I have a client who wants me to take over a short sale that failed. She was offered $25,000 from Chase Bank. LCS is the second. LCS blocked her contribution from Chase, stating it wanted the money. Chase refuses to give the money to LCS. She tried to negotiate a discounted contribution to LCS, but Chase refused that as well.

I'm wondering if it would make sense to ask Chase Bank to buy the loan from LCS as part of the approval process? Has anybody triggered this kind of negotiation?

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Hey Wendy: I like the idea. We can see if Chase will allow it because the prom note would have to go on the HUD. Thank you for thinking outside of the box. That's what it takes in short sales!

Prom notes do not go on the HUD, cash contributions do.

Yes, the prom note would have to go on the HUD as a POC item.

No, it wouldn't.  Why would it?  RESPA is for disclosing actual cash transactions.  A note is not a transaction and should not be on RESPA unless there is some form of immediate payment.  If your title company is doing this then they are overstepping their bounds.

Because we disclose all aspects of the transaction, cash or otherwise, on the HUD to avoid being accused of short sale mortgage fraud -- disclosure disclosure disclosure.

I've never seen a prom note appear on a HUD. I'm in NC where we are required to use an attorney at settlement. I don't know if that makes a difference. The attorney executes the prom note and returns it to the lien holder, but I've never seen it on a HUD.

I am sorry, Kelly, I did not see your note until today. If the prom note is part of the transaction, it belongs on the HUD. Just because a lawyer might choose to leave it off the HUD doesn't mean it's the right thing to do. I suspect if you asked HUD about it, you'd get a different story. These are federal regulations, not state. But I am stickler for disclosure. I would never advise anyone not to disclose.

I'm in Florida and prom notes on not on the HUD....

In CA, Prom notes are not on the HUD either - If it supposed to be on there - what LINE # ?

It depends on how you do it, Thom. I just had Chase approve a short sale with a seller contribution. I wrote them a letter explaining the situation. I also included the contribution on the HUD. Don't just put it on the HUD because it will get rejected. You have to explain why. And do it upfront, on the front end -- not after negotiations.

Wow this is an interesting scenario, Elizabeth.  Don't forget to drop a note about the resolution, if any.  I'm anxious to hear.  There are a lot of great ideas in this post.  Sounds like the most expedient solution is finding a cash buyer.  Have you decided to take this on? 

Good luck! 

Yes, I have, Tni. It's an interesting challenge. A more rational person would run like the wind, LOL.

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