Need brief advice on FHA short-please
I'm familiar with conventional shorts but have never shorted an FHA. The lender Commercial Federal has agree to short at 82% of the appraisal amount. We are getting all paperwork to them now. Appraisal has yet to be done. Balance of mortgage is $140K (with penalties) on a property FMV of $135K.
Now of course the goal for the sellers is to keep the foreclosure off their record. But I learned there is also a 2nd of $16K with Beneficial. Are there any other options other than:
1. Also shorting the 2nd
2. Foreclosing the 2nd
Sellers don't have the funds to make further payments on the 2nd.
Thanks a bunch--Jim 
I think the FHA lender will want to see that 2nd heavily discounted before they'll be willing to short theirs.
Start working on the 2nd immediately. If they won't discount then deal may blow up.
sorry tomjerry 200 i cannot offer any advice but i am trying to learn and would like to follow progress for experience purposes, so if possible please keep us updated
Thanks
Blair
In our experience, on an FHA loan the first can offer the second up to $2000 payoff. This seems to be a set amount and they will take it because if there is a foreclosure they will get nothing.
has anyone ever had them give more?
~twilla~
I've not had an FHA approved preforeclosure/short allow more than $1,000 to a junior lien.
Try to buy the second mortgage via an assignment at a discount... set the wheels in motion, but don't pay a dime until you are 100% certain that the FHA short will close.
With You as the 2nd mortgage lienholder, you can agree to accept $1,000 as payment in full of the second. So whatever you've spent to purchase the 2nd, you'll get $1,000 back.
I am deep into an FHA short sale right now, they wanted to see the 2nd at $2000. I got the 2nd down to $1500 and sent verification to the first. We now have the FHA appraisal done but had to list it...based on advice given in the forum, we listed it as a sale pending and will submit our offer right behind the listing agreement on Monday. Hope it goes well for you!
Just wondering how you went about listing the property?
Did you have to pay full commission? Did you hike up the price to reflect Realtor fees liens taxes etc then pend it and contract for a low amount or short sale?
Shortsalepro--
With regard to the assignment, I have general contract assignment paperwork. Is this the type of assignment you are referring to? Also, I'm assuming I would be the assignee but who is the assignor? Is it the sellers or the lender?
Thanks for everyone's advice-Jim
The 2nd mortgage lender is the assignor. There are "Assignment" documents written specifically for mortgage/note purchases. The title company can write one up for you. By the way, have the transaction handled by a title company and get title insurance on the deal. You want to make sure there are no 3rd and 4th liens the seller didn't tell you about.
Dave--
Thanks for your guidance. I'll see what happens. Appears this whole deal is based on what the appraisal is. On the last two deals the appraiser appraised the property really high. We'll see.
THanks again--Jim