Hello,
We have a huge problem Homeward is our 1st and Us Century is our 2nd. Homeward approval for the Short sale was given. Homeward would pay $6,000.00 towards US Century junior lien. Us century agrees to short sale and release of lien but not waiver of deficiency. Now the 1st mortgagor is closing the file because they state the second must waive deficiency per fannie mae guidelines. Please help me out! The property was bought by the bank we can vacate the sale but I need to know what is the smartest step to re initiate the short sale with the 1st. do we pay off the 2nd and not include it with the 1st?
Thank you for the help,
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If the subordinate is receiving ANY money from FNMA they must waive the deficiency and no other parties can contribute. However there is nothing in the Guidelines that state that if another party contributes to a subordinate that it must be waived.
Subordinate Lien Payments
Q1. If the subordinate lienholder will not release its lien for $6,000 (or a lesser amount if there are
other subordinate lienholders), can the borrower or another party contribute to the lien release
payment?
If the subordinate lienholder is accepting the $6,000 (or a lesser amount if the $6,000 is being
divided among more than one lienholder) in exchange for a release of its lien, it must not require
or accept additional funds from the borrower, real estate agent(s), buyer, or other party to the
short sale transaction. When funds are offered from the short sale proceeds to satisfy a
subordinate lien, the intent is to obtain a complete settlement of the lien using those funds
alone.
Great distinction!
Excellent point Kevin. The lender's main concern is always what's being paid from the proceeds of the sale. I always ask the lender who can pay.
If you can reach an agreement with US Century for an additional $ amount contribution to give a waiver it could be done. But, the seller would need to make the agreed contribution Prior to receiving the approval letter accepting the additional $6,000 in exchange for a waiver. If the payment is made in advance, it would not have to appear on the HUD. A seller can pay down any debt they have. The risk is if the seller "pays down" the 2nd, then the short sale falls apart for some other reason. If the second receives any money from FNMA, they must give the waiver.
thank you so much that is what is going to be done.