If a 2nd has gone to collections, is it impossible to do a short sale?

I've heard this in the past, and I'm facing my first possible short sale in which the 2nd TD is in the hands of a collection agency. Should I not waste my time looking into this, or are all collections as different as all banks? The bank is HSBC, the collection agency is Penncro. Thank you, from Sue

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Permalink Reply by Kimberley Kelly on August 14, 2011 at 1:38pm

Absolutely! I have done several over the past few years. Correct Jeff..if you get a decent person that understands the deal..basically they will get 10% or so even AFTER it goes to Sale (here in CA), and they pursue and hound. You will make it easier for them..convince them of that..and a quicker pay check!

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Permalink Reply by Sharon Alters, CDPE, GRI on August 14, 2011 at 2:38pm

We have negotiated two short sales where the 2nd loan was charged off. Once, it was charged off to an internal collections department in HSBC, and the last one was Compass Bank and was charged off to a Credit Collection agency. Both were successfully negotiated and closed - but with the HSBC second, we had to actually call the OCC before they cooperated. They had agreed to an amount($3000), then charged it off and the amount was higher ($5000) than what was agreed and was on the HUD to the 1st and would have killed the deal. It took a call from the OCC for them to come to their senses and work with us. Hope this helps.

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Permalink Reply by Sue Irwin on August 14, 2011 at 3:04pm

VERY helpful, thanks so much!

Sharon Alters, CDPE, GRI said:

We have negotiated two short sales where the 2nd loan was charged off. Once, it was charged off to an internal collections department in HSBC, and the last one was Compass Bank and was charged off to a Credit Collection agency. Both were successfully negotiated and closed - but with the HSBC second, we had to actually call the OCC before they cooperated. They had agreed to an amount($3000), then charged it off and the amount was higher ($5000) than what was agreed and was on the HUD to the 1st and would have killed the deal. It took a call from the OCC for them to come to their senses and work with us. Hope this helps.

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Permalink Reply by Kathleen Sheridan on August 14, 2011 at 4:50pm

I had a 2nd go to collections, between the 1st and 2nd buyer. Collections was much easier to deal with than the servicer. It's the job of some collections people to 'bark,' but whatever they get in a short sale is 100% more than they will get in the foreclosure.

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Permalink Reply by Sue Irwin on August 14, 2011 at 8:16pm

Great discussion -- everything has been helpful!

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Permalink Reply by Holly B. Long on August 14, 2011 at 11:25pm

My experience has been that if you can find out who has the file and contact them - you can negotiate it. Has HSBC relinquished the file totally to the collection agency? There are lenders who maintain the right to "manage the file" and even though it is with an agency or attorney - you still deal with the lender.

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Permalink Reply by Farooq Khan on August 15, 2011 at 1:08am

Hi Sue,

I had one short sale where 2nd went to collections. I had to contact the collections agency and they wanted $6000 to release and satisfy the 2nd lien. It was a $60,000 2nd. Both loans were with Bof A at first. But 2nd was sent to RealTime Resolutions their collection agency. The short sale was completed successfully.

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Permalink Reply by Jim McCormack on August 15, 2011 at 11:06am

Great info in this discussion.

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Permalink Reply by Sara Mehrpouyan Los Angeles CDPE on August 15, 2011 at 2:40pm

Short sales with 2nd loans in collections may be done. So, definitely give the short sale a try. I have had one with GMAC & was successful. Good luck.