So Was in the process of purchasing a property from a homeowner in foreclosure, She owed less than as is value and was going to actually receive some money from sell and the numbers still made sense. After speaking with homeowner, foreclosing lender and the lender's attorney there was no mention of a 2nd mortgage. When I get the payoff letter from attorney though, there is a line item of a Hud partial claim for 50k! Obviously this throws everything off and homeowner was completely unaware of this.
From the little I have learned, this seems to happen when homeowner get a modification, Hud comes in pays the back payments and then has a sort of silent 2nd mortgage that needs to be re-payed when ever they sale in future. I also see that it cannot be shorted and must be payed in full. The help I need is the numbers dont now work in this scenario, what other options do I have as investor? There has to be a solution that can help all parties involved.
Could you short sale the 1st mortgage for the partial claim amount? Is that even possible? Anybody ever deal with this? Any help would be appreciated! Thanks in advance
I am going to bump this as I have a similar situation.
A lady inherited a house from her mother and I am buying it from her. We have everything set and BOOM! we find out about this HUD 2nd mortgage right before closing, just like Tom. With the 2nd mortgage I can't buy it and the lady is going to let it go to foreclosure (she is already behind).
Is there anything I can do? We are on a tight timeframe.
@Tom W. You are correct that the partial claim cannot be settled. Per HUD guidelines those cannot be settled and will have to be paid in full however in those situations HUD will tell you to do a Short Sale.
Short the 1st and pay the partial claim off in full, the seller may still qualify for a relocation incentive through the FHA Short Sale.
We just did a transaction like this with 2 Partial claims on title.
What is the purchase price? What is the 1st lien Payoff? and who is the Mortgage servicer for the 1st?
@Eric F. Is the property already active in Foreclosure? If so what is the Date?
You should initiate a Short Sale, FHA Short Sales when active in Foreclosure are slightly different than when you are going into the review delinquent and not yet into Foreclosure.
Who is the mortgage servicer of the 1st for your Transaction?
I am in a similar situation. We have a contract to buy a home for the payoff amount. The title search found a Subordinate loan with HUD for 52000.00 (aka: HUD partial claim). The house is not currently in foreclosure. The loan was recently caught up, but the sellers are in their 80's and are downsizing, have health issues and may require nursing care. It will soon be in foreclosure again. How do we do a short sale? 1st mortgage is with Ocwen Loan servicing, LLC and 2nd with NOVAD ( HUD's loan servicing contractor company). Any help would be appreciated. It is sad but it seems that these people had no idea what they were really agreeing to when they signed the modification.