Short sale lender of the 1 & 2 won't allow 3rd to show ANY settlement on the HUD-1...any legal way to document?

We have a lender carrying the 1st & 2nd and the 3rd wants $6,000. or they won't participate!  The 1st and 2nd (same bank) won't allow payment to reflect on the HUD-1 and we want something that shows the 1st & 2nd are aware of the settlement to the 3rd so we can have a well documented file!

 

Is this deal dead...or is there a way to protect all parties and still close?

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Comment by DeLisa Rose on March 29, 2012 at 1:10pm

We have to follow program guidelines.  Typically the max to junior liens is 6k (about to increase to 8500 for hafa). So in your situation the 2nd is likely requiring you to pay them (the same bank) the max and the 3rd is out). HAFA will not allow your buyer or anyone to pay the extra. Ask your negotiator if you can pay POC, is your file HAFA and if your client opts out of HAFA... can you go coop or BAU (regular) so that the parties can pay the 3rd lien. The bank is aware of the 3rd and aware that they are getting paid. If your client has a non-hafa incentive the title company can have them sign the check over to pay the lien. 

Comment by Scott Cary on March 29, 2012 at 12:27pm
The concern we have is that the 1 & 2 (both B of A) know of the pay-off to the 3rd. Why is this such a difficult task to complete? The listing agent was trying to get a pay-off outside of escrow although the word 'lender fraud' haunts me!
Comment by DeLisa Rose on March 29, 2012 at 9:55am

POC, or POC by buyer. It can't come from the proceeds. If it is a HAFA file, the buyer cannot pay it regardless, so you will have to opt out of HAFA.

Comment by Jeff Payne on March 29, 2012 at 8:49am

Scott, can this be settled before closing?

Comment by Smitty on March 29, 2012 at 7:36am

I think Bryant has done a POC on the HUD-1 sucessfully.  I haven't attempted it but I'm sure he can walk you through it.  I know he has done it a few times.

Comment by Scott Cary on March 29, 2012 at 6:14am
Also...The buyer will be required to pay the third if this is documented properly...legally!

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