Second Mortgage of 75K Refusing to Participate in HAFA and Demanding 34K

Does anyone know of any options for a seller when the second mortgager PNC refuses to particpate in HAFA? Has anyone seen the first mortgages allow the seconds through a regular short sale receive 30K when the first is being shorted by over 200K?

 

Thank you,

Kim

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Just as an add-on to your reply - you can proceed with the short sale with the trustees approval if the client files bankruptcy and surrenders the property.  I have dont it. Also this can make things eadsier because now you will be dealing with the BK dept at PNC not loss mitigation and they are MUCH more realistic.

Currently doing that option with PNC.  Had lien strip motion in place, they objected to debtors/sellers plan but we worked out an agreement with their bankruptcy counsel to approve the plan which includes the short sale approval and payments.  They wanted us to still run it formally through their short sale department though the agreements and court orders were in place.  PNC negotiator came back claiming the investor is demanding $30,000 to release the lien.  The bankruptcy court orders give them $6,000 and the deficiency amount put into the seller/debtor bankruptcy for payment through their approved plan which will actually pay them about 60% of their $154,000 claim.

We just received BofA approval with $6k to PNC so I am following up my previous demand letter which threatened to bring an action against PNC and the investor for violation of the bankrupcy orders and automatic stay if they didn't abide by the orders which their bankruptcy counsel had wisely agreed to for them.  Said violations are not looked upon lightly by the bankruptcy court and they will award punitive damages, actual damages, attorney fees and costs.  We are suppose to hear back from PNC's negotiator this week or we are following through on filing the motion against PNC in bankruptcy court.

Bankruptcy does potentially gum things up, but it keeps the property from being foreclosed upon, potentially more time for your clients to stay in the property payment free and it protects your commission that you have been working hard to earn.

I will post back with our final results when we have them.

Not much you can do to force the hand of the second lien holder. Usually in these cases the second lien holder believes the selller has some money and maybe not a real hardship.
Wow, i had one like some time ago. It was a 400k BOFA second that wanted 42k and Was finally settled for 7k. Dont take me wrong, it was hard. I invested my time describing -in a very organized way- who my borrower was, in what situation she was in, what was her current financial situation -documented- and what her future financial situation was going to be like -here is when fantasy comes in and sometimes without having to defraud the system you can make your seller look completely broke even to the point of sadness... You have to make them understand you are part of their team and you are helping them save the money! You are the realtor !!! If u have postponed a sale date , remind them of the times you have save them...

I ussually structure these requests as follows: 1) who we are( borrowers/realtor) , 2)our current and future hardship, 3) what we've done to overcome our hardship, and 4) our request. A lot of people may say this is a waste of time, but they read all this. Beleive me, they will, i would name it last request and tell them if not granted you are "abandoning the listing" Attach all evidence you may have and use foreclosure timframe (specially if a sale date is close) and pretty much make them believe that if they dont take this deal now, they will lose this forever.
Make your request clear and give them the amount you want and it will wotk for the deal. Tell them how compromising ur commission is not a good idea and how valuable all your efforts are to get this deal going.
I had the swell and crazy idea of putting it just like : take this now and recoup some of it or dont take it and good luck. Never be sarcastic.

They came back at me and asked what my borrower did with the 170K she cashed out 2 years ago.... Well i was able to explain she is 82 and when husband died - provided dead cert. And bk papers- and business closed and she used that money to pay the mortgage over 2 years and now we are here. And I went again: take it now or let it go. They settle for 7K. I must confess I was scared but it worked.

Now many people may say how I expect this to work on every single situation, or how this applies to you extremly different particular situation... -Well, I just dont!!!- but I am bringing it to the table just to share with you this has been done and it can be done. Sometimes a lil motivation and previous experiences help, because this is why we come to this site in the first place, dont you think?

So good luck to you my friend, hopefully this helps. We must make lenders play the same games they play on us!
Forgot to say this: get seller emotionally involved with the request dont do it on your own and have all of you sign the letter. They may get soinvolved to the point of "wow, 30k is so much, if at least they say 10K or a 20k promissory note! Team work played in a smart way!

