If ashort sale has been approved by the1st mortgagee but the 2nd won’t to release, what can I do?
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If ashort sale has been approved by the1st mortgagee but the 2nd won’t to release, what can I do?
Offer price is $260K; amount owed to 1st mortgagee is $238K; amount owed to 2nd mortgagee is $10K. The amount offered by 1st to 2nd is $1K (10 cents on the dollar).
Asked on December 4, 2011 under Real Estate Law, Pennsylvania
Answers:
FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
What you have written about is a problem plaguing many homeowners who are trying to sell their home on a short sale basis. Many second lenders take a hard line approach on moneys they want on a short sale.
From what you have written about, your situation may not really be a short sale unless you have not been servicing the property's debt load for quite a while where the amount owed on the debt exceeds the purchase price of the home.
If the loan on the property's first and second is purchase money, you should retain an attorney to further negotiate with the second lender threatening that in the event of a foreclosure, the second gets no money and it would have no recourse as to you.
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
You can go ahead with the short sale as long as you are willing to pay off the balance owed to the 2nd mortgagee yourself--that is, so long as the 1st mortgagee's approval was not contingent on the 2nd mortgagee also accepting the offer. If the 2nd mortgagee's approval is not necessary, than if you can/will pay the $10k, you can do the sale; but if you are not willing to do this, and/or the 1st mortgagee's approval is contingent on the second accepting the deal, you might not have any recourse.
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