I am close to getting a deal done with the 1st lien (Wells Fargo) & the 2nd (CHASE).
Wells Fargo has verbally accepted the buyers offer & preliminary HUD. Also,
Chase agreed to accept $3,000 to release the 2nd lien, but have not forgiven
the remaining debt. Chase has agreed to
forgive the remaining debt if my client will bring an additional $2,000 cash to
closing. However, Wells Fargo has emphatically told me "Please be advised
that we will not allow any contributions to the 2nd lien at closing".
How can I get around this? What are my options, because my client can pull together $2,000 to get a forgiveness
of debt.
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In my case, we started by having the buyers pay the deficiency and putting it on the HUD1. The first is refusing to allow more than $3000 to the second and now they want the additional funds going back to the first. The investor is Freddie Mac. Any suggestions?
Thanks!
I like the idea of POC on the HUD and have been considering this as an idea to get around an issue posed where GMAC is the servicer for FreddieMac. Fred has issued a payoff to the junior of no more than $3000 and has stated that the jnr is not allowed to receive anymore than the allocated 3,000. The jnr, being CitiFinancial have rejected the 3,000 on a 61,000 and change debt. They told me to tell Freddie to go scratch as they would rather see the first lien file Foreclosure than accept the paltry 3,000 on offer from the senior. Anyway since the minimum acceptable by the junior is no less than $6100 or 10%, I rolled up my sleeves and started to call around, eventually getting the buyer to contribute the additional 3100 to appease Citi and close the deal. The problem that concerns me is that GMAC told me it is near impossible to get FreddieMac to allow the jnr anymore than the allocated funds regardless of who raises the funds for the junior lien holder. I was almost given a clue by GMAC when the negotiator told me that the only way in the past that Freddie has approved the junior lien holder getting more is if the buyer contributes and even then, the HUD must read correctly for the approval of the extra funds to be sent to the junior lien holder. I contemplated arranging to secretly send the junior lien holder the additional 3100, but then feared violating RESPA regs and more importantly committing fraud since those funds sent to the junior would technically be done without the consent of the senior. Plus,I was almost certain that one step from total approval, the senior would deliver a document with language requiring all parties to certify that the junior was not receiving funds outside the HUD, hence had I made such arrangement for the junior to accept the 3100 from the buyer prior to the approval, I would indeed have implicated myself into a fraud situation. Plus, in NJ attorneys prepare the HUD and understandably, there is not one who would risk their license to practice. I definitley prefer the Paid Out of Closing statement on the HUD since it is clearly more legal and above board. My question to you is how have you ensured that the additional funds to the junior lien holder go to the right place. ie, would it be something like, Buyer contibution to second lien POC?...thanks for the great idea, its the best possible solution I have seen.
Many thanks for your input and to all on this discussion who have clarified a few grey areas!!!!
Ben Benita said:to get around this, we have SOMEONE (Seller, Buyer, agent, whomever) send in the $2000 PRIOR to closing, making it refundable if the short sale does not close (MAKE CERTAIN YOU GET THIS IN WRITING).
This way, the stars are in alignment.....nothing happens AT closing, it is done prior thereto.
We have also put items on the HUD as P.O.C (paid outside closing) and they have been approved.....
Ben Benita said:to get around this, we have SOMEONE (Seller, Buyer, agent, whomever) send in the $2000 PRIOR to closing, making it refundable if the short sale does not close (MAKE CERTAIN YOU GET THIS IN WRITING).
This way, the stars are in alignment.....nothing happens AT closing, it is done prior thereto.
We have also put items on the HUD as P.O.C (paid outside closing) and they have been approved.....
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