Can judgments on seller be covered as a junior lien?

I had been working on this FHA short sale since December. Finally got an approval in April, with a 3% seller's concession, buyer got a loan for a 203k, when Pressler & Pressler filed a judgment on the seller for an unpaid credit card, which was found out during the title search of the buyer's lawyer. So all the problems started, since seller can not come up with the approved amount to fully satisfy the judgment. Title company will not close without a full satisfaction of this account. In short, closing did not happen on the deadline. I got a one week extension, but it still won't help. I have contributed part of my commission, buyer has contributed too, but seller says they can not help.

Just want to know if anyone has included a judgment on the seller as a junior lien to be paid off at closing?

Anyway, I am dropping this listing!

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Replies to This Discussion

Permalink Reply by Jason Sanseverino on May 23, 2013 at 2:42am

I have included judgments before - MAX of $2500 ($1500 from the short sale and $1000 from the FHA seller incentive).

Permalink Reply by Elvira Quiray on May 23, 2013 at 4:39am

I will work it out from the beginning since the buyer backed out.

Permalink Reply by Ann Howard on May 23, 2013 at 3:48am

Is there anyway that they can reduce the amount of debt on the credit card? Sometimes the credit card company will work with the Seller and take less to settle the debt or work out payment arrangements. I don't think that the lender will consider it for payment since it is a personal lien. I may be wrong, best of luck to you.

Permalink Reply by Elvira Quiray on May 23, 2013 at 4:38am

We had worked out a payment with the debt collector but the seller does not have enough funds to cover, even with my contribution, and the buyer's contribution.

Permalink Reply by Ann Howard on May 23, 2013 at 5:14am

Would the creditor work out arrangement outside of escrow to release the lien? In the one I had, the Seller owed $50,000 and the lien holder agreed to release the lien for $10,000 but still wanted payment for the $40,000. It allowed the house to close escrow, and the Seller got $10,000 off the amount he owed. Just a thought. Hope things work out for you, best of luck.

Permalink Reply by Christina Waymreen on May 23, 2013 at 3:52am

I've had judgements on a seller for a $125K loan removed from the property before going to closing. Ask the title company if they are able to do so.

Permalink Reply by P Nicolas Velecico on June 5, 2013 at 5:26am

  Title company must have deep pockets or you one hell of an agent 

 so they " removed " 125K loan ? , Could I please have their contact info . I have a $2,000,000 mortgage that needs 

 to be removed so I can sell my home and retire to Brazil LOL 

Permalink Reply by Christina Waymreen on June 5, 2013 at 5:44am

Sweet. Not unless I get a referral fee! :-)

But it seems "judgement" liens are okay, by some miracle, to be removed from properties, or that is how the underwriter for title did for us. But it is still following the seller. Just off the HUD. We closed.

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