Unbendable Bank :-(
Hi all,
So I'm working on this short sale deal. I'll run a quick stats to refresh:
House worth $100-$105k.
1st mortgage: $98k.
2nd mortgage: $51k.
I gave an offer of $10k for the 2nd mortgage, and they called the homeowner screaming at them that I was wasting their time and they were closing the case.
I could understand that $10k is very low, so I apologized and submitted another offer to them for $25k, with a total sales price of $75k ($50 to 1st mortgage.) They told me the $75k price was unacceptable and that they were "not here to offer bargains."
So, I sent her the following email:
I wanted to respond to your phone call now that I have had a moment to gather my composure.
You have rejected my offer to pay off your loan at $25,000. Well, in that case, I wish you the best of luck. Mr. Smith is filing Chapter 7 bankruptcy. You are the second mortgage on this property. The FMV for this property is $105k on a liberal estimate. The first mortgage is valued at $98k.
It is my understanding that in a bankruptcy/foreclosure proceeding, the first mortgage is protected with all interests to the property, and they must be satisfied in full before the second mortgage may have a dime. So, since the first mortgage is valued at 95% of the worth of the home, it should be interesting to see what your company will obtain once proceedings are complete.
My offer of $25,000 to satisfy your interest in the property still stands, though I think it's unlikely that I'l accept counter-offers. If you are serious about obtaining any funds from this loan, then give me a call, at 555-1212.
Otherwise, I'm not worrying about this situation any longer. There are plenty of other properties on the verge of foreclosure that I can focus my time on.
I wish your company good luck; I look forward eagerly to see how this will all play out.
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Do you think I was too sarcastic? My feelings are, if they want to squeeze the last little bit of blood from a stone then I guess it's their loss. I'm struggling financially but I've got a full-time job, so life isn't going to grind to a halt if this deal falls through.
But is this how the banks always act? I mean, if they were moronic enough to give a 2nd mortgage that was 50% over the value of the home, you'd think they'd be desperate to grab what they could and run for the hills. I feel that part of it is she knows I'm new, and she's yanking me around thinking I'll give into whatever they want.
What are my options here? Would it be feasible to try and get another rep who isn't a pig-headed wench? Or are other employees allowed to discuss/override a decision by a loss mitigation officer?
Thank you for your patience in my long-winded memo...and thank you all for your help.
No pain, no gain, I suppose..but this is discouraging. 
Andrew
Hello Wonderboy!
Looks great to me!
Wonderboy,
What documentation did you submit to the 2nd note holder to support your case for a short sale?
What did you submit to the 1st note holder to support your case for a short sale?
Quote:
On 2003-02-19 04:12, DaveT wrote:
Wonderboy,
What documentation did you submit to the 2nd note holder to support your case for a short sale?
What did you submit to the 1st note holder to support your case for a short sale?
I submitted a letter of hardship, a HUD-1 netsheet, (thanks to easyhud.com), comps in the area, offer to purchase, and sales contract. I sent this to both the 1st and 2nd lender.
Due to delay on the part of the 1st lender and myself, I have not received anything significant from them as of yet. They sent a financial statement for the homeowner to fill out as well as some misc. details about short sales, forgiven debt considered income on a 1098, etc.
Andrew
Does anyone feel it would be worth my effort to try and reach someone else at the 2nd lender's offices? It seems fruitless at the moment with the rep I've had to deal with.
Andrew
Hey,
1 thing you can do if you are prepared to possibly walk away from the property is remind the 2nd mortgage holder that the will foreclose and they will be out of 100% of their money and that you are prepared to walk away from the property. Since they are the junior lien they will lose out. In other words start playing hardball.
another thing you can do is ask to speak to his manager. See if that gets you anywhere. Everyone has a manager.
hope that helps
carl
Yes Wonderboy,
I would say go ahead and try to contact another individual in the 2nd's office. It can't hurt. What have you got to lose and the most you'll get iss another no.
Have no fear! They are people, just like you and me.....with a "job" to do
(J.O.B. =Just Over Broke)
Good Luck!!
B.
You folks all give excellent advice. I'll keep you posted on what happens and I thank you.
Andrew
It worked!!!! I called and got ahold of the rep's manager. He was very pleasant, very professional and even gave me some pointers and tips that I should think of. He said that my $25k wasn't out of the question and what mainly happens now depends on what the 1st lender says.
So, if all else fails, I've got his direct number. If I have more problems with the frontline rep, I'll talk to him.
BUT...........................
