Short Sale Hot Potato

I received a call from an escrow officer with a question on a short sale transaction she is currently working on.  She and I have worked on several short sale transactions in the past.  This one stumped me.  I’m not sure if this is a new trend, but thought you might know something on the subject.

The short sales she is working on fell apart at the last minute.  The buyer backed out of the transaction after both lenders on the property accepted the terms.  The second mortgage holder was to receive $3,000.  A few weeks later a new buyer submitted an offer comparable to the previous offer.  When Julie submitted the demand to the second lender, she was informed the lender already wrote off the debt.  The lender is Chase.

I realize most lenders of second mortgages here in California know they don’t have a chance to recoup their losses.  Any ideas or suggestions?

Dorene

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Hi Dorene, 

The second mortgage is charged off per Federal Financial Institutions Council which requires: “For open- and closed-end loans secured by residential real estate, a current assessment of value should be made no later than 180 days past due.  Any outstanding loan balance in excess of the value of the property, less cost to sell, should be classified Loss and charged off.”

You can still complete the short sale.  If Chase no longer has the loan then they should inform you of who to contact and if they refuse to do that for some reason then send a certified letter to Chase requesting the identity of the holder of the loan under 15 U.S.C. § 1641(f)(2) of the TILA and label it a Qualified Written Request to get their attention.  The short sale marches on!

Thanks for the questions and hope this helps.

Paul