Posted by Rich-CA on September 28, 2007 at 09:56:36:
I would approach the bank as if they had a 100% mortgage. The 80/20 gimmick was a way to avoid PMI but roll the risk bump into a higher interest second. If the same bank holds both mortgages, then its bottom line the same as a 100%.
How to negotiate a short 80/20 held by same bank? - Posted by steve
Posted by steve on September 27, 2007 at 23:21:58:
These days I find myself in front of distressed homeowners with only one possible option, a short sale. Many times they have an 80/20 mortgage, both held with the same bank and minimal equity in the property, say 5% or less.
So far Iâ??ve not gone after any of these, as I believe the bank will not entertain a short sale as a holder of both notes. What is your experience of this situation?
If you do go after these, how do you tackle the bank? Iâ??d like to be able to short the second mortgage and take over the first sub2. Does this strategy raise any red flags to the bank?
Iâ??ve done short sales in the past when the two mortgages were held by different mortgage companies. Essentially I would start negotiating a short sale with both banks, but at the end of the day, pay off the arrears on the first and the negotiated settlement on the second, thereby creating equity in the property with a minimal outlay of funds.
Thanks for your time and thoughts
Cheers,
Re: How to negotiate a short 80/20 - Posted by Kristine-CA
Posted by Kristine-CA on September 28, 2007 at 10:55:56:
I wouldn’t worry about the 80/20 thing. Like Rich said, treat it like a
100% first. Where I am, the values declined so fast that elimiating the
20% 2nd still has the borrowers way upside down. The lenders are
painfully aware of this as most of what they are taking back they are
putting back on the market at a percentage of the 1st.
The discussion with the lenders, in my exerience, is all about the value
of the property. They seem way less interested in the borrower these
days even though there is the tedius documentaton of no income. I’ve
talked to other investors about short sale deals where the borrower’s
ability to pay was not even part of the equation.
Happy short-saling, Kristine