Replies to This Discussion

Permalink Reply by Eric M. Boyd on February 4, 2010 at 11:35am

Stephanie,

The lender(s) may still approve a short sale, regardless of their financial situation. But, they should be prepared to sign a promissory note at closing.

Permalink Reply by Kent Dills on February 4, 2010 at 2:33pm

I'd give it a shot Stephanie. I'd position it as a "strategic default" where the owners have just made the business decision to walk away. The second lien in this case actually helps as they ought to be fairly motivated to take a discount vs. get nothing. That leaves more net to give to the first (close to a full payoff would almost make it a slam dunk).

Then you need to start prepping the sellers for the possibility of the lien holders asking for a contribution via cash or note. As long as the contribution was small enough that they were still much better off financially, it would be a simple business decision.

Some people focus on the moral hazard guilt issue on what is going to be a much more prevalent scenario; but, I focus on helping people the best I know how and not on judging them. It's the old - "people in glass houses" thing with me! ;-)

Permalink Reply by Katerina Gasset on February 5, 2010 at 10:49am

They do have a hardship! Their money is being drained by the negative payments and soon they will be out of money. Sell the bank on that part. But they do need to know that the second is going to want a note or cash contribution which you need to prepare the seller for. This is a business decision for the bank and the sellers. Fight for your sellers!

Permalink Reply by Stephanie Anderson on February 5, 2010 at 1:45pm

Thank-you so much for all of your comments! I really appreciate your help. I will see what we can do in trying to plead a hardship from loss of money long-term. What is a realistic amount the bank might ask for in a note?