I called the 1st lender, and I have no direct line for their loss mitigation. So when I enter his loan number (you have to or it disconnects) it routes me to collections.
When I spoke to the rep in collections, they said it takes 3 weeks or more to be "approved" for loss mitigation handling.
Problem is, the homeowner is filing bankruptcy the first week of March.
Is there any way to speed up the process with the first lender? Unfortunately I don't have much leverage with them, because their loan is pretty much in line with the value of the house.
AAAAAAAAAAAAACK!
Any suggestions my friends, colleagues, and/or extremely experienced pros???
Andrew
"If it's not one thing, it's another..."
How are you planning to make money on this deal?
If you are paying 20k or so over the market.
Will you take over the first payments and bring them current?
If it were me I'd ignore the second and try and buy the first at a discount and foreclose the second out of exsistence. At foreclosure the house will not sell for the value of the first and all back payments. They will be lucky to get 70%. So what are you doing.
If I was the 1st mortgagee I'd be stringing you along as much as possible in order to help you buy the second. Now I've got someone esle on the hook to get me paid off. Why are you trying to trade places with the holder of the second? Read your own letter to the 2nd holder. Do you want to be in their position? If the first forecloses what are you going to do? You've got 25k invested.
I could be missing something here but I don't get where you make money as I understand your post.
You may wind up with the house eventually but then what.
Further the guys going bankrupt! Are you up for the delays that might cause. One can delay foreclosure sale with bankrutcy filings. ( consult an attorney as to the laws and possible consequences )
Well, I plan on making money in the detail by negotiating the first mortgage down far enough that we'll be under FMV. I'm not going to take control of the 2nd unless I have good grounds with the 1st.
It is entirely possible that the 1st is stringing me along to delay; but I see no reason why they would do it to "get another off the hook." As a junior lien, the 2nd mortgage can't get anything till the first is satisfied; regardless of who is in control of the second.
True, my scenario is lacking hard substance and is relying more upon hopes of ideal situation or "ducks being in a row"; my hope is to get the 1st mortgage down to $55-60k, with the 2nd at $25k. This will put me at about $85k, then I'd try and flip it for $95k. FMV for it is about $100-$105k.
Andrew
Did the holder of the 2nd actully lend hard money? Is your 25K offer contingent on the 1st discounting to 50k?
Even so I'd always deal with the senior lien first. Then you know wether you are wasting your time with the juniors.
All my other comments stand.
You are correct you have 0 leverage with the 1st unless you can offer them close to or more than their anticipated foreclosure receipts.
I'm still thinking but if the 1st won't play you really don't have anyway to gain.
I see you do understand the problems so good on you. You now see why controling the 1st is so important. They contorl your whole deal. Work with them first if the equity is thin.
Just as an asside I've been burned by senior lien holders "assisting" junior lien holders and owners to get off the hook if they had other loans with the same lender. One just never knows what one doesn't know.javascript: x()
Got to watch you back all the time.
Hi group,
This is my first time posting reply, but this one I do have some knowledge about.
You did not specify in you post if you had presented a written offer to the 1st motgage holder. The reason I mention this is: If the property is in forclosure the 2nd get $00 unless they bid the full balance to payoff the 1st. If the property is not worth the balance of 1st & 2nd, they probably will not bid.
You should present your written offer to the 1st mortgage holder first; Have your net sheet show the amount you are willing to offer on the 2nd. If the 1st is willing to accept that, you can then submit the offer to to 2nd and let them know the 1st mortgage co is willing to accept your offer.
This should show the 2nd mortgage co that they can either take YOUR OFFER or take a big BIG risk of getting NOTHING.
I have seen this happen time & time again. Wishing you much success.
ps I have years of experience on this side of the playing field, I do know how these institutions work.
Even if you get the first discounted down say 70k, you'll still have to pay the 2nd 25k. So now you've spent 95k. After closing cost and the cost to sell the property , you'd be lucky to break even.
Now if there was just a 1st and no 2nd, than a buy in at 70k would still yield a nice return for you.
bparker, you do know that this was posted in January. Little late with the advice.
Tom
Another potential problem, I understand that some '1sts' may insist that the '2nd' gets nothing, so yes, get the 1st on board before the 2nd.
Wonderboy? did the Homeowner already file the Chapter 7? (you mentioned March - and it is now May?)
Did you mention the pending BK in your offer? Keep reminding them that when the homeowner surrenders his "interest" in his BK, that the second will not get a penny. (i know how soft the UT RE market is, and so does the 1st and second)... The second should be grasping for anything.. you NEED to talk to someone else at the 2nd.