Which Contract Do I Use To Negotiate With 2nd?
This is my first time negotiating a short sale on a property that has both a 1st and a 2nd mortgage.
I have two questions:
1. Do I use the same purchase contract for both the first and the second & just show how much goes to each on the HUD-1?
2. I know I'm supposed to negotiate with the 2nd mortgagee first, but do we actually go to closing before I start negotiating with the 1st mortgagee.
I negotiate 1st and 2nd at the same time. There is not enough time in a FL foreclosure to single file them.
Treat the 2nd like the first, call them up and ask if they have a short sell package. Ask what is needed to put in a short payoff request. Do what they say and make your offer.
You can use the same P&S for the first and second. No where on the P&S does it meantion the lender or lenders payoff.
good chance that the 2nd will not require that the property is even sold as part of the negotiations. meaning they might not care about a P&s and a hud.
The HUD1 is a preliminary. In most cases I would use a different HUD1 for the 1st and 2nd. Make the HUD1 look attractive to its targeted audience.
Brenda
Say the total amount I want to pay for both mortgages is 110K.
If I use the same purchase contract, how do I indicate to the 2nd how much I'm willing to pay them - just in the offer letter?
Also, I've heard of people having trouble with the 1st mortgagee if they find out the 2nd is getting anything.
What do you think Brenda?
Heather
Give the first and second a HUD1 (settlement statement) and that will state what each is receiving. I also state it in my letter, in bold and underlined. Yes sometimes the first does not like the second getting more than 1k. they usually fuss, but when push comes to shove, the first will usually take their money.
Brenda
So, as an example, on the preliminary HUD-1 for the 1st Mortgagee I would put them getting 109,000 and the 2nd getting 1,000.
Then on the HUD-1 to the 2nd I would put 105,000 going to the 1st and 5,000 going to the 2nd?
I can imagine the 1st "having a cow" when the final HUD-1 comes around...but maybe they're just so close to finishing the deal that they just grind their teeth and swallow it...
It is a preliminary HUD1. So you are not held to anything by it. The first will look at what they get net, and the second will look at what they get net. On the HUD1 to the first, just put a low amount to the second. See if the first comes back and says anything about a condition of the approval is that the second only gets X. Maybe the first will not say anything. If the first gets crazy, you can always just try to get them to accept it. Or, you can pay the second outside of closing.
What are your numbers for the AS-IS value, principle balance of first and principle balance of second?
Brenda
AS-IS value is around 140K.
1st is owed 218K, 248K including arrears,etc.
2nd is owed 56K, not sure on arrears.