2nd Loan or Mortgage is Higher Balance Than 1st Loan or Mortgage - HAFA Short Sale ?

The 2nd mortgage is a Home Equity Line and balance is significantly more than the 1st mortgage. So, 1st mortgage would be paid in full with short sale proceeds (no short sale with 1st loan). Will 2nd loan Home Equity allow for a HAFA short sale with relocation fee through the 2nd only? Any feedback and/or experience is appreciated. Thanks. (2 different lenders- 2nd with Citi)

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Hi Sara,

 

My understanding is that the sale must show equity deficiency on the 1st trust to qualify for HAFA.  While the amount of the 2nd doesn't matter under HAFA, the sale must result in a deficiency to the 1st or they won't process the sale under HAFA since the 1st trust holder must be the initiator of HAFA qualification.

 

Hope that helps.

Hi Clay!

It's good to see you back on the forum...We missed you!!!! (Was wondering how you have been-)

Take care, 

D

p.s. Are you attending the Short Sale Symposium at Sea in March? 

Sara,

One of the requirements for a home to qualify for HAFA is the 1st loan must be short. It sounds like your 1st loan on this deal is not short so you cannot sell it with HAFA. But you can still do a standard short sale on it. I would plan on someone, either buyer or seller making a cash contribution of 10% or more of the payoff amount to get the HELOC to agree to sell short. Or the seller may have to sign a promissory note.

Citi actually blew me away recently when they (in 2nd lien) accepted the $6k HAFA on a balance of over $140k.  It was actually a collection agent who got it accepted - after the woman in Citi told me 'if we don't get a payment, we are going to charge it off and then..' - she denied the exact wording, but sure implied there would be no short sale possible after it was charged off.

But the 1st thing to do is see which loan is really in 1st place.  Short of a subordination agreement to the contrary, lien position is not determined by the size of the balance, or the type of loan. ONLY the order of recording determines who is first.  Ask title for the documents.  Occasionally, the 1st and 2nd are recorded together, but in the wrong order.  Makes for a great little bit of info to keep in your pocket.

I have a Chase first for 250k and a Citi second for 525k the short sale would be around 675-700k.  Chase stated they would pay 3k relocation as both first and second are now 4 mths delinquent.  Citi has not agreed to anything.  Suggestions??????

Fred

Fred, if I had your deal, I would make sure that you do not involve HAFA, as the 2nd would only get $6000. Also, chances are that you will get an offer where Chase will be paid in full and therefore it is not a CHASE short sale, you would have to go to Citi as the 2nd. (is this an equity line?) and get a short sale approval. I just closed one similiar to this, that closed on Nov. 30th. CHASE was primary, and getting paid in full, we went to B of A equity to get short sale approval. We dropped HAFA as it goes with a primary mortgage, so that went out the window and instead of B of A getting the 6k, they were paid $78.000 and we even paid on an SBA loan. I was actually able to get CHASE to pay the promised $20,000 outreach program that they had promised to the sellers. 2 weeks ago the check for the 20k arrived and my sellers were quite happy and in this deal everyone came out okay.  Frances Hicks

Thanks for the info.  The second is not an equity line.  Your right Chase will be paid in full.  So I was just short selling the second.  Glad to hear yours wlrked out.  Chase paid your sell 20K?  I should push them for more then 3K for my seller.  Any help on the Outreach Program.

Fred

It may have come about because of the old wamu accounts... The seller had set it up before she called me to do the ss. I just held their feet to the fire... And got lucky. Go for it, the client will thank you. Feel free to call me. 949-456-9777

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