Posted by Randy (SD) on December 12, 2003 at 15:53:15:
The probability of the second collecting near $50,000 from the foreclosure auction might be good-might be zero. In order to answer that question intelligently more information is needed, for example who is the first lien holder? Who is the second lien holder? What part of the country is the property located in? Understand that any foreclosure auction where a bidder is willing to pay close to market value, or if the second lien holder wants to be assured of receiving their $50,000 the bid has to exceed $188,000.
In most cases should the property become REO the second lien holder will receive nothing. In many cases when trying to work a short sale the first lien holder dictates what the second lien holder is allowed to receive. The key to encouraging them to accept less is to justify motivation for them to do so. This starts with making an offer to the seller for $138,000 or $140,000 subject to the second lien holder excepting $5000 or $7000 as full settlement. This of course needs to be substantiated with written repair estimates, ugly photographs and the lowest possible comps you can find. This might be overkill considering the present debt and rehab costs totaled $208,000-when the market value is $260,000 it might be hard to convince them to except much less. It appears to be a good deal as it is.