Has anybody successfully made a settlement with B of A 2nd lien that is NOT a short sale?

 

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I'm confused.  If it's not "short" then why would they settle for anything less than a full payoff ? 

We want to settle the 2nd so we can do a regular sale and payoff the 1st, the 2nd would still net way higher than short sale amount and the sellers would keep their credit in better shape. In theory anyway, I havent done it before hence the questions.

Michelle - As you know, in CA if the lender approves a short sale, by law the lender cannot ask for borrower contribution or promissory note and there is NO deficiency.  If the borrower OFFERS payment, all bets are off.  The borrower may place themselves in a bad position of being responsible for the deficiency unless they can negotiate that as part of the settlement and they very likely will get a 1099 for the forgiven debt.

Are they past due in payments?  Why not do a short sale and take advantage of the existing CA laws?

I think a settlement for less than what is owed is by definition a short sale ... I've done successful shorts with customers who COULD cover the difference but didn't want to but I've never tried to get them to release the lien as unsecured debt or just take less at closing. 

Most 2nd's only get a tiny fraction of what they're owed, so if you're able to satisfy more than $8k but there's a verifiable reason why the seller can't pay the entire sum, BOA should jump on the chance :)

That was the idea, the borrower was willing to come in with $50K on a $300K 2nd, which would be well above the $$$ they usually get.

That's still a short sale.  You might be able to get an approval letter up front from BOA but if you're short on the 2nd's payoff, you're still a short sale.

The seller can either pay the difference at closing or do a short sale and settle for less ... it shouldn't be NEARLY as much of a headache as doing it with the 1st and should go a little faster.

Thanks Alex.

What about converting the 2nd lien to a unsecured, personal loan?  I'm in AZ but was able to have a regular sale for all but the last $7k and now it's just small payments on that balance.

Its called a 'short payoff' when a borrower offers to settle a debt with a creditor outside of a short sale. It typically costs more than what a 2nd would get in a short sale. At the moment, to my knowledge, B of A does not participate in short payoffs.

If it's short on the 2nd, it's still a short sale ... as with a regular sale, missed payments should spur them to look for a cash-out resolution.

no...its not a 'sale' per se. Its strictly debt mediation with the second as the home may not be sold...only reducing the debt and short paying the second. I've done quite a few and most have been reported as Paid in Full.

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