Since the SB-458 was passed on 7/15/2011, stating that 2nd lien holders can no longer pursue for deficiency judgment I have experienced difficulties negotiating with subordinate liens to accept the typical 10% of the payoff balance. The seconds are wanting more due to the inability to pursue the homeowner once the short sale is complete. They are tired of hearing the same argument that we all know is not just an argument but a true statement; they will get NOTHING if the home forecloses. If you are dealing with extremely large balances I can assure you the 2nd lien holders are going to give you a run for your money.
I have a client who is a disabled veteran. He is ill and has a true hardship. The first is BofA and the second is Chase. I have approval from the 1st. The 2nd balance is quite high and they are asking for 30%. I am just a tad shy of the traditional 10% towards the payoff. Chase refuses to take it and is willing to let the home go to foreclosure. I definitely have a fight on my hands but I am always up for the challenge.
I am also seeing a rivalry between Bank of America and Chase. If it is not a HAFA qualified borrower and there is a second lien, typically BofA will only contribute $3000 to the 2nd payoff. I have had two transactions now with Chase in first position and Bank of America in 2nd position and let me tell you; Chase is giving Bank of America the same courtesy no matter how large the balance is. The table has been turned in these instances and 10% is off the table.
Originally when SB-458 came out it was such a win for homeowners to be able to short sale their home without the ramifications of a deficiency judgment. Don't get me wrong, there are many instances where some transactions go smoothly but the ones that don't are problematic. For my client that is a disabled veteran; he has a true hardship. He is ill, has no money, and is unemployable. All parties have rallied together to get this 2nd lien holder- Chase, $19,000. I have never even seen a 2nd get that much no matter how large the balance is. And they are still willing to foreclose.
I feel that because of this new law and this power struggle that is taking place; 2nd lien holders are going to be more problematic in the future. I feel it is unfair to these homeowners that truly need the help. What good are these new laws that are being implemented if the banks are going to keep tightening up their guidelines and their greed to make it nearly impossible. OR..are they calling our bluff. Stay tuned.
We can only do our best with the information we have at any given moment. In the future taking short sale listings it would be in your best interest to make sure you know the following up front:
- Who are the lenders ?( 1st and 2nd )
- What are the balances?
- Where is the money going to come from?
I say this for the following reason: if you know who the lenders are you will know how much the 1st is going to give to the 2nd payoff. If you know the balances up front then you will be able to determine what it is going to take at minimum to satisfy the 2nd. Lastly, knowing the answers to the first two questions, you will be able to determine if you need to pull money from other parties to get the deal done.
Do not be afraid to ask a seller or buyer, even agents ( god forbid) but it may be necessary at one point or another if they would be willing to voluntarily contribute to the cause. It is going to get ugly. The best we can do as always is pre-qualify and set proper expectations. But we have to be willing to ask the uncomfortable questions.
It truly troubles me to see these issues continue to get worse. I have to believe there are good hearted people in the corporate world who wants to lend a hand to those in dire need of help and at the same time help our market recover faster by avoiding foreclosure.
In these uncertain times I cant tell you how many homeowners I talk to who are in fear. Everything is uncertain in their lives and they want to get through this process and get back on their feet pointed in a more positive direction. Uncertainty cannot be helped. Nothing is certain. But cooperation is key. If we cannot cooperate together; we as REALTORS, homeowners and the banks ( SECONDS); we will all be chasing our tails.
It is my hope that when the government passes these NEW LAWS that they think them through so we can truly STOP the bleeding. It appears that we are now just plugging holes one after another in a barrel to stop the leaking.
(Quote) My basic principle is that you don't make decisions because they are cheap; you make them because they're right.
Ronald Reagan
REALTORS, what is in your business plan this year? What are you doing to create a system that will allow you to build your short sale business? How often are you out there prospecting and how do you know if you are taking the listings that are going to be successful and not a waste of your time?
Call us today and let us show you a system that works to help you expand your business and effectively and efficiently close short sale transactions.
LOTUS REALTY GROUP
PROFESSIONAL SHORT SALE NEGOTIATORS
At Lotus Realty GROUP, helping people ethically succeed is at the forefront of who we are...
http://www.lotusrealtygroup.com/ 858-764-7300
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment