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MortgageLendMiam
174 Posts |
 Posted - 04/17/2008 : 09:26:16 AM
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Working on a short sale for a family friend. Have a little experience with short sales but havent come accross this situation.
Borrowers owes $200K to Countrywide, and $50K to Litton, is behind on both. Property will currently appraise for $180-$190K according to appraisal.
My questions is, will countrywide accept say $160K and Litton accept $25-$30K?? I dont see why countrywide would be willing to accept a loss being in 1st lien position when they know that the second lien holder is getting $$$.
On the other hand, I doubt Litton would write off the entire loan as they will not benefit from it and would rather the house go into foreclosure and take their chances.
Anyone come across this before? Any help would be greatly appreciated...
Jay! |
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MortgageLendMiam
174 Posts |
Posted - 04/17/2008 : 11:20:16 AM
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| bumpage |
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rtrefflich
2636 Posts |
Posted - 04/17/2008 : 11:59:21 AM
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Since it is a second, what you will probably do is have litton accept $1000, and CW accept the $150,000 minus fees. Litton will accept $1000 as it is standard practice in the industry. They know that the $1000 they will receive is better than the nothing they will get and that if the house forecloses they will have to pay off CW to get anything.
Standard practice is $1000 up to $100,000, $2,000 $101,000 to $200,000 and so on for a second.
The key to this entire thing is to make sure that the seller does not have to sign a promissory note to either bank for them to accept it. That will hurt the seller for a long time
quote:
Originally posted by MortgageLendMiami
Working on a short sale for a family friend. Have a little experience with short sales but havent come accross this situation.
Borrowers owes $200K to Countrywide, and $50K to Litton, is behind on both. Property will currently appraise for $180-$190K according to appraisal.
My questions is, will countrywide accept say $160K and Litton accept $25-$30K?? I dont see why countrywide would be willing to accept a loss being in 1st lien position when they know that the second lien holder is getting $$$.
On the other hand, I doubt Litton would write off the entire loan as they will not benefit from it and would rather the house go into foreclosure and take their chances.
Anyone come across this before? Any help would be greatly appreciated...
Jay!
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slants
4257 Posts |
Posted - 04/17/2008 : 12:16:25 PM
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| Typically, 1st TD will allow about $1,000 paid to the 2nd TD. If 1st TD files NOD (or has already filed), 2nd lien holder will get nothing so they may accept, especially if borrower is already in default with high likelihood of imminent foreclosure. They have been known to decline outright, or require an unsecured personal note from the borrower to approve the sale. If the 2nd was not a cash out refi and as such is not subject to a 1099 under the forgiveness act of 2007, it will be wiped out altogether in a foreclosure (unless lender pursues deficiency judgment) whereas if the homeowner agrees to an unsecured note, he will be personally liable for the debt. If 2nd TD will require a personal note, homeowner will have to decide whether letting the house foreclose is a better option than a shortsale. |
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MortgageLendMiam
174 Posts |
Posted - 04/17/2008 : 3:25:16 PM
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Thank you gentlemen for your responses. You have been of great help.
Jay! |
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EMScommercial
4780 Posts |
Posted - 04/17/2008 : 4:40:09 PM
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| i have a friend in a similar scenario... hoping it works out for him... |
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JohnnyLoanz
22 Posts |
Posted - 04/17/2008 : 5:10:07 PM
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WHY WOULD THE PRIMARY LIEN HOLDER TAKE A CUT TO HELP THE SECONDARY LENDER? THIS IS CUT THROAT BUSINESS NOW AINT NOBODY HELPING THEIR COMPETITOR....... COUNTRYWIDE GOT BOUGHT BY BANK OF AMERICA CUZ NOBODY ELSE WOULD HELP THEM NOW U THINK THEY WANNA HELP SOMEONE?
RL
DR OF REAL ESTATE
"IF IT LOOKS LIKE ****, SMELLS LIKE **** ITS MUST BE ****" |
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nbrunette
349 Posts |
Posted - 04/21/2008 : 12:37:27 PM
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If you want check out www.shortsalesonly.com....
But the answer to your question is...Countrywide will do put the money owed. Even though they are in first lien position.
Thank you
Nissa Brunette
303-755-5421 direct
nissa@shortsalesonly.com
www.shortsalesonly.com
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kimberlylong
161 Posts |
Posted - 04/21/2008 : 12:43:32 PM
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| If the 2nd loan was a cash out refinance used to pay off a HELOC how is that handled? Would they only 1099 on the difference from the cash out after paying the HELOC? or would the forgiveness act of 2007 just release the debt they would have to pay? |
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slants
4257 Posts |
Posted - 04/21/2008 : 1:27:23 PM
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quote:
Originally posted by kimberlylong
If the 2nd loan was a cash out refinance used to pay off a HELOC how is that handled? Would they only 1099 on the difference from the cash out after paying the HELOC? or would the forgiveness act of 2007 just release the debt they would have to pay?
Yes, my understanding is that anything over and above the original acuquisition indebtedness (purchase money) will result in a 1099 unless it was used for major home improvement. |
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