2nd mortgage is current!!
homeowner owes 85K on an arv of 85K. they are pre-forclosure on that. they also have a 2nd of 25k which just found out is current! i learned from dwan/sharon's course that you can ask the 2nd to remove their lien from the prop and attach to the individual, but wouldn't the 2nd want to deal because the 1st may foreclose and they will be wiped out? why does it matter if they are current on this loan when the fact that they are late on the 1st will wipe them out?
how should i proceed with this second. i dont want the homeowners to stop paying on the 2nd and hurt their credit further, but i think they will based on what i have told them. please help.
Although I've never done a short sale. I have purchased pre-foreclosures and negotiated discounts on liens and judgements.
Will the second agree to move themselves from a secured to an unsecured position? That's a tough one. I doubt it. They will likely be more open to negotiating a discount. But give it a try. All they can say is no. Now of course for all of this to work, the 1st would have to be open to a short. Have you checked with them first being that NONE of this is feasible unless the 1st is open to short?
yes, the first is open to a short sale, in concept at least. i have yet to submit anything to them concretely.
Sewa-
If the 2nd has been served (knows that the first is foreclosing), then they will be negotiable. When this happens to us, the 2nd believes that the homeowners will continue to pay them, because they are doing so now, and the 2nd will usually agree to remove their lien from the home and allow the owners to sign a promissory note. Note that if they do this and then file bankruptcy later, it wipes out the note. Also, the first will believe there is reason to short sale if they know the 2nd will walk or discount. First mortgagees don't want to be the only one in the line of liens that takes a loss.
Whenever you have more than 1 lien to deal with on a short sale, try to work all of them at the same time. You will waste less time that way and be able to figure out where you need each one to reduce to as you negotiate. Great one to try to work with....go for it.
Sharon,
you mention that the first will deal if they know the second will walk or discount. i had in my head from the course that we should not let the first know that there is a second bc then they will demand the second get nothing. can you straighten me out?
thanks to dave too for your comments.
also would the homeowner know if the second had been served? would that happen when the homeowner is served?
these guys still aren't there yet.
sorry, i meant thanks to IB NJ for your helpful comments.
Sewa- In a situation where the 2nd would agree to short by a huge margin or trade their position for a personal note before you even got into negotations with the first, I would tell the first, because it would probably sway their decision. If the foreclosure has not even been filed yet, then the second has no reason to deal at all. I would still contact the second regarding the pending foreclosure, but until they are served and realize the default, they may not be willing to talk. You may have no choice but to wait until the first files the foreclosure. Dwan will be teaching the call tonight....thanks, Sharon