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I have a fannie mae 1st and a Wells Fargo 2nd. If the 1st is made whole plus more, can the first apply the overage to the 2nd above the $6000?

Looking for docs & or 3rd party authorization forms for a Citi Financial 2nd ....And any direction on the process with working with Citi Financial as the 2nd with Nationstar.

Homeowners with second mortgages have a higher risk of a delayed short sale or foreclosure. Why? The 2^nd lienholders have trouble (rightly so) allowing tens of thousands of dollars to be forgiven and often times, their denial of the short sale offer results in more loss on their interest(s) than if they cooperated. Mark Zandi, chief economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, says, “Subordinate liens have become the biggest hurdle to resolving the foreclosure crisis more quickly.” How do our agents resolve the 2^nd mortgage issue? By Persistence and Communication.

First, what are some local governments doing to eradicate the subordinate lienholders issue? A recent bill proposed by Rep. Jerry McNerney (Cali’s 11^th congressional District) called the “Fast Help For Homeowners Act” aims to expedite short sales by requiring second mortgage lenders to review and make a decision on a short sale agreement within 45 days. If the lender does not respond within the time frame, the short sale is deemed “approved” by the second mortgage lender on the 46^th day. McNerney ultimately wants this bill to provide relief to homeowners throughout the country.

I commend rep Mcnerney for putting effort in publicizing the issue and proposing ways to get 2^nd lienholders to comply. Do I believe more laws and regulations will improve the situation? Not necessarily. Will it actually produce positive results for the short sellers? From a historical perspective, one can easily be skeptical but we all can hope for the best.

To set the scene (reiteration of my last post) of a typical short sale with primary and subordinate lienholders, picture a room of five famished people waiting for food and suddenly throwing one pie right in the middle. Most likely, a fight will break out for the pie and it will probably end up getting ruined resulting in a loss for everyone (AKA foreclosure). This is what typically happens in a short sale transaction and 2^nd lienholders are usually the biggest contributors to this demise.

What uncooperative 2^nd lienholders do not understand is IF they allow the property to fall into foreclosure, they will get nothing from the transaction. Yes, they are able to pursue the borrower for the remaining balance post auction but they would have to pursue via lawsuit which will add on more costs, time, and a headache. The homeowner will probably end up filing for bankruptcy anyway.

Now, one indispensable element to a successful short sale transaction is COMMUNICATION. Our previous post The Secrets Of A Pro Negotiator, emphasizes the importance of communicating with all parties of the transactions well, one of which is the 2^nd lienholder. The job of a professional short sale agent or 3^rd party negotiator is to communicate the simple notion, “Here is the whole pie. You can either have a piece of the pie or nothing at all. We think you should take the piece we offer you.” Although many no’s will be spoken from the 2^nd lienholder, through months of persistence and explaining the present circumstances, they will eventually understand that accepting the offer will be the better financial choice than the alternative.

What do you think is the solution for subordinate lienholders?

Peter

Too often, many homeowners doing a short sale read up on the internet and speak to friends, coworkers, relatives and anyone else whose done a short sale, about how they received $3000 relocation assistance by doing a HAFA short sale.

Sadly...this is NOT always the case. Simply going into the HAFA short sale program here in CA does NOT guarantee you will walk away with money.

Case in point.....First your realtor needs to determine if your servicer(the one you normally make or made your mortgage payments to for your 1st lien)participates in the HAFA program. Many servicers DO NOT!.

Also, even if your servicer(1st mortgage lienholder) participates in HAFA, the INVESTOR who is above your servicer and has final say so...may NOT be a HAFA participant.

Many 1st mortgage liens are SOLD to a private investor or group of investors that DO NOT belong to HAFA, nor do they have to abide by HAFA's guidelines and rules. 

OK, so let's say your 1st lien holder and their investor DO participate in HAFA and allow you to do a HAFA short sale.

If you have a 2nd lien, you need to also find out if THEY participate in HAFA...for if they DON'T...then guess what may happen when you go to close? Your 2nd lien holder could see the $3000 monies awarded to the seller(YOU) by the 1st lienholder and decide to GRAB or TAKE any monies on the table. Thereby preventing YOU, the homeowner from getting ANY MONIES awarded to you. Don't say NO...because I've seen it done.

Also...here's the kicker....and even better than the above. Let's say..Mr and Mrs Seller had a 1st and a 2nd on their home, and the 1st even agrees to a HAFA short sale, and so does their investor.And let's say your 2nd lien servicer WAS a participant in HAFA and agreed to participate. *  If your 2nd in this process gets SOLD OFF or CHARGED OFF during this process to a collection co. for x amount of months of NON PAYMENT on your part, then that COLLECTION co is NOT HELD to HAFA's rules and can collect the relocation monies at funding. The collection companies ARE NOT SERVICERS...and therefore they DO NOT belong or partipate in HAFA's rules or programs...so  since they are a collection company..they can TAKE the monies left on the table. Remember people...they are a COLLECTION company...they don't call them a collection company for nothing!!!!

Remember the 2nd lien holder, whether it be a servicer or now a collection co...has begrudgingly accepted what the 1st will give them, and they are NOT happy.

Please make sure when doing a short sale that you interview an agent who has done them extensively and has much experience in negotiating short sales. Please don't assume EVER that because an agent has these CDPE or SFR designations...that they KNOW or are VERSED in NEGOTIATING short sales. These companies handing out designations are PRIVATE COMPANIES charging realtors a $500 or more fee to take a 1 day or sometimes just a several hour course in short sales. THIS DOES NOT mean your realtor knows in the slightest how to navigate and negotiate the slippery slope of short sales. Many of these realtors who have gotten their licenses not that long ago or get these designations because they know that 50% of the market is upside down and if they want ANY business, they better get with the program and start handling short sales.

I am not knocking these designations....there are agents who have them and legally have experience and know how to handle short sales... the main thing is to check for experience in how many short sales they have done...and if they have DONE it themselves. Farming it out to 3rd party negotiators or attorneys, does NOT guarantee success.

Please ask many questions about the short sale process and scenarios. There is no magic wand that anyone can wave to make sure your short sale goes smoothly, for many things occur as roadblocks to navigate along the way. But with a strong negotiating agent who is familiar with all the ins and outs and possible scenarios that the banks, lenders, servicers, investors,and collection agencies throw our way....hopefully having this extensive knowledge and experience can help you obtain a successful outcome.

Appreciate your help or advice on this: Below is basic scenario involving PHH as the 1st (the 2nd is the problem).

I have a call in to Fannie Mae to get clarification on this "guideline" in order to gain some ground with the 2nd.

First mortgage PHH today stated that Fannie Mae recently changed their guidelines and now will not allow the secondlien holder to require a promissory note or agreement to pay back the moneyoutstanding, the second lien holder must release the difference. 

Second lien holder (Citifinancial Equity Services)   will not release the lien unless the Seller agrees to pay the entire amount back. 

Hi, there are 3 deals that are ready to close, but the 2nd's are asking for 50% of the loan balance, and I just do not know what to do:

1) Realtime Resolutions: they have a balance of 140K, and are asking for 80,000 as a payoff. The 1st (B of A) has allotted them $6,000.

ANY ADVICE ON WHAT TO DO?

2) Strategic Recovery Group: they have a balance of 120K, and are asking for a $60,000 payoff.

3) Indymac: They are doing a BPO (Why would a 2nd do a BPO???)

If someone has any advice for me, please respond. I would appreciate any feedback.

Thanks,

Jeremy