The 2nd Mortgage
I have a question regarding the 2nd mortgage. I am working on a ss and there are two liens on it. I try to negotiate with both banks. What about if I get an agreement with the 2nd bank but cannot get a good price with the first one (foreclosed) and decide not to buy the house? Will that risk my reputation with the 2nd bank? What should I say to the 2nd bank if the deal with the first one goes sour? Thank you for being patience with newbies.
What's owed on the first? What's owed on the second? What's the house worth in it's as-is condition? Is the first mortgage insured by the FHA or VA?
Thanks for replying. The first one is Fairbanks. I am not sure if the bank is insured by FHA or VA. The insurance for the homeowners is Liberty Mutual but it got terminated two months after they defaulted on it (they did not have the insurance and tax held in escrow). The house is two years old. The first lien is $123,000 and 2nd is $30,600. The as-is value is about $117,000. The arv is $135,000. The house only needs minor repairs (carpet and painting) but the garage needs to be converted back. I am offerring 85,000 but the bank said it is too low because they have a broker did drive-by outside and said should be $140,000. The area is very slow in sales. When I ran the comps, I couldn't even find any sales in the past two months, not to mention there are over 10 houses for sale in the same subdivision. The 2nd lien is from Household Mortgages.
"The first one is Fairbanks."
Fairbanks is tough and will want to maximize it's net recovery.
"I am not sure if the bank is insured by FHA or VA".
It's probably not either, but that should be one of the first things you ask.
"The first lien is $123,000 and 2nd is $30,600".
"The as-is value is about $117,000."
How do you arrive at this? Is there a recent appraisal?
"The arv is $135,000."
This is immaterial for the purposes of a negotiated short sale.
"I am offerring 85,000 but the bank said it is too low because they have a broker did drive-by outside and said should be $140,000."
This is their perception of value. It is this number that you'll have to denigrate.
Thanks for your reply.
The as-is value is based on the market value substract the repairs. The arv is based on the asking price of other houses on the same area. I did this case exactly follow the e-book I bought from CFI. It did not talk about FHA or VA.
On another posting, I ask you about your e-book. Is that just an introduction? What about compare it to other guru's short sales courses? I am thinking to buy a more comprehansive course on ss. Thanks.
SSP,
I forgot to tell you that the homeowners already have the docs ready in their attorney's office for filing a ch.7 bankruptcy. They will hold on to it after the closing if the deal goes through.
I have no idea what material you've purchased or read, but if the section on mortgagee approved short sales didn't discuss FHA insured mortgages... perhaps it missed or minimized other basics as well.
In the case of FHA insured loans and shorts.. the FHA imposes specific criteria for accepting shorts. So, since A Short Sale Primer only deals with shorts, I guess you could say it's an intensive introduction.
The printed version which includes E-Support, has inserts and updates as they become available, including the FHA short sale formula. [ Edited by TheShortSalePro on Date 10/27/2003 ]