We should have a 4 valid credit class on "Seller counseling and short sale drama, dealing with the unknown"

Just closed a deal where PNC not only refused to play along with the primary mortgager, a local bank that was taking a $250,000 bath on the property but still negotiated in good faith, but PNC also changed its mind mid-way thru on what it would take. Needles to say, it scoffed at the $3000 offered by first mortgage holder -- and demanded $20,000 on its $48,000 HELOC, then turned down the $20,000 when my clients came up with it through relatives -- and upped the ante another $8000, claiming the $20,000 counter had been more of a conversation than a counter. I don't think so. We had it in writing. But I did learn that PNC is tough as nails, so pleading for mercy is worthless. Indeed, in this case, the sellers were highly motivated to get out from under and, thankfully, had family members to help. Otherwise, the deal would have been dead even though the buyers were actually amazingly paying market value, and it was the best case scenario for all concerned.

PNC = Pain N Crotch

Thought you'd like that :)

They are even horrible when it's a stacked file (PNC holds 1st & 2nd).

When it's stacked, they demand that the 2nd retain 10% of it's value on the Closing Statement.... and they have a new Deficiency Agreement that ALL Sellers must now sign.... Welcome to the PNC world.

The second does not have to participate in HAFA for the short sale to work.  Usually PNC will release for x amount and forgive for a different amount such as above.  If you can negotiate the $34K down to something that is reasonable for the buyer or seller to contribute then just put that amount on the HUD and submit to the first.  I have had the first pay up to 6000 with HAFA and up to 10% in a regular short sale of the outstanding balance of the junior lien holder.  PNC is very tough but I have closed with them as the junior lien holder.Good Luck!
PNC is participating in HAFA 2MP. The did not opt out at their annual option time. They will try to tell you "the investor" wont participate and then they will refuse to tell you who is the investor and/or outright lie to you about the investor name. at the onset of a short sale you should request a Qualfied Written Request and demand the name of the investor so you know who you are really dealing with and it gives you another lender name to research and to call. They only have 20 days to return this Qualifed Written Request to you by law. Yes I know they all ignore the law but it gives you one more bullet for your arsenal. This is one that most of them seem to care about. Send it by Fed-x so you have signed receipt and follow up right away to see which department you are now dealing with. Also if your 1st loan is owned by Fannie or Freddie enlist their aid via e-mail. Fannie Mae has a short sale desk now. The more escalation paths the better. And remember, always be nice. You never know which real person has the ability to push that button for you; find their humanity if you can. BTW these guys are all in big trouble with OTS now. Go and read the OTS reports on these banks. Some of them are running scared like Chase who now has a huge layer of management in place designed to help with mods and short sales because Chase is in fear of losing their banking charter. PNC should be.

Awesome info Jennifer!

Yes they certainly are.. never will deal with PNC bank again.. they would NOT cooperate and demanded minimum of 1/2 of the balance of $65K second.  I read right here on another thread that PNC had an investor directive issued early this year that stated PNC would get paid a higher % on the back end on their jr. liens IF there was NO other contributions from any other party including the first mortgage, agents and buyers.  I don't know if that's true, but I have learned to count on the agents here to give the best and most accurate information out available...  Anyway.. the house foreclosed a couple weeks later and quite honestly the seller was relieved to have it over with even though the outcome wasn't what he had hoped for.

Also.. we should all make sure we keep track of what PNC is doing... Jennifer Scott wrote above about them being in trouble with OTC.. maybe down the road our PNC borrowers should file a complaint or class action suit.  I would LOVE to see them get nailed.

 


Sean Underwood said:

PNC = Pain N Crotch

Thought you'd like that :)

They are even horrible when it's a stacked file (PNC holds 1st & 2nd).

When it's stacked, they demand that the 2nd retain 10% of it's value on the Closing Statement.... and they have a new Deficiency Agreement that ALL Sellers must now sign.... Welcome to the PNC world.

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