Potential Short Sale - Need Wise Input

A mailer generated a call from a gentelmen who was notified that his second note holder has initiated foreclosure. Here are the numbers:
1st - $150K
2nd - $43K
3rd (HELOC) - $18K

Comps show the house is worth about $210K.

A quick call to the public trustee in our county revealed that the 2nd noteholder has withdrawn the demand to sell the property at public auction (was scheduled for 28-APR-2004). The seller informed me that he had just wrapped up BQ procedings. I'm not sure if the BQ caused the 2nd notehlder to become satisifed or if something else happened to them.

Regardless, in a situation where the 2nd noteholder is the foreclosing party is there a way to convince the first noteholder to short? What about the second? Ordinarily the second would get little or nothing if the first notholder foreclosed...right? In this situation I'm not sure who would be willing to bargain and what thier motivations would be. Any advice or knowledgeable insight would be welcomed.

Thanks!!

Comments(3)

  • bgrossnickle16th April, 2004

    What does the home owner want to do with the house? Is he deliquent on the 1st?

    Brenda

  • rek76916th April, 2004

    WOW..thanks for the lighting fast reply!!
    He is behind on the first also (4 months) so I'm sure they will be itching to start foreclosure soon. Seller has moved out of state and simply wants out of the property and is willing to let it go for whatever amount we can negotiate with the different lenders.

  • TheShortSalePro16th April, 2004

    Not too likely that the first will agree to a short... and the second would only agree if the 3rd took a substantial hit.

    Many people think that seconds and/or other juniors are automatically out of luck if a senior forecloses. That's not the case, especially if there is some equity. The juniors often join in the foreclosure as a Plaintiff, or, they can attend the sale and bid up until their exposure is reduced, or, in some cases, they take out the first.

    My thinking is that the home equity line of credit has the most risk.... and they are the folks to whom initial contact should be made. Offer them a nominal amount. Then, move on to the next senior lienholder. If you are successful, try the first mortgagee. The worst that they can say is, no.

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