Seller is still making payments is that why 2nd is playing hardball?

I've got a short sale in progress with GMAC and Specialized Loan Servicing. Specialized is playing hardball and want $7k in cash at closing plus a $5k promissory note or they will not even submit it to the investor (Total owed is $53k). I told them no way for $7k in cash that GMAC is only giving $3k but maybe the seller will agree to a few $K in a promissory. My question to the group is...is this negotiating going nowhere because the seller is still making payments? Is this the time to start escalating to the VP level at Specialized?

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Permalink Reply by Shari P on June 21, 2011 at 4:31pm

They asked for his 401k acct which has less than $65k and he has less than $5k in the bank. He has a job but he has been supporting two properties. He was laid off and had to relocate for a new job so the short sale unit is vacant. What would you do in this case? Also the buyer has no money to pitch in either.

Permalink Reply by Kristy Hamilton on June 21, 2011 at 4:59pm
I recently had a file with SLS as the second.  The seller had to give them a $1500 payment, over the phone, in order to issue us a short sale approval letter for the $3000 that the first was allowing.  What does your short sale approval letter from the first say?  Many times, the first will indicate that there cannot be another agreement outside of the contract and that the seller cannot contribute more than the amount they approve in the letter.  In my case, the first didn't see the seller making a payment prior to closing as the same as a contribution.  The problem with that is that should the closing have had an issue whereas we would have had to obtain an extension to that approval letter, they could have then increased their amount or not agreed with the earlier amount.  Signing a promissory note after closing is an agreement.    
Permalink Reply by Shari P on June 22, 2011 at 9:33am
I don't have written approval from the first yet but the negotiator verbally said they won't give more than $3k. I think it's best for me to wait until I have something from the first because I would hate to get approval from Specialized and then they pull something like wanting even more money to extend.
Permalink Reply by Bryant Tutas on June 25, 2011 at 11:25pm
I'm going to place this in the newsletter today to see what kind of responses we can get.
Permalink Reply by Paul Antonelli on June 26, 2011 at 3:01am

  Personally I think the second is not a mortgage but a HELOC. They are always going to ask for $$$ at closing, anywhere from 5% to 70% of the outstanding balance. And it mostly depends on what they did with the $$ they took out. I have had several of these this year. The lender will always start high and you just have to prove the hardship and give them a lower counter and meet somewhere in the middle.

Keep in mind they can ask all they want about investment accounts (IRA & 401K) but they can not make the seller go into them. They can threaten all they want and hold their breath if they want. But the seller does not have to touch them.

Permalink Reply by Tni LeBlanc (805) 878-9879 on June 26, 2011 at 4:11am
Wow that does sound pretty stiff.
Permalink Reply by Shari P on June 26, 2011 at 4:32am
It is a HELOC but it was a 80/20 loan to originally purchase the property (owner-occupied). They have now verbally agreed to $3k cash and a promissory note for $6k (0% interest due in 5 yrs). However, they have not taken that deal to the investor so I'm worried that it will go up from there.

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