Short sale on Pre-Pre-foreclosure
My motivated seller is two months behind in payments. His house is 1 year new. He has two loans, 1st with USDA, FmHA loan with a subsidy recapture clause, $123K. The 2nd is Chase Manhattan, $30K. This 1100 sq ft house is valued at $154K. 
I was going to do a lease purchase when the title search turned up a $1050.00 lien from DSHS. The owner is in drug rehab, lost his job, his parents can no longer make the payments, his 'wife' left him and took the baby with her.
He is the only one on the title, he no longer resides in this house and doesn't want it. He's a little concerned for his credit but if the house is foreclosed on, oh well. 
I've read your articles on 'short sales'. Do I approach the USDA people the same way as any other lender? How would I approch the 2nd lender? Is it too early to approach them at all? On a short sale how much do I offer the owner? 
Without getting into a long song and dance... I'd walk away from this one.
Not every scenario lends itself to a short sale.
Not much chance at a discount from 1st. Possible discount from 2nd. But not much.
But, that's just my opinion.
I made a mistake. I looked on my Property Detail Report on this property and it lists the Chase Manhattan Mortgage($30K) as in the 1st position, the USDA, FmHA loan ($123K) as the 2nd. Does this change the scenario, or would you recommend I still walk away?
thanks
Skwe-G
I would recheck your data. My expereince with USDA loans is limited, but I haven't known them to make many 2nd mortgage loans.
Can you confirm this? Is it possible that your 'property detail report' isn't accurate? Could the Chase loan have been paid off?