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.

I wrote an article a few months ago about whether or not Florida attorneys could be considered ‘foreclosure rescue consultants’ under FS 501.1377.  My question at the time was: “what was the legislative intent behind removing the attorney exemption in FS 501.1377?”

Well, three months later we have a better idea, as there are presently some changes to FS 501.1377 and Chapter 494 underway with CS/SB 2226.  Based on what’s been added and marked up as of today’s date in CS/SB 2226, attorneys will now be required to become “a loan originator, mortgage broker, or mortgage lender” when completing loan modifications for clients unless the attorney negotiates the loan modification “as an ancillary matter to the attorney’s representation of the client”.  So basically any of the attorneys that are advertising ‘loan modifications’ will be required to become licensed in the mortgage business.

I also noticed that the present changes to FS 501.1377 have removed the definition of ‘foreclosure rescue consultant’ from the Act and since it appears the amendments to Chapter 494 F.S. referenced above apply to ‘loan modifications’, it would appear that companies engaged in short sale processing in Florida would no longer be subject to its provisions or at least that might have been the intent.  Only problem with that is a ‘loan originator’ is defined (in part, emphasis added) as: “an individual who, directly or indirectly, solicits or offers to solicit a mortgage loan, accepts or offers to accept an application for a mortgage loan, negotiates or offers to negotiate the terms or conditions of a new or existing mortgage loan on behalf of a borrower or lender, processes a mortgage loan application, or negotiates or offers to negotiate the sale of an existing mortgage loan to a noninstitutional investor for compensation or gain.”  So, it appears that every Florida licensed real estate agent who negotiates a short sale must also obtain a Florida loan originator license. Rut-roh!

It should be noted that as of the date of this post we don’t have the final version yet and since that’s the case, I’m going to recommend that everyone in Florida who objects to this provision send an email to Senator Mike Fasano fasano.mike.web at flsenate.gov with a link to this post stating that ‘short sales’ should be specifically exempted from the definition of ‘loan originator’. 

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

And you have a short sale…

Then why not let me buy & negotiate your short sale?

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…)