Need Short sale advice
We just came across a property that has a first of $201,000 and a 2nd at $95000. with a true market value at around the first. The property already went to auction and the plaintiff got it back but bankruptcy papers were filed the day before the auction so the foreclosure sale was vacated. What kind of short sale negotiating power does the sequence of events give us now? The homeowner definitely wants to stop the foreclosure but not stay in the house. The house is in beautiful condition so we know that will not help our case. Property values for a comp will be all over the place since it is in a rural area...does this help us? Any advice will be greatly appreciated. The first is with Countrywide and is conventional. Thanks.
Hopefully, ShortSalesPro will pitch in his veteran advice for you sometime today, but until then, I'll give you my meager take on the deal.
It sounds like you need the holder of the second mortgage to forgive their note. It is possible, I suppose, but I imagine you are going to have a difficult time making them accept a $90,000 loss, unless you have some powerful evidence. What is the property appraised for? If it is appraised for less than the total debt, how did the seller manage to get the second mortgage?
Yes, Comps will be difficult, but for this type of process, I believe you need a third party evaluation, such as an appraisal. Additionally, push the fact that the seller has filed bankruptcy. If he has filed chapter 7 and intends to stay in the property, they may never see a dollar of what they loaned. You are the hero that is helping them recoup part of their loan.
Anyway, can someone else step in here, so I can stop fumbling with the scenario? Short sales are not my strongest strategy.
[addsig]
Thank you for your input...it didn't seem like fumbling to me. Wouldn't the 2nd be willing to deal since it has already gone to auction (although it was vacated) and no one bid on it? Or will they hold out hoping to file a deficiency judgement? I am not sure if the homeowner filed Chap 7 or 13 , we are making contact with them this afternoon. I couldn't find the info on docket report...will try again.
Again, any help would be appreciated. Thanks.
As far as the appraisal, we are not sure what it appraised at. We will try to find out this afternoon. Yes, it seems like it would have had to appraise high enough for the 2nd to approve the loan originally. Thanks again.