We have a lender carrying the 1st & 2nd and the 3rd wants $6,000. or they won't participate! The 1st and 2nd (same bank) won't allow payment to reflect on the HUD-1 and we want something that shows the 1st & 2nd are aware of the settlement to the 3rd so we can have a well documented file!
Is this deal dead...or is there a way to protect all parties and still close?
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We have to follow program guidelines. Typically the max to junior liens is 6k (about to increase to 8500 for hafa). So in your situation the 2nd is likely requiring you to pay them (the same bank) the max and the 3rd is out). HAFA will not allow your buyer or anyone to pay the extra. Ask your negotiator if you can pay POC, is your file HAFA and if your client opts out of HAFA... can you go coop or BAU (regular) so that the parties can pay the 3rd lien. The bank is aware of the 3rd and aware that they are getting paid. If your client has a non-hafa incentive the title company can have them sign the check over to pay the lien.
POC, or POC by buyer. It can't come from the proceeds. If it is a HAFA file, the buyer cannot pay it regardless, so you will have to opt out of HAFA.
Scott, can this be settled before closing?
I think Bryant has done a POC on the HUD-1 sucessfully. I haven't attempted it but I'm sure he can walk you through it. I know he has done it a few times.