Posts Tagged ‘lender’

Short sales

May 9, 2009

clip art houseWhat is a short sale?  This occurs when a seller is in finacial straits, is unable to continue making mortgage payments and the existing  loan(s) exceed the value of the property. A knowledgeable agent (me) can assist the owner by marketing the property, entertain offers, prepare a package of documents for the existing lender(s) and negotiate with the lender.  In order for this transaction to close the lender has to agree to pay the closing fees of the seller and take less than is owed on the property.

There can be an outright refusal, the lender may require the seller to kick in some funds or the lender can absorb all of the costs.  When there is a second mortgage; even if it is with the same lender as the first mortgage, both loans have to be approved.    The loans are genreated in different departments.  Many times the first lender will pay the second lender a fee towards their fees, but this is usually a nominal fee, usually about $3,000.  The first lender would pay all of the closing fees for the seller.

It is time to change the name to Long Sales, as it take take many months to negotiate these transactions.  I just closed two transactions that were tied together and it took the seller a year to finally close.  It took my buyer about six months to finally close the deal.  Any time there is any change it has to go back to the negotiator for approval.  In that time frame the buyer can lose faith and go on to another property or if they love the property they can stay with the transaction.  Sometimes the value of the property has decreased and another round of negotiations can begin.  All along there has to be a monitoring of the trustee sale (in California) where the property can be sold to an independent party at the courthouse.  This is also another department. 

 I have had this present transaction trustee sale delayed three times.  The second mortgage wants the seller to put in $4,000 which the seller does not have.  Presently, she is running out of money every month and has no extra money and has maxed her credit cards.    I have requested that the first pay the second more money.  We shall see how it goes.

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