Senior lender won't allow Junior any $
What is the reasoning behind the senior lender not allowing a junior lender to get any $$$$ in a short sale?
What is the reasoning behind the senior lender not allowing a junior lender to get any $$$$ in a short sale?
Some lenders have requirements for allowing a short sale, and if one of the requirements is not to give any money to the juniors, then you should obey them. They may have various reasons for not letting the juniors get anything, it all depends on the lender.
If the home leins on the property are more then the value of the property, then the senior lender wants to know that they will get what is owed to them. At the foreclosure auction, the juniors would be wiped out anyway if the bid isn't high enough. The senior may think the property will not get a high bid at auction and will settle for a short sale if the juniors get nothing. At the auction, the juniors would get nothing...so why should they get anything in the short sale? At least, that would be my reasoning. But, I don't know how the lender thinks...so I cannot speak for them.
Tanya
Frank,
The good news is that if you have a transaction with a large 2nd, you can negotiate with the 2nd about buying their mortgage at a (steep discount) and then at closing, you just leave the 2nd of the hud-1. This can allow you the opportunity to make many more deals happen for when the 1st says that the 2nd can't get any money!
Best of Success!
BAMZ
Frankca- The senior lienholders don't want to accept thousands less only to see the juniors get paid. They will require the juniors to accept little or nothing as a payoff. The way around this is to offer to purchase the junior at a discount and coordinate the purchase of the home with the buy of the note on the same day so you can close everything without the junior payoff showing on the closing statement. Your investor friendly attorney or title company can coordinate this for you and make it go smoothly.