Minnesota Short Sale Expert

When doing a short sale and there are 2 mortgages on the property there are a couple things that happen. The first mortgage holder in most cases will release the lien and satisfy the mortgage. The second however has two options (actually three) when making their decision to allow for the short sale.

1. In some cases the second mortgage holder plays “hardball” and requests that an unreasonable amount be paid in order to accept the short sale. What I mean is if there is a $50,000 second mortgage they may respond by saying that they will accept the short sale but they require like $10,000 to be paid to them in order to move forward. In most cases this will NOT  happen as there is no money available for this either from the first lender, the seller or the buyers. This is where we continue to negotiate with them to get them to understand the final outcome if they will not budge from this number. If they hold firm and we are not able to provide this amount to them the seller’s only other option may be to let it go to foreclosure, in which case the second mortgage holder gets wiped away getting NO MONEY.
2. The best option for the seller is having the second lender realize that there is no money to be squeezed from the sellers whether it is now or after the short sale takes place. They simply have nothing left. In this case the second lender makes the decision that the best option is to release the lien and satisfy the mortgage for the amount being offered by the first lender…typically $1,000-$3,000.
3. The most common scenario that we are seeing currently is for the second lender to accept the terms of the short sale (whatever the amount is offered from the first) and release the lien allowing for the property to be sold and titles transferred. By releasing the lien ONLY they retain their right to file a deficiency claim (collection notice) against the seller(s). This is not to say that they WILL file the claim but often times if the balance on the second mortgage is high enough they will do so to try to recover at least some of it. Please understand that the second lender realizes that the chances of them recovering all of the money is very low based on the fact that most sellers will either file bankruptcy (which will wipe it away) or they negotiate for a % of what is owed, typically 10%-25%.

Please understand that these are “general scenarios” and that every short sale process and potential outcome can be different. My team is committed and works very hard to negotiating with the lenders with the seller’s best interests in mind. We specialize in short sales and would be happy to speak with any seller that is looking for a way out and needs help.

I can be reached anytime at 763-242-6303 or via email at Rob@MnShortSaleExpert.com if you have questions about the short sale process.