2nd lien holder limited to 6% of remaining balance?

My broker tells me that when first lien holders negotiate a short sale, they think they are only allowed to give the 2nd lien holder 6% of the balance owed to the 2nd lien holder. My broker says this only pertains to HAFA short sales, but first lien holders think that it pertains to all short sales.

 

What is your recent experience? It doesn't seem that long ago that 2nd lien holders always got $3,000.

 

If this 6% rule does only apply to HAFA, and doesn't restrict negotiations on non-HAFA short sales, do you have any documentation I can send to the first lien holder?

 

Thank you.

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Permalink Reply by Scott Gregory on October 19, 2011 at 11:24am

The servicers are following guidelines, not rules set in stone. The first can give the second a half a million if the numbers make sense. Try to get the second loan to take whatever falls in the guidelines. If it doesn't work, you can escalate on the first loan to try to make an exception to the guidelines because the numbers are still more favorable than a foreclosure. The servicers don't want to rock the boat and make exceptions to guidelines, so they try to force everyone inside the box.

Permalink Reply by Kimberley Kelly on October 20, 2011 at 2:31am

Agree with Scott.  HAFA guidelines have changed and yes, seconds are now limited to 6%..reason is that the standard $6,000 was too low for many second lienholders and they were holding up the HAFA process.  It seems to be working for me here in southern California..

Permalink Reply by Jessica Eisenhauer on October 21, 2011 at 4:36am

It's also of the principal balance (they won't include missed payments and late charges etc)..  yes I have been seeing this too.  I think most 2nd lien holders are ok if it is HAFA and if not if it is owned by Fannie Mae or Freddie Mac.  Just from my expereience.  So find out if the address is owned by either and then if you get any trouble from the 2nd ask if that makes a difference.  It usually does.

Permalink Reply by Kristy Hamilton on October 23, 2011 at 1:55pm

If the first is a Fannie Mae loan, they will only allow 6% of the payoff to the second. 

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