A common variable in Short Sale transactions is the second lien holder. Many borrowers who are upside-down on their properties elect short sale as an alternative to foreclosure. The process gets sticky when there is more than one lien. These were the details of my last two Short Sale transations with a first and a second lien:
The first deal, I closed September 12th 2011 and the second lien holder was Bank of America. The second deal, I closed October 14th 2011 and the second lien holder was Wellls Fargo.
On the first transaction; Bank of America, second position lien holder approved a lien release for 6% or $4,428.77, on August 29th 2011 with a closing date of October 17th 2011. IndyMac, the first lien holder, would contribute $3,000 towards the second lien and would not allow the borrower to contibute any additional monies to Bank of America.
On September 6th 2011, Bank of America agreed to discount the total distibution to the second to $3,000 with the same closing date of October 17th 2011. Escrow closed before October 17th 2011.
On the second transaction; Wells Fargo, second position lien holder approved a lien release for $5,644.51 on September 14th 2011 with a closing date of October 14, 2011. Citibank, the first lien holder, would contribute $3,000 towards the second lien and again would not allow any additional contribution to the Wells Fargo second by the borrower.
I requested a discount from Wells Fargo, similar to the first deal but the negotiator told tme that the bank is within FreddyMac/FannieMae guidlines, under 6% or $6,000. Wells Fargo bank would not negotiate any further discount.
The buyers gladly agreed to make up the difference of $2,644.51 since I was able to negotiate a $40,000 discount for them from Citibank, the first lien holder.
Both banks had to resend both approval letters to be re-approved. We got the new approval letter from Citibank on September 14th 2011, good until October 14th 2011 and the approval letter from Wells Fargo on October 11th 2011, good until October 14th 2011.
I hope this helps any of you that are currently in a similar Short Sale transaction. If you have any addtional questions about a Short Sale or conventional sale, please don't hesitate to call or email.
Zevi Shafran
Real Estate Broker Associate
Sotheby's International Realty
Sherman Oaks, CA 91423
818-974-2279
Info@ZeviShafran.com
