Replies to This Discussion

Permalink Reply by Evelyn Broxterman on September 2, 2010 at 4:14am

Yes, I had a similar situation. The HELOC wanted my seller to contribute 10% AND agree to a repayment plan for the entire balance. There was also language that the seller would consent to a judgement. They were very stupid not to accept what they got as it now went to foreclosure. Good luck!

Permalink Reply by Alan Remigio on September 2, 2010 at 4:40am

Rolf,

You are in a difficult situation. You have already exposed seller $$ to the lender(s). In the future, when negotiating "same" lender short sales, the 2nd and even 3rd positions should be included on your pre-HUD, so the negotiator can address these items with a counter. This gives you room to give the 2nd and even the 3rd some $$ to recover. After your best efforts, tell all negotiators to settle it between themselves and ask for escalation if they are unwilling or unfamiliar. Wells Home and Wells Bank asset management are in the same building and the supervisors will work it out as it does affect their compensation. You have options with sellers $$ to still come to approval, but, it is a little more complex because of the additional $$. 1sr must allow 2nd and 3rd to keep it. Good Luck!

Permalink Reply by Rolf Kuden on September 2, 2010 at 4:46am

Alan,

Thanks for your reply. The HELOC negitiator is saying not issue with the 2nd and 3rd keeping the additional money because the first is just about being made whole. I will confirm with the negotiator for the first. Do you have any feel for what amount the 2nd and 3rd may accept here to wipe everything out and avoid the recovery team?

Alan Remigio said:

Rolf,

You are in a difficult situation. You have already exposed seller $$ to the lender(s). In the future, when negotiating "same" lender short sales, the 2nd and even 3rd positions should be included on your pre-HUD, so the negotiator can address these items with a counter. This gives you room to give the 2nd and even the 3rd some $$ to recover. After your best efforts, tell all negotiators to settle it between themselves and ask for escalation if they are unwilling or unfamiliar. Wells Home and Wells Bank asset management are in the same building and the supervisors will work it out as it does affect their compensation. You have options with sellers $$ to still come to approval, but, it is a little more complex because of the additional $$. 1sr must allow 2nd and 3rd to keep it. Good Luck!

Permalink Reply by Alan Remigio on September 2, 2010 at 7:41am

Rolf, my experience (because I did a pre-HUD) is on average 6% of the respective balance for both. Since the $$ from seller is exposed, the adjustment may be higher, consuming the $25k. Understand, if 1st can see themselves made whole with any part of the $25k, they will have incentive to do it. You're fair game, unless you have the approval letter in hand from the 1st.

Even then conditions of the approval letter may preclude you from keeping the additional monies from the seller for the 2nd and 3rd only. You must read it carefully. If the 1st is made whole you do not have a short sale with the first. You have a full payoff. There is a difference between the notes' full value and BPO value. !00% of BPO value could still be construed as a short sale if the value is less than note value. I have assumed the value you spoke of is the note value plus charges.

If the first is true, you now have a short sale in progress with the 2nd and 3rd. The $$ to negotiate is the balance left from the $25k after the drawdown from the 1st is applied. I did tell you it is complex, but doable. Make sure, all including first is aware of your proposal. It has become a better deal for the lender, as a company, because of the unexpeced $25k. If there is difficulty escalate with the 1st. You gave that supervisor a gift. The 1st should push this through when you escalate it. Good luck!

Rolf Kuden said:

Alan,

Thanks for your reply. The HELOC negitiator is saying not issue with the 2nd and 3rd keeping the additional money because the first is just about being made whole. I will confirm with the negotiator for the first. Do you have any feel for what amount the 2nd and 3rd may accept here to wipe everything out and avoid the recovery team?

Alan Remigio said:

Rolf,

You are in a difficult situation. You have already exposed seller $$ to the lender(s). In the future, when negotiating "same" lender short sales, the 2nd and even 3rd positions should be included on your pre-HUD, so the negotiator can address these items with a counter. This gives you room to give the 2nd and even the 3rd some $$ to recover. After your best efforts, tell all negotiators to settle it between themselves and ask for escalation if they are unwilling or unfamiliar. Wells Home and Wells Bank asset management are in the same building and the supervisors will work it out as it does affect their compensation. You have options with sellers $$ to still come to approval, but, it is a little more complex because of the additional $$. 1sr must allow 2nd and 3rd to keep it. Good Luck!

Permalink Reply by Mike Horton on September 3, 2010 at 6:56pm

Evelyn, since it is a heloc I don't think your buyer is off the hook for the deficiency. Wells will just sell the heloc to a collection agency who has upto 6 years to began collections activities. Even though they do not have any assets to claim, they can get a judgement. On a Wells I had last year, the 2nd actually increased their demand for additional funds making impossible for the seller to get an agreement and the house went into foreclosure. They then sold the paper and collections activities started. The seller is currently considering bankruptcy to clear the debt.

Evelyn Broxterman said:

Yes, I had a similar situation. The HELOC wanted my seller to contribute 10% AND agree to a repayment plan for the entire balance. There was also language that the seller would consent to a judgement. They were very stupid not to accept what they got as it now went to foreclosure. Good luck!

Permalink Reply by Ann Trieb on September 19, 2010 at 8:58am

I really think that expectations should be managed on the homeowner end to treat these HELOCs like credit cards. If they can negotiate a payoff and work out an arrangement that allows their house to be sold, they need to be prepared to accept these.
HELOCs are often not the same as second mortgages used to finance the home. They are normally used after the fact for cars, jet skis, paying off other debt, or acquiring toys.