If the property forecloses, they might get some payment eventually once they file a judgment, but won't get the $2500.

They don't care, because they will file for a judgement whether they retain rights to the property or not. Start offering them cash contributions.  My point was that this should have been foreseen from the beginning.

www.ssprocessing.com

SE Davis: What a pain, but an option. Thank you.

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