1st Will Accept Offer... 2nd Said NO
I've never seen this happen before... so I'm seeking advise.
The home is in good condition, needing minor repairs (carpet & paint) and has a BPO approx. 165k.
Although the 1st mortgage holder is in a good equity position, they are accepting a small shortage. The 1st (Fairbanks) is owed 135k and has agreed to accept 125k, but will not let the 2nd receive anything over $1,500.
The 2nd mortgage holder (Household) is owed 37k and has declined my first offer of $1,000. Household told me they will NOT accept anything under 34k and they will accept "0" before they take $1000.
I know that I can increase my offer to 1.5k and I know Household will loose everything if Fairbanks forecloses, but why are they so adamant? They obviously know something I don't.
How do I counter this attitude???
James 
James,
Here's a little trick that SSP taught me to help your situation. Instead of trying to pay off the lien for $1500 completely, have the 2nd assign the note to you for a fee. This fee can be higher than 1500 because you will not report this to the 1st. You can show a 1500 payoff for the 2nd on the HUD1 because you own it.
If you don't understand this, PM the shortsalepro.
Now, one thing you need to ask the 2nd is that are they planning to protection their interest by bidding at the auction? If so, the 2nd will probably not want to play and will ask for almost a full payoff. This happen to me last week!! Arghhh..
Good investing,
Bginvestor
Hi James,
Another thought is to simply reverse this whole thing. The 1st is only giving you a $10,000 discount. If you cant get the 2nd to assign you the note for a low amount, then switch gears.
Go back into this with the intention of paying off the 1st in full, and trying to Short the second for $5-$10 K. Because I am not aware of the FMV, you may want to run your comps if you havent already!
Best of Success!
BAMZ
Too bad you couldn't buy the note from the first at a serious discount and then continue to foreclose wiping out the second and getting the property well below FMV.
Seems like the first mortgage is an FHA insured loan... or Fairbanks is employing FHA servicing techniques.
If the second is unwilling to play, offer to help them, as a consultant, with their other non performing loans. Maybe they have some problematic cases that require some 'outside the box' thinking.
I've had one recently just like yours. In fact the 2nd was Household but the first was not FHA. They just would not deal, at all. I tried working with everyone associated with the 2nd...i.e. managers. No one would move. In fact I posted about this ss from the standpoint that the 2nd was demanding a payment from the homeowner to even start a ss application. All said and done, this property went to auction and the 2nd got wiped out. Why didn't they deal? After the auction, I called my "friendly" contact at Household that we've closed deals with to get some explanation. Bottom line on this deal was that the homeowner was in BK previously (it was discharged) and basically for whatever reason accounting wise, with a BK they are not motivated to settle. Basically the rep told me they have no motivation to move their files...it makes no difference to them. Her final word was that if there is a BK try to work with Household prior to the discharge. Anyone else have any comments?
Thanks to all who have tried to help...
I think Blamcat knows about Household... I forgot to tell about the initial conversation in which Household said they wouldn't even consider a SS unless the account was brought current. I should've known then - this was going to be difficult because why would Household entertain the SS if the account was current.
I thought the banks motivation for a SS was because the account was delinquent and BK would drag things out. I also thought (my own experience) junior lien holders would be willing to accept anything they can because anything is better than "0".
Household will not accept anything less than 34K. Not by SS, note purchase, assignment or anything else. Again, the comment was "we will accept "0" before we accept $1,000.
I just don't understand Household's accounting practices.
Right. To us, it doesn't make any sense. But, the great unknown as to why a mortgagee accepts or rejects a Proposal... has everything to do with their "philosophy of the day" and their corporate agenda.
We are not privy to their thinking. That's why even if we do everything right, everything by the book, and (to us) everything makes perfect sense.... our Proposal may still be rejected for no apparent reason..
As has happened to you. Go figure.
My final advice. Save your energy and go find another deal!
I'm not sure if it has any bearing on your case, but Household bank is involved in a class action lawsuit regarding their lending practices that may preclude them from taking actions in specific situations.
imagprop-
If I were you I'd go to the auction and buy the house. You could have a great property here if the 2nd doesn't bid. In FL isn't the rt of redemption only 3 days or so? If not have the seller sell you their rts. I've done this and it worked great.
What do you think? Jim :-D