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There are many lenders and investors that have no issue with any party to the transaction, including the agents, making payments to junior liens or other expenses not approved by the short sale lender. In fact BofA and other large servicers place this right in their approval letters.

• "Please be aware that any additional fees that were not approved on January 14, 2013 will not be covered by Bank of America, N.A., and will become the sole responsibility of the agent, the buyer or you to pay at closing."

I've had buyers and sellers pay towards the junior lien. They have paid at closing, after closing and before closing. Always with full disclosure to the lenders.

However, Fannie Mae and Freddie Mac both have this as part of their guidelines for their Standard Short Sale.

• 
  Fannie Mae is requiring any payments to subordinate lienholders to be paid from the sales proceeds at closing for either a short sale or deed-in-lieu of foreclosure, in exchange for a lien release and full release of liability for the borrower. Allowable payments from the sales proceeds to all subordinate lienholders to facilitate lien releases must not exceed $6,000 in aggregate.

The servicer may offer the maximum payment of $6,000 for subordinate lien amounts of $6,000 or greater in order to facilitate the transaction. If there are multiple subordinate lienholders, the servicer has discretion to divide the subordinate lien payment among subordinate lienholders so as to maximize the chances that all subordinate lienholders will release their liens. The servicer must not authorize the settlement agent to pay more than an aggregate of $6,000 of sale proceeds as payment(s) to subordinate mortgage lienholders. If an individual subordinate lien, or total subordinate liens are less than $6,000, the payoff can only be up to the subordinate lien amount owed. No exceptions will be made to the $6,000 aggregate cap.

Prior to releasing any funds to a subordinate mortgage or lienholder, the servicer must obtain written commitment from the subordinate lienholder that it will release the borrower from all claims and liability relating to the subordinate lien in exchange for receiving the agreed-upon payoff amount. The servicer must require the closing attorney or agent to either confirm that they are in receipt of this commitment from subordinate lienholders or request that a copy of the written commitment provided by the subordinate lienholder be sent to the servicer with the HUD-1 Settlement Statement which is provided in advance of the closing.

Subordinate mortgage or lienholder(s) may not require contributions from either the real estate agent(s) or borrower as a condition for releasing its lien and releasing the borrower from personal liability.

So.....the answer is that sometimes you can and sometimes you can't. But always ask. The answer you get  may may your job a whole lot eaiser.

Or...just contact Bryant Tutas. Your Orlando Florida Short Sale Specialist.

****Always seek competent legal advice before implementing any of my ideas and techniques. I am NOT an attorney and I do NOT play one on TV. This is not legal advice but just one Broker's opinion.

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

I have searched through this site and cannot find the answer I am looking for, so perhaps collectively we can use what we have learned  and post the data here..

I am looking for a list that shows what % on average each 1st lender will pay out to 2nds, and what each 2nd on average will accept to release their lien.

If noone has this info compiled, then perhaps each of you can weigh in on this with your recent experiences and let's get some data going that we can all use..

Thanks guys..