Jr. lienholder claims not subject to Fannie/Freddie guidelines because the lender spun debt off to an LLC

In trying to negotiate a short sale approval, the first mortgage holder is on board and is offering a deficiency waiver. However, the junior lienholder refuses to approve the deal unless it receives $75k -- about half of its loan amount. It wants $25k at closing, and the remaining $50k paid monthly over five years.

Fannie guidelines limit junior lienholders to $6,000 ($8,500 in some cases). An exception is when the lienholder can demonstrate the seller has the means to contribute funds to the deal.  

The junior lienholder claims it is not subject to the $6,000 cap, because it is not a bank. The original bank apparently created an LLC and shifted its bad loans to the LLC. The entity is called "Heartwood 47 LLC, f/k/a Bank Atlantic."

The LLC's position has some logic -- and of course poses one heck of a loophole for second lienholders to utilize to get around having to take only $6,000.

Seems to me if this was a sure thing, though, more lenders would be doing it. This is the first I have heard of it.

Anyone ever come across such a scenario? Were you able to resolve it? Thanks in advance for any help/input.

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As I understand only the big banks (in the settlement) agreed to a standard $6,000 jr lien payoff when Fannie/Freddie holds the first. You don't state who the lender was before the loan was transferred to this LLC...but if it wasn't one of them...not sure how they would be bound to take the $6k anyway. 

Not to say they shouldn't....just that they may not have to and you should try another approach....

Hello Larry. I have a similar situation with "Heartwood 47 LLC, f/k/a Bank Atlantic." They are asking for $60k, 40% of the balance. Im wondering if you can share how you resolved your experience with them, did you present a counter offer that worked? 

No matter what the junior states FNNMA/FREDDIE will not give them any money unless they agree to release the borrower from all future liabilty. But that's only if they take the money from the seller side. If the buyer will pay the 25k then there is no issue with the prom note.

I now have a loan with Heartwood 47 LLC, and I need to contact them.  I have been unable to find a phone number for them.  Would you still have the phone number by any chance?

No lender or bank is required to accept what Fannie offers. It's only if they accept Any money from Fannie in the deal, then they have to abide by the guidelines.

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