2-lender short sales (foreclose, 4%, agents, mortgage)
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Has anyone had a two (2) lender short-sale in which the 1st lender will not begin processing, including ordering the BPO, until the 2nd lender has issued its approval letter? Of course the 1st lender is limiting the 2nd lender to 6% of its balance while the 2nd lender is insisting on 10%. Sellers could prepay the 4% difference and risk losing it if the short-sale is declined; especially risky when sellers don't even know if the offer's price is acceptable.
Last edited by Kamms; 11-11-2011 at 12:06 AM..
Reason: word omitted
I have had several, it usually means a complete package is faxed or emailed to the second lien holder. Then, you can ask what their guidelines are for approval. I always tell seller's to expect a 10% request. Then I ask about timelines for approval, and try to juggle them with the needs of the first.
CA recently changed a law about future deficiency judgements on 2nd liens on a short sale. The 2nd can no longer come after the seller for that deficiency. It makes a good sound bite for the politicians, but since they didn't change that for foreclosure, it is now often more profitable for the 2nd to foreclose and sell the deficiency judgment to a collection agency for 15-20 cents on the $$. We've seen very few short sales with a 2nd lender close since then, and now I'm seeing more buyers being asked to fork over the extra cash to close the deficiency.
We had one just this week, but not quite that bad. The first wouldn't issue final approval until they had an approval letter from the 2nd, and the 2nd wouldn't issue an approval letter until they had a final approval from the first. We finally got the 2nd to agree to a 6% payoff, which the 1st also agreed to, and it looks like we are going to be able to move forward.
We had another recent one where there was a 1st, a 2nd, and two other junior lien holders. Both junior lienholders refused to budge a penny. The buyer pulled their offer, submitted an offer for enough less that he could come to the table with enough to pay off the junior lienholders in cash and still have the same total cost on the house. That deal did successfully close as well.
I've never seen one where the first wouldn't even start the process without approval from the 2nd.
I am in the third month of a short sale and the 1st lienholder just stated that it is ready to approve it but will not issue its formal approval until receives approval in writing from the 2nd lienholder. Also has said it will not pay anything to the 2nd. The 2nd issued its approval letter this week with the requirement that the sellers come to closing with 10% of the loan balance in cash. Not sure if they will be able to do that.
1st lender is PNC; 2nd is Citibank. Today, I was dealing with a new negotiator on the 1st; the 3rd negotiator on this file. Turns out, the 10% 2nd lender letter I had on October 25 could have been submitted but, because of the 1st lender wanting 6% payout to the 2nd, would have been delayed for up to 4 weeks. Lenders/Investors want to get deals done quick when all parties are in agreement. The most recent negotiator (#2) was adamant that the 10% letter will not work and no BPO would ever be ordered. Often times I would call his line and it would ring and ring- no voice mail pick-up.
The problem I'm experiencing on short-sales is the quality of the negotiators. The 2nd negotiator wouldn't tell me his last name for example. He sounded like a street thug anyway. Today, a chipper young woman took over my file. This happened recently to me on a Chase file. Negotiator set forth certain additional requirements and conditions; we complied by the next morning, a Friday. Monday morning another chipper young woman took over the file; told me to disregard everything I was told by the last negotiator. Deal closed a month later.
We had one just this week, but not quite that bad. The first wouldn't issue final approval until they had an approval letter from the 2nd, and the 2nd wouldn't issue an approval letter until they had a final approval from the first. We finally got the 2nd to agree to a 6% payoff, which the 1st also agreed to, and it looks like we are going to be able to move forward.
We had another recent one where there was a 1st, a 2nd, and two other junior lien holders. Both junior lienholders refused to budge a penny. The buyer pulled their offer, submitted an offer for enough less that he could come to the table with enough to pay off the junior lienholders in cash and still have the same total cost on the house. That deal did successfully close as well.
I've never seen one where the first wouldn't even start the process without approval from the 2nd.
I can't describe how annoyed I am with PNC. I waited a month before I heard from the negotiator; called at least twice a week for a month. This jive talking jerk tells me ''you can't just send in doca-ments without following up''...uh, what about the approximate 10+ messages left with that moronic ''point of contact'' sad-sack I've been dealing with? The negotiator then tells me since October 5 that nothing going forward until the 2nd lender letter is in. Today I find out from 3rd negotiator that the letter could have been submitted but would have delayed the process and made apologies for the previous 2 negotiators....it's scary out there.
I know agents here that won't take a PNC short sale. For the above reasons.
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