Anyone who closes short sales knows that these second mortgages can be tough to deal with.  When the first forecloses, the second can still go after the borrower for the full balance by suing on the promissory note, so they tend to want to hold out for as much as they feel they can claw back on the short sale and their behavior can potentially kill the transaction. 

Readers of the Broken Credit Blog know that I purchase short sales in Florida and throughout the U.S.A.  Call me crazy but I like the challenge of orchestrating a perfect short sale strategy all the way down the finish line.  And along those lines, here’s an example of how to successfully deal with a second mortgage on a short sale.

Bear in mind that the second can offer a full release of liability, a lien release only, or a partial release with signature loan.  The shorting second wants the seller to commit to paying back the deficiency while the seller wants a full release.  Solving this negotiation puzzle takes time and a calculated strategy.  Contrast this with the fact that the normal short sale submission involves a buyer who is extremely anxious and desiring/demanding to close within 30 days of contract.  This is why the short sale and the type of release need to be negotiated in advance of any end buyer.  Here’s a follow up to Estoppel The Insanity:

HSBC Second Mortgage Crummy Short Payoff

Seller Counters By Crossing Off Crummy Terms

HSBC Gives In

I love a happy ending.

This author is not an attorney and this information should not be considered legal advice.  Please consult an attorney for legal advice.

Hi Paul,

I had a short-sale close in Sept 2008.  The loan amount showed on 2 of the 3 credit agencies.  I did receive a document from Countrywide that it was forgiven.  How do I get the other 2 agencies to remove this as Experian was the only one who did.

Also, when can I apply for another home loan.  My FICO is 626.  I also have debt that needs to be brought down but I don’t know how fast I can get that done.

Thanks for being here for all of us in this nightmare.

Rosanne (more…)

Paul, My Chapter 7 bk was recently discharged.  Included was a mortgage on an investment property, very upside down.  I am now considering doing a short sale rather than foreclosure.  Seems best for everyone.  However, I want to be sure I don’t “mess up” the exclusion from debt cancellation income which bk affords for discharged debts.  For tax purposes, would the ultimate disposition of a short sale versus foreclosure or deed in lieu make any difference as far as the exclusion of debt cancellation income is concerned?

By the way, I have appreciated the very useful info on your blog, and your scriptural insights as well, and have referred this blog to a few associates and will continue to do so.

Jim (more…)

We have a home in punta gorda florida that we were going to move to, but we had to shut down our business over there and stay on the east coast as there is no more demand. 

We have a first and second with wells fargo.  Current for now on both, mortgage is in my name only. 

Will they negotiate a deed in lieu of foreclosure or will I still have a deficiency. 

First is 200k and 2nd is 148k.  Value is around 200-225 – nothing in area is selling. 

Should we get an attorney, not sure how to proceed.

Deb (more…)

In the state of Florida, if a homeowner purchased a property with a first and second mortgage (100% financing) at time of purchase; is it true that if the home is sold short sale that the second mortgage company cannot go after the seller for the unpaid balance of the note?

Carol (more…)

215k mortgage + 50k credit line from Chase.  USAF active duty, was counting on building equity for 2 years and cash out when I bought in 2007.  My duty changed, reducing my income by several thousands a year.  My work location changed from being 5minutes to 40minutes away.  I was breaking even for 2 years.  Cant continue this path anymore.  Looking to settle for a smaller mortgage, otherwise I will have to let the house go. 

Khanh (more…)

What was the outcome of the foreclosure case that April Charney defended for Margret A Massey. Deutsche Bank vs Margret A.Massey?

Ray (more…)

Paul,

I reciently short sold my house. I had two mortgages on the house. The first from Coundtywide and the second  (Heloc) from WAMU. Countrywide accepted the short sale and my credit report states settled/ paid. WAMU shows charge off? Why? They accepted the short sale too? (Per my realtor). What questions should I be asking? Do I have to repay the debt? Can they place a judgement againts me, garnish my wages, of file law suit againts me? We did a short sale to avoid forclosure and ruining my credit. I couldn’t afford to pay the mortgage and cannot afford to pay the remaining debt. Please Help

Lisa (more…)

I have 8 homes needing to be short sold. How do you have time to help? You must be over loaded. I need real help. I need lots of advice. H E L P!!!

Judy (more…)

Dear Paul,

I am a licensed realtor in las vegas for the past 10 years & have seen my personal income drop from over $100k to basically nothing this past year.  My husband owns a fitness/personal training business which has been very successful over the past 15 yrs.  However do to the economy and it being a luxury based business… his longtime clients are dropping fast.  So we have had to make a hard, yet important financial decision to move back to Kansas where my husband can go to work for his family business and provide for our family (we have small kids).

We purchased our home 10/03 for $385 with 20% down, did a cash out refi in my name only (I had over 800fica)  02/05 for $440 with American Servicing Co. + HELOC of $80,000 with Countrywide. We have put in over $175k upgrading the home & it is a real show stopper, but in today’s market that is indifferent. I have had a desk comp ran & it’s coming in at $320K – so selling this is not an option.  I have never been late on a payment, so ASC will not discuss a short sale + I have the heloc.  I feel that handing the keys back & foreclosing is my only option as we must relocate in two months and I have researched every avenue with experts. I just want to make sure I am prepaired for the long term effects of this decision.   I happened upon your site and thought maybe you might have some advise for me. 

Thank you,
M in Las Vegas (more…)