Well luckily for us, 1st mortgages have paid attention to the changing trends and have changed their policies to match. Now, more and more 1st mortgage holders are allowing a payoff of 10% to 2nd mortgages to avoid any complications. And for us short sale specialists, this is perfect! One of the lenders that have started to be more open to this policy change is ASC.

Keep in mind, not all 1st mortgage holders are doing this, and it is on a case-by-case basis, but, they are at least open to it and some will approve 10% to be paid to 2nd mortgage holders. Try to determine your particular investor’s guidelines. Some 1st mortgages will only require that their net amount is met, and they won’t have any restrictions on how it happens. But in all cases, it is worth pursuing getting them to pay 10% to the 2nd mortgage, because you just might get it!

Strategy:
When it comes to actually putting this knowledge in practice, the best way to approach it is this: initially offer $1,500 to the 2nd mortgage, that way you can negotiate up with them. On the HUD that you send to the 1st mortgage, include a payoff amount of 10% of the 2nd mortgage’s principal. That way, you can initially explain the situation and try to get the full 10%. Otherwise, you can still hopefully get the 1st mortgage to pay above the $1,500 you initially offer the 2nd, so both mortgages feel like they’ve won! For more articles and videos with real-time updates on changes in the pre-foreclosure industry visit www.RealEstateBusinessMentors.com and if you would like to ask me a question visit www.AskBobLachance.com.

And so we decided to roll the deal into a retail short sale and realized that we could have the buyer pay us a fee equal to the one we’d make if we completed the wholesale short sale! (In Connecticut part of the reason that this can occur is because when doing wholesale short sales we have to perform two separate closings and added costs). This is how we did it…

In looking over the contract, we noticed that the buyer did not require any concessions/closing costs, and so we spoke with the buyer and his agent and told them that we could work out a way to have the lender pay our fee. We then spoke to the buyer’s attorney and informed him that not only would we be able to accomplish this, but that we’d be able to represent everything on the HUD1 to satisfy title issues. And so what we did was negotiate 3% seller’s concessions for the buyer, which they in turn agreed to pay us at closing. The beauty of this was that the buyer wasn’t faced with having to pay us that amount out of pocket, and so they gladly agreed to pay the concessions, especially since we negotiated them and got them approved to begin with.

As I said, the initial offer was $400,000. The first time the buyer set out to get a clear to close, their appraisal came in at $350,000, and so we had to go back to the lender and get them to approve $350,000, which we were able to do shortly thereafter. For more articles and videos with real-time updates on changes in the pre-foreclosure industry visit www.RealEstateBusinessMentors.com and if you would like to ask me a question visit www.AskBobLachance.com.