Help with a short sale with two mortgages

[Dee Xixi]

I'm working on short sale but the property has two mortgages, the second lien is a private holder that is not willing to make too much concession and want to protect their interest. have anyone deal with this issue.

[Myka M.]

I'm sure someone here can help ya. fortunately I haven't ran across that problem, and the only reason I am commenting is to put it higher on the dashboard so someone will hopefully respond. I'm all for learning about something new!

Good luck!

[Scott Hubbard]

Originally posted by Dee Xixi:

I'm working on short sale but the property has two mortgages, the second lien is a private noteholder that is not willing to make too much concession and want to protect their interest. have anyone deal with this issue.

I have run into this from time to time. Private lenders can be difficult to deal with for a myriad of reasons.

The best way to deal with them is to find out how sophisticated they are. For instance, quiz them on the foreclosure laws. Or, find out if they know how much they believe property is worth or how much is owed on the first.

You need to determine how savvy they really are. If you feel they know there stuff, chances are they are two steps ahead of you and probably have a plan.

If they do not seem sophisticated or are ill informed you need to try an educate them about the risks they face.

In my opinion, most private noteholders will not settle for a mere 10% or less. Either they have a plan or they are too stubborn to take what they can get. I have been successful in partnering with a private noteholder once, where we split the proceeds from the sale. He stood to lose 100% in a foreclosure scenario, instead he got 17% percent of face value. You might try this approach too.

[Dee Xixi]

Thanks for the quick reply but my other question, can that private noteholders either stop the short sale, claim the property at the sheriff sale or be an issue for me as the new owner

[Scott Hubbard]

Originally posted by Dee Xixi:

Thanks for the quick reply but my other question, can that private noteholders either stop the short sale, claim the property at the sheriff sale or be an issue for me as the new owner

Can they stop the short sale? The lienholder does not have to accept your offer, so if this "stops" the short sale, then YES they can. Since you need to have all leins released in order to complete a short sale transaction, you need for all lienholders to agree to accept.

Yes, the noteholder has the right purchase the home at the auction provided they meet the minimum required by all superior positions.

If your the new home owner before the sale, then this would mean you should have no issue. This is because you would have needed all noteholders (lienholders) to have previously agreed to release their interests in order to gain title.

[Paul Beauchemin]

Originally posted by Dee Xixi:

Thanks for the quick reply but my other question, can that private noteholders either stop the short sale, claim the property at the sheriff sale or be an issue for me as the new owner

Yes, I've had private investors that had a second note buy the property at the auction. They can stop a short sale on the first if they demand too much - the first lien holder will not want anything with a junior lien to make out too well.