Question on short sale for 2nd lender

[sleepless in ca]

Hi! My condo is on the market for a short sale. My agent is taking care of everything and hired a third party to negotiate the short sale. I trust him but just would want to know what happens to my 2nd mortgage.

Loan amount 1st lender: $305,000 ++
2nd lender: $77,000++

We're selling at $199,000. So far, have 2 offers. My second lender is still calling me at home (computerized calls). I asked my agent about this but he told me not to worry about it cause everything's being taken cared of.

Question 1: Can my second lender still foreclose the condo even if it's in the market already?

Question 2: Are there any fees (connected to selling) that we should be paying or will the lender take care of it?

Any advice will be greatly appreciated.

[Moe Bedard]

the agent should have already negotiated this with the lender............and they also should be able to let you know what will happen in your state with the deficiency...........as it varies.....state by state.........

[sleepless in ca]

Thanks for the quick reply, ***. I'm from CA. My agend mentioned that I won't get taxed for the loan difference cause it's my primary residence. But he didn't explain what happens to my second lender. I guess I just have to trust him. Thanks again.

[Moe Bedard]

I am not sure about that..........you should get a second opinion from a real estate attorney...............agents are not attorneys nor should anything they say be taken as legal advice.

[HopingtoFind]

Originally Posted by sleepless in ca

Hi! My condo is on the market for a short sale. My agent is taking care of everything and hired a third party to negotiate the short sale. I trust him but just would want to know what happens to my 2nd mortgage.

Loan amount 1st lender: $305,000 ++
2nd lender: $77,000++

We're selling at $199,000. So far, have 2 offers. My second lender is still calling me at home (computerized calls). I asked my agent about this but he told me not to worry about it cause everything's being taken cared of.

Question 1: Can my second lender still foreclose the condo even if it's in the market already?

Question 2: Are there any fees (connected to selling) that we should be paying or will the lender take care of it?

Any advice will be greatly appreciated.

Are these purchase money loans by the way? There is a lot of information on this under Deed in lieu of foreclosure forum. You have a lot more leverage with your lender if you are in CA and your loans are purchase money. Your 2nd is not secured anymore and from what I have read here there is almost no chance for them to foreclose, they wouldn't get anything out of it because they would have to pay off 1st... so they generally wait and do nothing.

As far as fees and if the lender requires you to bring some money to the table it is all up to your negotiator and what the lender agrees to.

In your situation I would really make sure that if both lenders agree to a short sale that they also release you of any liability of owing anything extra.

When you get paperwork from the bank get a lawyer go over it to make sure you understand what you're signing. Trust but verify.

[HopingtoFind]

Just to add to that. Agents no matter how well intentioned are concerned about their commissions and not so much as to what will happen after the sale completes. I have often heard lenders agreeing to short sale but still pursuing borrower for the difference between sale price and what was owed after closing.
Attorneys on the other hand do not have vested interest if you close on the property or not, so should give you impartial advice.

[sleepless in ca]

Thank you, Hoping and *** for your advices. I'm not sure I can afford a lawyer right now. Are there attorneys who give free initial consultations? I also have questions on HOA dues which I'm not paying anymore...can they still come after me? This may not be the forum for this concern, though. I will continue to research on other threads. Thanks again.

[Moe Bedard]

Here is what Professor Shays had posted on that topic to a member asking the same question...........


Let me clear up the issue of HOA dues in a manner that may make some sense. Your HOA dues are assessed against the property and are also a personal debt. They actually have priority over your lender's loan under the rules relating to priority, absent one key fact. What I mean by that is the HOA dues are being charged pursuant to the Covenants, Conditions, and Restrictions (CC&R) that were recorded before any of the condo units were sold. But, virtually all CC&Rs contain a specific subordination, where their prior lien is eliminated for unpaid dues that existed before your first loan is foreclosed. Dues that accrue after the foreclosure sale become the obligation of the purchaser at the foreclosure sale (usually your lender).

So, HOAs can and do attempt post-foreclosure collection against the foreclosed former owner. That is why you will hear me recommending that you pay them even if you are going to walk and let the lender foreclose. Mitigating this expense is the fact that I recommend that you remain in the property until after the foreclosure.

[Irish Gal]

<<>>

I've never heard of an agent "handling everything" but someone else is doing the negotiating ? Keep in mind the lender pays the sales commission / cost of the short sale whether it's an agent or lawyer/broker. You shouldn't have to pay a dime to complete a short sale. You've already hired an agent so you are probably bound now, but I prefer attorney/brokers as the lender pays them and they can minimize your legal risk post short sale (deficiency judgments). I would never just "trust" the agent. I would be cautious about an agent who isn't even doing the short sale negotiating. Does this agent have any/enough experience with short sales? If you had hired an attorney/broker, you wouldn't have to pay. But, seeing as you already hired an agent, you would have to pay to get an atty consult. I would also read all posts in this thread by "Faith." She explains how to complete a successful short sale. Good luck.

[sleepless in ca]

My 2 loans are not purchase money. I did refinance in 2007. Does this mean that I am not qualified for the debt forgiveness? Shall I start to worry now?

[RAMD05]

I was told that a title company that is involved in particular short sale process can serive as a negotiator, as well. Have anyone heard of that? Thank you.