I’ve Carried The SS Ball To The 5 Yard Line, The Clock Is Ticking…
Greetings All, I’m at a point in my first SS where I can really use some help. The fist mortgage holder who is owed $520K agreed to accept $478K. The second mortgage holder is owed $55K and refuses to release the lien for anything less than $25K. Of course, the first will not allow the second to receive anything higher than 1% of the sales price ($478K). The second insists that because $4780 is such a small portion of what they’re owed that they don’t mind sitting on it and taking a complete loss if they must. A complete loss or getting $4780 on $55K owed is “equal”. I’ve worked for the past several months on this SS and even have a buyer lined up for the property. Alas, I’m caught in this stale mate between the first and second mortgage holders.
Here is what I might want to use as a strategy on the second. They specifically state in writing that if they release the lien (at $25K), they reserve the right to pursue a deficiency judgment. So, I’d want to say to them – look, since you already said that you’ll pursue a deficiency judgment, why would you not accept the $4780 now and pursue the remainder later rather than waiting to receive nothing (if sold at FC auction the place would not bring enough to pay off the first completely) and then pursue the entire amount? Or, is there a way I can legally/ethically provide the second with additional funding after the closing? I’ve worked too hard and have come too far in this SS to watch it fall apart now. Can those of you who’ve “been there” please provide me with those pearls of wisdom. Thanx in advance for any advice you can give me.
Hehehe, you think this is tough? Try working out a sale with 5 lienholders involved(and enough money to pay in full only 2 of them).
You forgot to mention what the FMV of the property is - I'm guessing that second is trying to get $25k based on the FMV number. You also didn't mention how far in the foreclosure process is this property? Is the auction coming up very soon? Your best bet it to keep pounding second to accept $5k and retain the right for the deficiency judgement. They better know that if the property ends up at the auction, their lien will be wiped out and they won't have any chance for deficiency judgement. IMHO, $5k and right for deficiency is better than nothing. Of course, be prepared for them to be in denial until almost the last day before the auction. My deal closed 4 days before the foreclosure sale.
Well I'm not sure you can do this, residential lenders seem to have much different rules for such things than commercial lenders do.
I'd go back to the first and attempt to purchase their position in the foreclosure. Offer to pay the deliquent payments in exchange for an assignment agreement to pay the reduced principle within 90 days. Then you continue with the foreclosure. 2nd truly gets nothing.
THe place I'm talking about is in real dumpy condition. If it were in good shape it would appraise for $750. Each lender had done a BPO and I know they each came in pretty low because of the poor condition of the place. The place is in FC and the papers have been filed. I began working this SS a few months ago - before the papers were filed. The targeted sale date is Jan, 6 '03.
You did not mention what state you are in. Jan 6 '03 is in the past.
so I am assuming it's Jan 3, 05. Sounds like a judicial process state. Anyway, I'd put the pressure on the second - I doubt that you'll be able to do anything with the first, short of buying their $520k note for $485k and foreclosing in their shoes, there isn't much else you can do but to pound on the second...
Quote:
On 2004-07-13 10:19, commercialking wrote:
Well I'm not sure you can do this, residential lenders seem to have much different rules for such things than commercial lenders do.
What exactly are you referring to here?