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Permalink Reply by Emily S. Knell on April 17, 2010 at 5:23am

If It's on the HUD, that means it IS disclosed to the 1st lien holder, even if it's near the home inspection charges. Personally, it should be on the 1st page directly underneath the line that shows the amount the 1st is also paying to the 2nd.

It is not a liability issue for you. It is a liability issue for the listing agent and possibly the buyer's agent, should this $7k NOT be put on the HUD that the 1st lender sees.

You should speak with the Escrow officer and bypass the listing agent to make sure that this is the case and that the escrow officer is NOT preparing "dual HUDS".

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Permalink Reply by Melinda Forster on April 17, 2010 at 5:35am

Thanks so much I did speak to the escrow officer and it will all be above board - I cannot tell you how much I appreciate you clear expert answers and this forum it has really helped me through this tedious process.

Melinda

Emily S. Knell said:

If It's on the HUD, that means it IS disclosed to the 1st lien holder, even if it's near the home inspection charges. Personally, it should be on the 1st page directly underneath the line that shows the amount the 1st is also paying to the 2nd.

It is not a liability issue for you. It is a liability issue for the listing agent and possibly the buyer's agent, should this $7k NOT be put on the HUD that the 1st lender sees.

You should speak with the Escrow officer and bypass the listing agent to make sure that this is the case and that the escrow officer is NOT preparing "dual HUDS".

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Permalink Reply by Len McGuirk on April 17, 2010 at 12:01pm

Melinda,

In many cases, the buyer is asked to contribute towards a 2nd lien payoff to get the short sale to work. As long as it is disclosed on the final HUD to both lenders, then it would be legit. The reason the purchase price will not increase in some cases is because anything in the purchase price belongs to the 1st lienholder payoff. Then the 1st lienholder would have to pay the 2nd lienholder out of their own proceeds and they usually have a maximum amount allowed towards the 2nd payoff from the 1st proceeds, usually around $3,000. So any additional monies on the price, the 1st lienholder will want to keep for their own proceeds. Even though the numbers add up exactly the same either way, this is how 1st lienholders work through their policies. If you contribute money on the HUD directly towards the 2nd lienholder payoff, the 1st lienholder usually won't care.

I currently have a short sale where we have asked the buyer on the other end to contribute $60,000 towards the 2nd lien payoff. This is in addition to the purchase price eing paid to the 1st lienholder. They agreed to at least $20,000 so far. We are trying to work with the 2nd to reduce their $60k payoff request. If you love the home bad enough, sometimes these uncommon scenarios make sense.

Hope this helps too...

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Permalink Reply by Melinda Forster on April 17, 2010 at 2:57pm

thanks this does help and I am happy to be getting off with 7k good luck with your sale
MElinda

Len McGuirk said:

Melinda,

In many cases, the buyer is asked to contribute towards a 2nd lien payoff to get the short sale to work. As long as it is disclosed on the final HUD to both lenders, then it would be legit. The reason the purchase price will not increase in some cases is because anything in the purchase price belongs to the 1st lienholder payoff. Then the 1st lienholder would have to pay the 2nd lienholder out of their own proceeds and they usually have a maximum amount allowed towards the 2nd payoff from the 1st proceeds, usually around $3,000. So any additional monies on the price, the 1st lienholder will want to keep for their own proceeds. Even though the numbers add up exactly the same either way, this is how 1st lienholders work through their policies. If you contribute money on the HUD directly towards the 2nd lienholder payoff, the 1st lienholder usually won't care.

I currently have a short sale where we have asked the buyer on the other end to contribute $60,000 towards the 2nd lien payoff. This is in addition to the purchase price eing paid to the 1st lienholder. They agreed to at least $20,000 so far. We are trying to work with the 2nd to reduce their $60k payoff request. If you love the home bad enough, sometimes these uncommon scenarios make sense.

Hope this helps too...

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