What is the max amount that Fannie Mae will pay to subordinate lien holders?

I have a short sale going with Chase as the 1st lien holder, SLS as the 2nd lien holder and an attorney who is representing Discover card as the 3rd lien holder.  I am working on this as a HAFA short sale and am wondering what the total is that I can get to pay both the 2nd and 3rd lien holders.  I was under the impression that I would be splitting a total of $6000 between the 2nd & 3rd lien holder.  SLS is telling me that the total is $8500.  I was under the impression that the amount had changed in standard HAFA short sales but not with Fannie Mae.  Their total is still $6000.  Am I right or wrong?  Any info will be helpful

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Can the 3rd lien holder get more because their lien is not secured by a mortgage on the property.  I think I read that there is some sort of exception to the $6000 cap when there is a lien that is not secured by a mortgage?  

Even though Fannie Mae and Freddie Mac don't participate in the HAFA short sale they have their own short sale guideline that are similar to HAFA and these are what I am referring to.  Anyone else have any opinions?

In that case, check this out! https://www.fanniemae.com/content/announcement/svc1219.pdf

There is a section in there on page 11 called allowable Subordinate-Lien Payments... Check it out

Hope this helps.

Hi Team Thayer,

HAFA still exists for Freddie and Fannie - It's called HAFA II now.  $6000 is what they will pay out to subordinates. You can get up to $3000 for your seller too.
https://www.fanniemae.com/content/announcement/svc1219.pdf
http://www.freddiemac.com/sell/guide/bulletins/pdf/bll1216.pdf

REDUCED DOCUMENTATION AND MAXIMUM SUBORDINATE LIEN PAYOUTS FOR DILs
Effective November 1, 2012
We are revising our DIL requirements to permit Servicers to:
■ Submit a recommendation to Freddie Mac for a DIL without obtaining a Borrower Response Package or Borrower contribution toward the deficiency if the Borrower is 90 days or more delinquent and has a FICO score less than 620 as of the evaluation date. Servicers should refer to Section B65.44, Eligibility Requirements, for additional detail related to this change.
■ Authorize payment of up to an aggregate $6,000 to subordinate lien holders in exchange for a lien release and extinguishment of the indebtedness secured by the Mortgaged Premises. Servicers may divide the payment among subordinate lien holders to maximize the chances that all subordinate lien holders will release their liens and extinguish the debts, provided that the aggregate payout does not exceed $6,000.
These changes align with similar changes announced in this Bulletin for the Standard Short Sale.
Sections B65.44 and B65.47, Approval Conditions, have been updated to reflect these changes.

Subordinate Lien Payments
Q1. If the subordinate lienholder will not release its lien for $6,000 (or a lesser amount if there are
other subordinate lienholders), can the borrower or another party contribute to the lien release
payment?
If the subordinate lienholder is accepting the $6,000 (or a lesser amount if the $6,000 is being
divided among more than one lienholder) in exchange for a release of its lien, it must not require
or accept additional funds from the borrower, real estate agent(s), buyer, or other party to the
short sale transaction. When funds are offered from the short sale proceeds to satisfy a
subordinate lien, the intent is to obtain a complete settlement of the lien using those funds
alone.
Q2. How does the $6,000 maximum for subordinate lien payments affect IRS liens, tax liens,
mechanics’ liens, HOA liens, etc.?
$6,000 is the maximum amount of sales proceeds that is available for all types of subordinate
liens. Liens which have priority over the first mortgage lien, such as HOA super-priority liens,
should not be included in the $6,000 maximum.

https://www.fanniemae.com/content/faq/short-sale-faqs.pdf

Hi Kevin, thanks for the clarification. So is it a flat 6k regardless of the UPB? I have a second with an UPB of 25k.

Unless the UPB is less than $6000.  FNMA would offer $6000.

Brian,

Have you done this scenario in practice?  I know the Guidelines imply this.

What are your state laws in regards to homesteading?    In Arizona if the home was your primary residence you can claim it as your homestead and the credit card would not be able to put a lien on it.  This could be something worth looking into.  Good luck!

I am working on a short sale where SLS is the first lien holder and there was a 2nd private lien of $50,000 and SLS would give nothing. The 2nd would release the lien for $10,000 on the house but still wanted the remaining $40,000 from the Sellers. SLS is the worst. The only way that you can get any documents to them is either fax (takes a week to receive) or email (takes 3-5 days)  Because they are only servicers it takes forever to get approval from the investors. In your situation, you may get $6000 for SLS, I don't see Chase giving any more, but the credit card company will get nothing.

Is the Buyer or Buyers Agent willing or able to contribute and money?

The Seller may be able to work out a payment plan with Discover to release the 3rd lien, other than that bankruptcy may be an option, they should seek legal advice.

Best of luck to you and your client. 

Below is the Fannie Mae section for the secondary lien holders. It appears very clear that the max is $6000?

Allowable Subordinate-Lien Payments for Standard Short Sale/HAFA II and Deed-in-Lieu of Foreclosure

Fannie Mae is requiring any payments to subordinate lienholders to be paid from the sales proceeds at closing in exchange for a lien release and full release of liability for the borrower. Allowable payments from the sales proceeds to all subordinate lienholders to facilitate lien releases must not exceed $6,000 in aggregate.

The maximum on HAFA short sale to jr liens is $8500 but usually they will not pay over 10% of total lien amount not to exceed $8500.00

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