Have a small local credit union that is in second position.  We have an offer that actually pays off the first mortgage as it was already shorted at sheriff/trustee sale, and give the second some 37% ( of $89,000 total owed).  Now they are strongly hinting that they want more.

 

What are some averages that secondary liens are receiving in short sales?

 

Then to add some credibility to the foreclosure argument, if the borrower lets the property go to foreclosure the second gets nothing.  Yes, they can file for a deficiency judgement but what do these guys really get for a bottom line on average?

 

And finally, some seconds are selling their judgements to collection companies.  What is a good average for that type of sale?

 

I want to be able to show some logical numbers that show 37% is darn good.

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Steele, 37% is an incredible offer. I believe the most a 2nd has ever been given from one of my short sales is 10%. I would say average is $3,000 or 8% which ever is less.

Maybe the seller could also offer to sign a small note?
That is what I am thinking. This bank is using fairly standard lines about the full remaining amount still being owed. Hopefully it is more an opening negotiating tactic.
OK, here is the latest we just received. The lender sent the following email to the buyer, Eric, in reply to him saying that they couldn't afford a note:

"Thanks for the e-mail back, Eric. Unfortunately, paying nothing
additional on the deficiency beyond the proceeds from sale is not
acceptable for a lot of reasons that I am more then happy to discuss
with you and/or Steele if you want to give me a call......that said, if
you want to counter something that you could work into your budget from
a payment and dollar amount standpoing, I would consider it. Otherwise,
we will take the actions we need to collect on this loan.......we
actually have taken the initial steps on the property by filing a
redemption certificate and will also proceed with legal action on the
Note if need be.........not the preferential way for any of us but one
we have had to prepare for and we are comfortable in taking if we have
to.

There is still an opportunity for this to be advantageous for all
parties so you can move on from a personal as well as credit
perspective........but the lack of an agreeable deficiency agreement is
not going to allow that to happen."

Now, this property has already had the sheriff sale here in Minnesota and redemption is over April 29th. The secondary lender will then have a one week opportunity to redeem the first lender's lien which was already discounted some $80,000 by doing a low bid at the sheriff sale (bid $147,000 on a debt of about $220,000). But then they have to sell the property.

Any thoughts?
BofA policy is 5%. Freddie will "allow" up to $8,000.
Steele, Sounds like the credit company knows something you don't about the borrowers ability to repay their debt. Let's never forget that that the borrower signed a note agreeing to pay the 2nd $89,000.

Any agreement made now for less than that is a win for the borrower. Especially since more than a third of their debt is already coming from the proceeds of the deal. So you have about a 50k issue. Offer a little cash and a note and see what they say. Their email certainly sounds like they are ready to negotiate.

The advantage of coming to an agreement is to avoid uncertainty in the future and to get back on the road to credit repair. Making payments on a note can help with this.

That's my sales pitch.

Steele V. Propp said:
OK, here is the latest we just received. The lender sent the following email to the buyer, Eric, in reply to him saying that they couldn't afford a note:

"Thanks for the e-mail back, Eric. Unfortunately, paying nothing
additional on the deficiency beyond the proceeds from sale is not
acceptable for a lot of reasons that I am more then happy to discuss
with you and/or Steele if you want to give me a call......that said, if
you want to counter something that you could work into your budget from
a payment and dollar amount standpoing, I would consider it. Otherwise,
we will take the actions we need to collect on this loan.......we
actually have taken the initial steps on the property by filing a
redemption certificate and will also proceed with legal action on the
Note if need be.........not the preferential way for any of us but one
we have had to prepare for and we are comfortable in taking if we have
to.

There is still an opportunity for this to be advantageous for all
parties so you can move on from a personal as well as credit
perspective........but the lack of an agreeable deficiency agreement is
not going to allow that to happen."

Now, this property has already had the sheriff sale here in Minnesota and redemption is over April 29th. The secondary lender will then have a one week opportunity to redeem the first lender's lien which was already discounted some $80,000 by doing a low bid at the sheriff sale (bid $147,000 on a debt of about $220,000). But then they have to sell the property.

Any thoughts?

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