How much will Chase (through Freddie Mac) pay to small junior liens?

There is a tiny HELOC used for painting and floors through a small local credit union. Investor on Chase loan is Freddie Mac.  Before we listed it the owner had negotiated with the credit union to release lien for short sale, but they would have her resign paperwork she would still owe the amount and make payments. She was fine with that as the payments are very small.

Unfortunately, Freddie Mac is not.  We put on the HUD 6% going to the 2nd, but negotiator said Freddie Mac will not allow that.  They will only approve a short sale with a deficiency waiver if the 2nd waives it also- if not, no waiver or short sale.

This has changed since my last Freddie Mac ones where they didn't spell out a waiver in the letter (but NAR stated Freddie would not pursue unless fraud discovered).  2nds didn't have to have deficiency waivers.

I checked guidelines and this appears to be the case.  Someone please confirm.

The negotiator asked us to get a letter from 2nd what they would take for a waiver and put that amount on HUD, so they would be willing to pay more than 6% of unpaid balance I presume.

Thoughts:

1) Any chance of getting the full amount of a couple thousand approved?  Negotiator said offer price right about at their BPO.

2) Can you do a short sale and not request the deficiency waiver to get the 2nd released? Not ideal but is Freddie even offering this as an option and are they known to pursue?

3) It appears buyer not allowed to contribute, so I couldn't put it on buyer to pay difference.  Is this correct?

 

Thanks!

 

 

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Replies to This Discussion

Permalink Reply by joe beauchamp on May 22, 2013 at 3:57am

I believe that Freddie and Fannie, with fanfare, "streamlined" the SS process by no longer allowing more than their 6% to the 2nd and demanding that the 2nd must waive the deficiency. Streamlined as in more dead short sales. That is in their announcement a few months ago. (Like WF and BofA streamlining the process by demanding docs in 3 calendar days - they love oxymorons.)

The seller can always pay off more debt to the 2nd before closing - it is his legal debt. What you would need to work out is that the 2nd agrees to waive, etc. for what will be on the HUD-1 for the closing. You might be safer with the buyer paying the extra to the 2nd because the 2nd is not likely to give anything back to the seller if he pays and the short sale fails, whereas the buyer should be able to enforce a refund. Anyway, you get the idea.

Permalink Reply by Tara Samney on May 22, 2013 at 8:15am

Thanks Joe.  It seems everytime something changes with them; it just makes it worse.  I understand the intent to make the 2nd waive deficiencies but very something this small I'm afraid it is just going to kill it.   The seller doesn't have any funds to pay 2nd ...I just checked.

Permalink Reply by Kevin - Greenville, SC on May 22, 2013 at 12:44pm

$6000 flat amount unless the total balance of the subordinate liens are less than $6000.  How much is tiny?

Permalink Reply by Tara Samney on May 22, 2013 at 2:12pm
Kevin, it is 4,000.
Permalink Reply by Kevin - Greenville, SC on May 22, 2013 at 10:29pm

Don't rely on the Negotiator's statement on what Freddie will or will not allow.  Get Freddie involved and they more than likely will pay it off.

Permalink Reply by Tara Samney on May 23, 2013 at 4:54am

Thanks Kevin. This gives me hope.

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