Hi,

I have a Short Sale scenerio I would like to run past you guys, kind of interesting. Wells Fargo holds 1st of 562k and second of 75k, total $637k. The home will sell for approx. 770k I would say. Therefore the homeowners will not be short on the 1st and 2nd! Here's the kicker though- they have a 3rd, an SBA loan of $140k. How would you handle this? Wells did file the NOD so the foreclosure process is under way. Do I just sell the home and then let Wells take what is theirs and then the 3rd automatically gets whats left over? Once the homeowners pay off the bank, arent' they technically free and clear and then they can take what's left and use it at their discretion or does the 3rd automatically get paid? What would be best for the homeowners?

Any advice appreciated.

Thanks!

I'm not an attorney, but my guess would be that the 3rd would automatically get whats left over. Don't think your home owners will get the left overs. Free and clear means just that.....all liens are free,which the 3rd would too come up short but because it is a short sale.....the homeowners s/b free! Might have to accept the remaining write off as a gain on taxes in the next tax year though.

Acoope02

How do you know what the payoffs are for all 3 loans?????

The payment with the balance are not the payoff amounts. Your seller or sellers have to request the payoff amount good for a certain number of days 30 to 60 from each loan to get the payoff amounts IF they want you to do this you will need a signed authorization to release to fax to each lender so they can release the info to you.

The sba loan is a 3rd lien on the property. ALL liens will be paid from funds recieved and then what's left over will go to the sellers which in this case is nothing.

A lien is an encumbrance on the property period. Since you won't be shorting the first or second you won't need there permission. You will however need the authorization to release to speak with the sba loan on there behalf. Explain to the sba loan the hardship the sellers are having and that there will not be enough to pay off there loan in full and that the property is going into foreclosure and there lien interest will be wiped out and they will get nothing.

They will probably perform a bpo to determine a non-biased value to look at there options.Tell them the homeowners are thinking of filing bankruptcy if they don't work with them and are out of options. The sba will come up with an amount they will RELEASE the lien for and might let the seller off the hook for that or in the letter might say they reserve the right in the future to come after the seller for the balance owed.

They might just accept a promissory note signed by the seller to gurantee payment in the future. They are not just going to go away you can forget that scenario. They will look at all you sellers assetts with an attorney search to see what they can go after. If they approve the short sale make sure the pre-lim hud-1 you send to them INCLUDES your commission and show net payoff. Also make the buyers understand your sellers have no money and at this price they will be paying closing costs,and all related fees.

good luck and no legal advice

Thanks super, much appreciated!

lets us know what the SBA does. it would be interesting to see what they do.