I have a short sale that has an SPS 2nd mortgage. The 1st mortgage is with Mr. Cooper and is a Freddie Mac Loan. The 1st mortgage holder will give the 2nd mortgage holder $6000 per Freddie Mac guidelines to the 2nd mortgage. Freddie Mac only gives $6000 max and does not allow the buyer or seller to bring in additional funds. The investor for SPS wants 18K but that is not allow per the Freddie Mac guidelines even if the buyer wanted to bring it in they can't. I have appealed to the Omsbudsman for help and they wrote a letter to the investor to explain that they can only get 6K because of Freddie Mac guidelines and the buyers or sellers aren't allowed to bring in more money. The investor rejected the offer again. The house will now go to foreclosure. This is the 2nd short sale in a row that i have had SPS 2nd mortgage servicer that the investor has denied our offer. I'm trying to figure out why the 2nd mortgage holder won't take 6K and wants it to go to foreclosure.Is the 2nd mortgage investor have soem sort of insurance that pays them money if the house goes to foreclosure? Are they getting more than 6K from the insurance companies? Does anyone have any solutions?
its very doubtful that the 2nd has insurance. Please understand a 2nd lien holder could care less about Freddie Mac's guidelines. So possibly the reason they will not accept is that they know that they can go after the seller for the entire amount due after the first forecloses. You are in Calif so they legally can do that. I have a good contact at Mr Cooper and maybe he can give some input to Freddie. Funny that Fannie Mae and FHA does allow a buyer to contribute to a 2nd.
Reach out to me if you like
Tony Morales 909-239-2322
Have you escalated with the 2nd lien? Do they have proof that FHLMC is the investor? Typically what the 2nd wants comes down to lien position and their valuation. They must think they may get more at foreclosure auction.
At times you can get them to take the 6K. Other times they will force people to go into the gray area when it comes to contribution.
Brett, The 1st is foreclosing, not the 2nd . So 2nd is aware that gets 0 if goes to auction
Tony, just because a 1st is foreclosing does not mean a second will get 0 at foreclosure. This depends on amounts owed vs what the home sells for at auction.
HI guys thanks for your input. The 1st is owed way more than the property is worth so the 2nd will not get any $$$. I have worked on this deal for a year we have escalated and filed complaints with Consumer finance protection bureau and Omsbudsman have written letters directly to the investor. The borrowers filed Chapter 7 BK 5 years ago and the 2nd was discharged so there is no recourse from the 2nd lender but the lien is still on title. When the borrowers did the BK they did not take the extra steps needed to remove the lien.
ch 7's don't typically discharge mortgage liens, that's typically a motion when someone does a ch 13 and is going for a discharge.
I feel like we may have gotten an exception from Freddie Mac or Fannie Mae once to allow contributions from a party. Have you had Mr. Cooper reach out to the investor to see if they would allow any contributions? I believe once we offered more money to the investor and they approved an exception in return.
Sucks that SPS is forcing you into a position where they want contributions outside of escrow. =(!
I just got off the phone with Freddie Mac who stated that is their guideline but then said that the servicer can ask fort an exception. Then I called my contact at Wells Fargo as they service FM loans too. he stated FM will always decline a request for exception.