There is a 1st & a 2nd mortgage. Do I need to have payoffs of either of those on the HUD?

Thanks!

ETA: I found these HUD-1 instructions online but still need confirmation:

Lines 504 and 505 represent the net offers to the 1st and 2nd lien holders. These two lines are the most significant in a short sale offer.

So, it sounds like I'm supposed to come up with net offers to the 1st & 2nd lien holders, which I don't believe is correct. Any insight?

Generally the senior lienholder (1st mortgage) wants to see a negotiated payoff for the second before consider approving a short sale.The second will usually have a lien release letter in writing good for about 30 to 45 days for a specific payoff. If you go past that time you will need a new letter for closing.

So are you submitting a short sale offer to a for sale by owner?

You haven't communicated exactly where you are in the process or specific details.

Thanks Super! here's more info:

I have a short sale listing, I'm representing the seller.
I received an offer & sent it to both banks with the short sale package 3 weeks ago.
My title company prepared a preliminary HUD-1 that went in with my package, which did not have payoff info on it.
The first is CitiMortgage.
The second is Chase.
Citi is cruising through this package, asking questions, getting more info, moving it along.
Chase has done nothing.
Citi emailed me & said they "need a new HUD-1 that includes the 2nd mortgage."

So, does this mean that Citi wants the total current pay off to Chase shown on the HUD-1 or do I have to wait for chase to negotiate a lessor payoff? And if I have to wait for a negotiated payoff from Chase, am I at a standstill if Chase isn't doing anything with the package yet?

Hope the new info didn't make it even more unclear. Thanks again!

"My title company prepared a preliminary HUD-1 that went in with my package, which did not have payoff info on it."

Well than the HUD-1 is useless. Think of it this way. The loss mitigator for the first mortgage has maybe a few hundred files they are working on many with first and second mortgages as part of the short sales. It is a waste of time to work on the file if the mitigator doesn't even know what the second is willing to do.


Do you have current payoff statements for the first and the second?

Not the monthly mortgage bills but the actual payoffs that include interest,penalties,past mortgage payments due,etc. Usually the payoff amount will be good for 30 days. Now you look at your offer and see how much will be available to payoff the second loan.

So if offer is say 250k but after commission and other costs net is 220k. Both loans combined are say 270k so you will have a 50k difference. Usually the first will throw a few k at the second to agree to a lien release letter. If the second wants something crazy like half of the second mortgage balance the first will just foreclose and wipe them out because they net more. It just depends on the foreclosure process in your state as to redemption laws and non-judicial or judicial foreclosure etc. how motivated the first is. In my state you foreclose in 4 weeks with a non-judicial foreclosure with no redemption rights after the foreclosure. So the first mortgage never pays the second mortgage more than a few k.

Now the buyer or the seller can offer additional funds to the second if they want on top of what the first will pay to get the release.

Getting the second to release for a reasonable amount is always the hardest step and the deal killer most times. You need to work on the second hard in getting a line release amount negotiated in writing. Without it you have nothing no matter how motivated the first is.

You will need to come up with a payoff amount to Chase to list on the hud 1 to Citi. I always try to ask for at least 10% + of the principal balance. You probably wont get it unless it is a very small loan, but if you dont try you certainly wont.

So for example first is for 200k, second is for 50k. House is selling for 150k.

I would propose in the hud 1 to Citi to pay say $8k to Chase.
On the hud 1 to Chase I would ask for a payoff of $1k.
Now Citi may not pay Chase the 8k and Chase likely won't take the $1k, but the hope is that somewhere down the line there will be a meeting of payoff amounts or at least you can get it to a very short shortage that can be contributed by buyer seller, etc.
Make sense?

For example Citi agrees to pay Chase 3k, Chase agress to payoff of 5k and someone forks over the other 2k.
Or in a perfect world, Citi and Chase both agree to the same payoff...however that doesnt always happen.

I hope that didnt confuse you more..lol

You should just ask Citi what they want.

LOL - I bet they WANT to get paid in FULL!

minna-too funny!