Junior Lien Tips

Negotiating Junior Liens


  • Types of Junior Liens.
    • Mortgage-HELOC
    • IRS Liens- IRS Publication 783

    • Code Enforcement Liens

    • Property Tax Liens

    • Mechanic Liens

    • Judgments

    • HOA Liens

    • Collections

  • When to start working with the junior lien?
    • At time of listing.

    • Open dialogue.

    • Order a payoff

    • Is it a HELOC?

    • Cash out or purchase money?

    • Is it the same lender?

    • Order title search

  • Know the maximum the first will pay.
    • HAFA  $6,000

    • Freddie HAFA  $6,000

    • Fannie HAFA  $6,000

    • FHA PFS  $1,500 plus you can use the seller incentive of $1,000

    • VA Compromise. Net 88.13% of appraised value.  

    • If none of the above start with 10% of the balance owed or $1,500 whichever is less.

  • When and how to submit the Short sale to the junior lien(s).

    • Submit at same time as 1st mtg

    • Dual HUDs

      • One to the 2nd offering less

      • One to the 1st paying more

    • If they ask for approval from the 1st try submitting a payoff letter.

  • Negotiating

    • Lien Removal

    • Amount Paid

    • Cash Contribution

    • Promissory Note

    • Deficiency Waiver

    • Credit Reporting

  • Misc

    • Who can pay?

    • Paying prior to closing

    • Placing payment on the HUD

    • 1st won’t allow additional payment

    • Junior wants it “off the HUD”.  RESPA

    • Move Lien to different collateral

    • Just can’t come to an agreement at all? Seek legal advice

      • BK

      • Lien Stripping

      • Sate specific.

        • Notice of Homestead FL Sta. 222.01 (example)

    • Start over. The answers may be different the next time.

  • If all else fails have the borrower contact the lien holder and/or an attorney to discuss remedies to have the lien or judgment removed from the property.

Negotiating Junior Liens Outline.pdf

Wendy Rulnick

Wendy RulnickWendy Rulnick is a licensed Real Estate Broker for over twenty years, and has sold hundreds of short sale and pre-foreclosure properties. She has been featured in Kiplinger Personal Finance Magazine and Florida Realtor Magazine as a short sale specialist. Wendy also teaches Short Sale seminars and has developed a special agent training and resource site with her business partner, Bryant Tutas - www.shortsalesuperstars.com.

Bryant Tutas

Bryant Tutas

Bryant has been in Real Estate for 18 years and is the Broker/Owner of Tutas Towne Realty, Inc located in Kissimmee FL. He is also the co-founder of Short Sale Superstars and co-broker of REGrow, LLC. Negotiating Short Sales is the cornerstone of his business. He does it often and he does it well.


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Comment by Bryant Tutas on November 18, 2011 at 8:32am

Thanks Harry.

Comment by Judy Graff on November 17, 2011 at 10:53am

Wendy and Brian, my client has a BofA first and a BofA HELOC for the second.  He borrowed against the HELOC to finance property improvements.  How will this HELOC be treated by BofA? Is it non-recourse? We live in California, btw.


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