Payoff The 2nd Before Closing?
I was able to negotiate a short sale with a second lienholder who is requiring payment by Friday the 26th. I may not be able to close on the house until the following week.
Since the agreed payoff is only $1800, I was hoping to payoff the second note by the 26th and then complete the transaction the following week.
Is this something that a bank would agree to or do they usually require a closing on the same day as payoff? Has anyone been in a similar situation?
Thanks!
Mike
Before anyone can answer your question a few more details are needed.
1. Is there a foreclosure in process?
2. If so is the first or second leinholder foreclosing? :-
3. Is the second upside down? (meaning is there enough equity in the property to fully cover the note they have?)
4. Do you already hold title to the property? (has id already been deeded to you?)
Yes, you can definitely payoff 2nd before closing. The risk in doing that, is if somehow you are not able to close, you would need to foreclose to get your money back. Let the second know that you a closing in a week, and maybe they will agree to postpone until you close.
To answer the questions:
Yes, there is a foreclosure in process. The first lienholder is foreclosing but the sale date isn't until February.
There was not enough value in the home to give the second a full payoff (which is why they agreed to to short sale).
The property has not been deeded to me.
Is there anything specific I would have to do to cover my butt if I were to payoff the second note before I held title? Do I need to request anything specific from the 2nd lienholder so they don't come back later and kill the deal because I haven't closed? (or am I being paranoid?)
Mike
Sure you can payoff the second... You can make a payment on anybodies loan - want to pay off my second mortgage, too?!? All jokes aside, make sure that you have a solid and legally binding contract on the property. You know what everybody here says - you don't want to put any of your own money into someone elses property - Until you own it...
Good Luck!
[addsig]
Here's the deal:
Now that we know the second leinholder is in a very weak bargaining position the answer is easy. TELL THEM THEY WILL WAIT AN EXTRA WEEK. You see the reason they agreed to take $1800.00 is that otherwise they will probably recieve nothing after the first leinholder is paid his/her due. COntact whomever agreed to take the 1800 and inform them of your closing date next week. Tell him/her to fax you a payoff agreement stating that date.
If you think this is a good deal worth holding on to, I would not recommed playing hardball with the 2nd lender. If you do, they might just say forget it. When you payoff the 2nd you essentially become a lender in 2nd position, therefore you acquire all the rights and risks that go along with that. All you need to do is get assignment paperwork from the 2nd, that states that you are the lien holder, once you pay off.
I would think the big question is are you short selling the first mtg. If you are only shorting the second, then get the deed then pay off all at the same time. Once you have the second gone and have title, theres no way the first will not take full payoff... so then it's yours and you cannot lose IMHO.
Quote:
On 2004-11-17 18:16, reinatalie wrote:
If you think this is a good deal worth holding on to, I would not recommed playing hardball with the 2nd lender. If you do, they might just say forget it. When you payoff the 2nd you essentially become a lender in 2nd position, therefore you acquire all the rights and risks that go along with that. All you need to do is get assignment paperwork from the 2nd, that states that you are the lien holder, once you pay off.