Creating 2nd Lien On Sub2 Short Sale
Might this work?
I have a house that I acquired subject to the exisiting financing. The sellers didn't move out when they agreed to, they didn't keep their mortgage paid while they continued to live there, and the lease-option buyer that I had lined up backed out when the sellers didn't move out in time.
The reason I took the house is because it was over-leveraged and a realtor wanted to list it at about the loan value. I knew I could get a premium price with a lease option, and had it all lined up, very profitable. I fell out of prime time for doing that kind of transaction as school started, and the lease option buyers for this category of house($250,000 plus) went away.
I am going to sell this property using a short sale. In Maryland it is stupid to pay transfer taxes twice, and at this point I just want to unload the property without losing too much. There are plenty of reasons for the bank to accept a short.
My question is this - in order to get paid in this transaction, creating a short sale directly to the buyer, has anyone tried getting paid by creating a second mortgage(promissary note & deed of trust) of say $5000 against the property? It seems it would be a good way to ensure that I will get paid, since I am making it appear that the sale is from the original sellers to the new buyer. Here's a great case where it would be handy to be a licensed agent!!
That lien will need to be paid at closing.
What do you think?
Craig
Unfortunately, that won't work. When you place that 2nd lien on the property and then negotiate a short sale with the 1st, they are not going to want to leave money on the table. They are going to have a problem with the 2nd not being dicsounted and also with the 2nd popping up at the last minute on the title.
Basically your question is how can you sell to the end buyer and collect a profit without ever taking title and causing a seasoning issue? Is that correct?
It will be interesting to hear what the moderators on this forum suggest, since they are the short sale experts. Amazingly, this is an issue which is skirted in every short sale course out there (at least that I have studied). It is also the most critical question in the process.
Hopefully the moderators or someone else who completes short sales on a regular basis can answer this question. Good luck!!
you skirt the seasoning issue with the warranty deed being signed into a trust.
Say you bought the house from Mike Smith who was in pre-forclosure. You simply name your trust "the Smith Family Trust" with you as the beneficiary.
Looking in, no one knows who the actual benificiary is besides you. It appears the house is still owned by Mike Smith but it is not!
Best thing is, its completely legal to call your trust anything you want.