3 Tips On How To Negotiate With The Second Mortgage Holder – Foreclosure Challenges – Short Sale
September 7, 2010 by man
Filed under Foreclosures Chandler AZ
The short sale by itself is a sophisticated game. It is even more interesting when a second mortgage is involved. Often, both mortgages are with the same lender. In this case, it is processed as one and the negotiator will apply all of the paperwork and actions on both loans. If the second mortgage is with another lender, then there is more work involved.
I was surprised on several occasions when negotiating with second mortgage lenders. The negotiators did not know about the rules and the priorities of differed lien holders. Here is the most important rule: at the public sale the second mortgage is completely wiped out. They get nothing. The real estate market is experiencing the lowest point of the bell curve. Almost 80% of the houses in foreclosure are upside down, which means that the fair market value is lower than the amount owed on the first mortgage. There is nothing left over for the second and the following mortgages, if any.
All of the contracts involving a short sale are subject to the lender’s approval. The first mortgage allows the second mortgage to receive some funds, but usually no more than 10% of the balance on the loan. Here is how to proceed:
1. Start the negotiation process with the first mortgage holder. Request the short sale package and provide the information required. It includes the following: purchase contract, preliminary HUD (net sheet), hardship letter, financial sheet (income and expenses), prove of income, tax returns, bank statements, preapproval letter from the buyer’s lender.
To get an answer to these queries let us learn about the procedure behind foreclosure. Foreclosure occurs when a homeowner cannot pay their mortgage. The bank which had issued the mortgage then becomes the owner of the property, and sells so that the remainder of the debt can be cleared. Hence when you buy such properties you actually relieve the bank of the burden. The bank does not aim at profit making, it is interested in getting back the amount it had given out as a loan and they want to do it quickly.
How to Find Absolutely Free Foreclosure Listings:
The best way to find foreclosures is by searching online listings, most of which charge a nominal monthly fee for the services they provide. However, most of the major foreclosure listing websites offer a free trial of 7 days, where in you are given complete access to their entire foreclosed property lists 100% free of charge. By taking advantage of these free trials you will be able to browse high quality listings of foreclosed homes, satisfying your curiosity and allowing you to see exactly what is available in your area
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