Second Lien Holder Won't Budge
Hi, I'm new to this site and apologize in advance if this question has been asked before.
I'm currently in a traditional short sale situation where the primary lender has approved a short sale and agreed to pay the junior lien holder half of what they wanted. The junior lien holder will not issue a short sale approval letter without receiving funds via wire transfer. This is what I've seen on this site referred to as Paid Outside of Closing Seller Contribution. The primary lender will not accept this and include this as an item on HUD. To drive home the point, the only issue is the primary lender will not allow this to be included on the HUD.
I'm in a pickle where the primary and secondary lien holders will not budge. Moreover, the second lien holder will not provide any written documentation agreeing to issue a short sale approval letter until receiving the Seller's Contribution P.O.C. Buyer is very hesitant to agree to this.
Any advise on how to resolve this issue?
Replies to This Discussion
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Permalink Reply by Short Sale Superstars LLC on
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AC,
Situations such as these consider to be in the gray area as their are liabilities involved. We would never guarantee that a 2nd lien holder will issue an updated approval for a lower release if a payment was made, but from our experience we have seen them do so. If you can't get the 1st or 2nd lien holder to budge this may be the only option, especially if they do not allow contributions to show on the HUD.
310-564-6389
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Permalink Reply by TOP END Properties on
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Ask them to put it in writing so you can report it to the attorney general and/or they can accept what they are being offered. I would never consider a P.O.C. deal.
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Permalink Reply by Bryant Tutas on
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Just to clarify. POC items ARE on the HUD. POC is just not a line item expense. My experience is when lender state it cannot be on the HUD what they really mean is it cannot be paid out of the proceeds of the sale. Place it on the HUD as POC and see if that will work for the lenders.
I recently has a seller contact their 2nd direct to sort out a similar situation. He ended up wiring $2,000 to the 2nd and they gave us the approval letter the way the 1st needed it. We closed several weeks later.
Just be sure everything is above board.
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Permalink Reply by Donna McClelland on
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AC,
Who is the investor on the first lien? If it is Freddie Mac, they do not allow POC on the HUD. I agree with Bryant and Brett on how to handle this. We've had to do this a few times and have never had a 2nd lien holder renege on the final approval letter. Before seller pays the 2nd anything, we always make sure the buyer is solidly headed toward closing. IMHO, and I may be completely wrong, but what is the difference between doing it this way and the seller making a couple extra "payments" to the 2nd on his own before we close the sale?
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Permalink Reply by AC on
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Thank you everyone for the responses. It has been very helpful. The short sale is in California. Neither loan is an FNMA or FHLMC loan. And it is in the "grey" area of "suggestions". Second will not give anything in writing, won't even respond over e-mail regarding the Seller's Contribution. But, only over the phone agrees to providing SS approval letter once funds are received.
A new HUD is being prepared with Seller's Contribution on line 506 and will be uploaded shortly. BofA SS department also said that there is no problem with the POC being added to the HUD. However, they said to talk to Negotiator directly and / or Closing Officer and Closing Supervisor to confirm. Still haven't heard back from BofA and will be calling repeatedly till we get through to someone.
I'll post the results once more info becomes available.
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Just an update on this Short Sale. Success! BofA allowed Seller's Contribution to Second Lien Holder and HUD has been approved. Escrow closed last week, almost four years later, over a dozen restarts on the Short Sale process, 5 offers, and half a dozen times on the foreclosure auction block. Almost stopped believing in miracles until now! :)
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Awesome AC!
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