Junior loan payoff with close of escrow

I have a short sale with B of A in first and a PNC Heloc loan in second position.  The Buyer is willing to pay off the PNC note.  It will be a payoff as part of collections, not part of the short sale transaction.  PNC knos ws of the short sale but will accept a payoff like this.  Accordingly, the HUD-1 will not list any payoffs to a junior lienholder.

I want escrow to handle the payoff and close of escrow concurrently.  The title company will of course coordinate this too.

Shouldn't BOA be willing to allow this?  I need to make it all concurrent to protect the Buyer.  I want B of A to approve this. Will I have any problems or is it pretty straightforward?

Thank you.

Peter Babos

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Replies to This Discussion

Permalink Reply by joe beauchamp on January 11, 2013 at 11:47am

You are not paying BofA in full and expect them to be happy with you paying the junior lien in full? And why should they agree? If they foreclose, the junior lien gets stuck with the losses. So, pay everyone but me is OK? No.

Secondly, each investor has guidelines - if they are being shorted, then X% can be paid to the 2nd. I think it is safe to say that X is not 100.

This is why PNC does not want it as part of closing - because BofA would never allow it.

Permalink Reply by Peter Babos on January 11, 2013 at 1:03pm

B of A was going to allow $8,500 to the second.  The Buyer, not borrower, is willing to pay more than that to PNC as a settlement on the account.  In doing so, there will be no mention of PNC in the final HUD-1, and BOA does not even need to pay the $8,500 to PNC.  

I just want the PNC payoff and eventual close of escrow to be handled concurrently by escrow and the title company.

Should B of A have a problem with That?

Thank you.

Permalink Reply by Tammy Davis on January 11, 2013 at 12:37pm

Have you started the short sale process with BofA? If PNC is being paid off before you take the listing, before any communications take place with BofA in regards to a short sale, you are ok.

But if you have started the process...absolutely BofA may decline your short sale because of it. Why pay a JUNIOR lienholder? If the borrower has the reserves to pay this off...keep the money, negotiate the payoffs with both lenders and IN CASE the borrower needs to make a contribution to close escrow he has it.

Permalink Reply by Peter Babos on January 11, 2013 at 1:00pm

Yes its with B of A.  I am at closing stage now.  Buyer, not Borrower, is willing to pay PNC 35% of the principal balance as a settlement on the account.  PNC doesn't care where it comes from as long as its not part of a short sale.  I want BOA to just allow the payoff to PNC and be made part of the pending escrow so the payoff and close of escrow all happen concurrently.  

 

Should BOA have a problem with that?

 

Thank you.

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