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I know a lot of you are going to think I am crazy but I really love short sales. I am sorry that the market is such that there are many people who need to sell their homes short, but that is the current reality. Given that reality there are many things about the short sale process that I enjoy, fewer things that I just tolerate, and even fewer I hate. 

I HATE PRIVATE THIRD LIENS ON SHORT SALES!!!! I can not emphasize this enough. 3rd liens are always tough, but private ones are the worst, because very often there is an emotional component to the person holding the private third, and also because it is often not a large, impersonal bank losing the money, it is a real person, who probably was depending on that income.

But feelings aside, I learned something very interesting today from Chase. I was told it is their policy to only give $1000 to a third lien, period. This is good information to have, because while they made an exception for me on a Redwood City short sale, I do not expect to get it again. 

So next time I take a short sale listing with Chase as the first lender and a private 3rd lender, I will be able to negotiate upfront with a solid number. If the third is unwilling to take $1000 then I can hopefully find out what they will take, and get that worked out up front.

If you have any questions about buying or selling short sales in Santa clara or San Mateo County please feel free to contact me.

Marcy Moyer

Keller Williams Realty

www.marcymoyer.com

marcy@marcymoyer.com

650-619-9285

D.R.E. 01191194

My client is doing a short sale on an investment property. Sales price is $175,000. The first mortgage, Citi, Is taking a short sale and allocating $4,500 towards the second mortgage which is 5th 3rd.

5th 3rd wants the entire remaining balance of $40,000 to be repaid by the seller. 5th 3rd wants the seller’s current 2^nd mortgage on the investment property to be transferred as a third mortgage on the seller’s personal residence. The seller may have maximum $5,000 to $10,000 equity in their personal residence, but not really if you factor in selling costs and closing costs.

5th 3rd demands, per some “policy”, to have the seller encumber his personal residence up to 140% of its value.

5th 3rd also disregards the seller’s financial statement. The financial statement shows about $2,000 monthly negative including the loans that are included in the short sale. After the short sale, the seller will be barely breaking even.

5th 3rd claims that according to his credit report he has $2,000 of discretionary income, even though the CREDIT REPORT DOES NOT REFLECT most of his expenses such as groceries, baby expenses (two babies), utilities and most of the expenses needed to run a household. 5th 3rd is plucking numbers out of air and is unwilling to explain their math.

The sellers refuse to jeopardize their personal residence and the roof over their babies’ head and are ready to pull the trigger on a chapter 7 bankruptcy to shake loose of the problem. They have spoken to a BK attorney who confirmed their chapter 7 eligibility. The BK attorney has sent a letter to 5th 3rd clarifying the situation.

5th 3rd also states they would rather get ZERO dollars in a foreclosure and bankruptcy rather than $4,500 now! Does 5th 3^rd get reimbursed more by TARP or other source if they get ZERO from the seller?

We have appealed and escalated to a manager, but 5th 3rd’s answer always comes back the same: FIRM DENIAL.

We now want to escalate as high as we can. Does the group have any experience, suggestions or contact info within 5th 3rd?

A similar situation was previously posted at http://shortsalesuperstars.com/group/fifththirdbank/forum/topics/lisa-i-am-in-the-same-boat-as . I have not been able to obtain the phone numbers that were offered in that previous post.

Any help would be greatly appreciated. I have not run into such a brick wall in the hundreds of liens I have negotiated.