Real Estate Investor · Murrieta, CA · Member since 2009 · 34 posts · 1 vote
I'm just looking for a little bit of clarity from the experienced... I'm a bit confused on how to handle a short sale that has 2 mortgages. I'll give na example: John Doe has a house that has a first mortgage of 200k and a second of 50k.
1. Who do I contact regarding the short sale? And if it's both, which one do I contact first?
2. I imagine the second is much more willing to play ball considering they have the most to lose, correct?
3. The short sale package gets delivered to whom?
This may be a stupid question....just need a little bit of clarity.
You contact both at the same time. The first will generally take longer than the second.
The second will usually deal for 10% of the balanced owed. Some play hardball with you, it just depends on the situation. The more you can give them the better. Some first mortgage will only give a certain amount to the second ($3000). If this does not come close to 10% of the balanced owed, then the second will not negotiate with you.
The second mortgage will usually have a different contact than the banks department that deals with the first mortgage. Make sure you tell them they are the 2nd lien and you want that short sale department.
You contact both at the same time. The first will generally take longer than the second.
The second will usually deal for 10% of the balanced owed. Some play hardball with you, it just depends on the situation. The more you can give them the better. Some first mortgage will only give a certain amount to the second ($3000). If this does not come close to 10% of the balanced owed, then the second will not negotiate with you.
The second mortgage will usually have a different contact than the banks department that deals with the first mortgage. Make sure you tell them they are the 2nd lien and you want that short sale department.
Hi, has anyone had a private second holder move in on the short sale to protect their interest?
I have not. Either way, bank or private loan, if the 2nd is completely upside down along with the first, there is no room for them to protect themselves. All they can do is hope for the highest short payoff.
Regarding the question about seconds protecting their interest, I have two real life examples.
I know somebody who specializes in purchasing second-position NPN. He will purchase those at a discount of course, and he has various exit strategies. And he will often get requests to short his second position. Typically, he gets more from the short than what he paid in the first place. But he will always ask for more to see how much he can squeeze out!
At the December 2009 sheriff sale that I attended, one property that initially caught my eye turned out to have a significant second thus making it a non-buy for me if the second were to bid. There was an attorney present to bid for that second lien, so I just kept quiet, and that attorney got the house on behalf of that second. In the November 2009 sheriff sale that I also attended, a house (belonging to the selling agent that I bought my present residence from) was for sale. Also had a big second; in fact the second and first were almost the same dollar amount liens. For this particular house, the second did not bother to bid.
Just a few real life examples of how a second behaves - and it could go either way.
Hi, has anyone had a private second holder move in on the short sale to protect their interest?
Sure have...had a private investment company that owned the second. I originally tried to get them to take 10% of their lien, but they wanted 50% and ended up buying the property at the Courthouse auction