All Forum Posts by: Scott Hubbard

You need the end buyer to sign a promissory note that will be secured by a junior lien after closing. This document should be drawn up by an attorney and will be a fee for your services rendered.

The one thing that you cannot due is file the lien prior to closing. It will be caught and it will not close.

In order for this to work, you must have a contract for consideration drawn up by your attorney. You should have some confidence in the end-buyer. The monies paid to you should not be straight from their checking account or savings account because it could show up. Lastly, if escrow is required by the end-buyer, use a different escrow company for each. You only need to have the right to file a lien and not actually file it unless the buyer fails to perform. Filing the lien is expensive and having the right to file is usually enough security.

Mark you are correct! This is what i use for FHA end buyers or when seasoning is an issue.

However, this is not without problems. Lender (quicken) might call into question the assignment and/or the sudden lien showing up on the prelim.

Good Luck

Contacting the lender is a waste of time unless you have an authorization from the homeowner. Your best bet is to contact the listing agents broker, in fact, i would actually contact the agent first to inform he/she that you intend to contact the broker if you are not properly notified (in writing) for the acceptance of a lower price.

I think, in california, there is no deficiency judgements filed for purchase money mortgages. However, if there is a second, this could be considered non-puchase money and may be on the hook for the difference.

in all likliehood, you will go no where because it sounds like the agent is justified or at least close enough to avoid any violations.

It is a shame. Your Earnest money was only $1000.00? That's crazy!! I get 3% minimum!!

Your not going to effect performance on your contract because doing so will not help your homeowner or yourself to get a sale. No court or attorney will force someone to purchase a home. If your contract calls for liquidated damages, you could sue for non-performance, but again, it is not worthwhile.

many lenders will not becuase doing so will cause a change to the the loan convenants. Instead, talk to your attorney or title company and they will make the change right after closing.

If you paying cash, you can indeed purchase the property through an LLC. Again, it is best to work through an attorney or title company under both sceanrio's.

I also do short sales from with and without agents.

My two cents: I agree with the advice of hiring an attorney. In my experience, the first advice your attorney should give you is to NOT DO A SHORT SALE. If you find an attorney that is willing to take on this without trying to convince you otherwise is someone you should stay clear of. Make sure the attorney has previous experience and is willing to provide successful sales examples.

HO: Make sure you take pictures of the interior (preferably a video) just before sign the purcchase agreement. Within the sales agree you will note the documented condition of the proerty and any deviations from this condition will void the sale.

Convince the homeowner to document his legal exploits in the hardship letter. This will help characterize the risk the lender has by going through the foreclosure with such a deviant. Tell the homeowner that the arrests are public record and by his disclosing his record will help the short sale process.

Offer: In my opinion, based the the 700K comparable, your proposed offer is way too high! Your credit is exceptional and with the lack of liquidity, dismal economy, and so on, the lender will likley not sell the property as an REO for less than a 20% discount to current market. I would offer no less than 40% discount to current market which is more like $ 400K. Start out low, the bank is likely going to counter and you cannot go back down should the real estate market continue to silde.

Also, my aggressive discount will work best in a declining market and where properties have high days on market.

When submitting your short sale package, be sure to point out all the negatives, including photos, crime in the area, vandalism on nearby vacant properties, etc. This has been very effective for my success.

Good Luck!

Although I am not an expert on S. Carolina laws, it is likely not illegal. However, there may be some laws about disclosure, meaning that all interested parties to the transaction must be informed of a double close. For clarification, contact a title company or real estate attorney.

Your lender has two key departments that handle short sale transactions. Loss Mitigation and a Legal Department. Loss mitigation approves the short sales and loss legal department executes all of the agreements, court filings, etc. Until you have have a fully executed settlement agreement, you have no short sale.

Personally, I would contact the loss mitigator to see if you can get a two week extension. Make this an addendum to the sales contract and have the seller sign it.

Make sure that the loss mitigator sends the addendum to their legal department. The legal deaprtment will have to file an extension to the sale date with the county or municipality conducting the sale.

Of course, your going to claim that you do not need the extra time, but due to the upcoming holidays, your concerned about delays.

Your question, " Has anyone been shafted this close to closing even with a short sale approval". The answer is Yes!!

I was sent a letter by the loss mitigator approving sale extension of two weeks. Then, unbeknownst to me, on the very day we were scheduled to close, the sheriff's held the auction.

It took two months to actually undue the foreclosure and I eventually received the property. This all could have be adverted if the loss mitigator had actually sent the extension approval to their legal department.

Good Luck

Since I try to negotiate the lowest price possible, I have the lender agree to a deficiency judgement waiver against the homeowner.

Scott,

How is the lender incentified not to pursue a deficiency judgment based on the fact that you are going for the lowest price possible?

David-

The lender is not incented with a deficiency judgement waiver. They are incented to sell to my company to avoid going through the costly foeclosure process. Since I pursue steep discounts to FMV, I have to protect the homeowner with a waiver contingency, otherwise, the deep discount would have a negative effect on them financially. Most lenders are quite cooperative with the contingency because filing a judgment costs the lender thousands$$$.

Besides, I negotiate directly with lenders without the property being listed in the MLS. This saves them thousands $$$ in commissions too. You have to do your homework though, most lenders will not sell without listing the short sale. However, if your armed with a good contract, a good proposal, a good attorney, and have a good reputation you'll be suprised how many get done without a REALTOR.

Years ago, shorts sales were negotiated directly banks without agents. Due to the nationalism of banks (small regional banks being bought by larger national banks) in the last 10 years or so, they rely more on listing agents.

I am a former agent and a former bank employee, my success is determined not only by my experience, but also by the fact the offer makes sense for everyone involved.

Originally posted by Mike Luzzo:

Quick question:

Doing a short sale:

A 2nd lender has charged off the mortgage on a subordinate lien position. Does that release the lien?

Thanks

I worked for a lender and when a charge-off was made, it left several options for our bank. After the loan has aged ( gone unpaid) to a predetermined point, lenders policy is to write-off the receivable and recategorize it into bad debt and expense it as a loss. From here, they have several options:

1) Collect the debt or settle for an amount less than what is owed. Generally, this option is used prior to the charge-off.

2) Sell the bad debt to a recovery service (collections company) for pennies on the dollar. This is the most likely scenario. Any negotiations will be handled through the new debt holder.

3) File civil action. If they like their chances they may choose to file a civil suit to pursue a judgement against you. This is usually unlikely since they chose not to pursue foreclosure.

4) Not pursue anything. Unlikely as some schmuck will likely pay something for the bad debt.


As for the lien release, technically speaking, you need them to release the lien in writing. A Charge-off does not qualify as a release.

In my opinion, the 2nd option is most likely. I would call your lender to see if there is anyone in their collections department who can give you some insight. If they have not already sold it, you might get them to settle for a lien release. Plus, by negotiating with the lender directly, you'll avoid a harrassing call from Guido the Killer Pimp!

Good luck!