Short Sale With Discharged Bankruptcy And CYA
Hi all,
looking for guidance on a SS. The owner filed a chapter 7 in 11/03.
ARV=150K
Foreclosing 1st owed 105K
2nd way upside down @ 75K
I have the release signed by the owners and figured I'd just hit up the 2nd on the short. Homecomings (2nd) says due to the "discharged bankruptcy" they only need a purchase contract, a net sheet (I imagine a hud 1 ?) and the payoff on the 1st. My questions are:
1) I'm sending off a warranty deed, a limited POA, and a blank sales contract for the owners to sign. Do I need or is it recommended to have a CYA letter signed mentioning the possibility of a deficiency judgement and/or tax concequences ? other CYA concerns ?
2) What is the 2nds concern over a discharged bankruptcy ? It seems to me that even if the note has been discharged that there is still a lien on the property that will cloud the title. Would a ~10 % offer still be the way to proceed ?
3) I don't want to divulge the 1st payoff to the 2nd for obvoius reasons. How would you handle this on the purchase contract and HUD 1/net sheet ? I really only want to make an offer to the 2nd without muddying up the water with the 1st payoff.
Thanks much and hope this helps others in negotiations as well.
I would love to hear some other replies, because I am facing a very similar situation.
The seller of the short sale I'm working on just got out of Chapter 7 as well - the balance on the first is 72,000, the second is 19,000, and the house is worth 95,000. My contractor estimated repairs at $28,200, so the banks don't want to have this one on their hands.
I'm pretty clear on how to talk to the first, but my trouble is how to approach the second. Should I try for a discount? Should I include their payoff on the HUD for the first (or vice versa).
Any help would be appreciated.
Once you negotiate an acceptable payoff for the 2nd, get an assignment, rather than a release. (I.e. you take the place of Homecomings as the lender on the 2nd mortgage. Therefore quest #1 is not an issue. Also quest #2 is no issue - write your own release to clear the title if you wish. 10% sounds like the right number to me. As for #3, if homecomings gives you an assignment, they most likely will not need a HUD1 or the net sheet.
Good Luck.