Short Sale Short Cut Advice
October 28th, 2009
Recently I put in an offer on a property in the Seattle area, and the listing agent called me with the most unusual story. It was a methodology is how get the first lien hold to take less, and pay the second more, so the second lien would not follow the seller if it came up short. So i know what everyone is thinking By law the primary Lien Holder has the first rights to any fund to dissolve its debt. The issue is the home owner went and got a commercial loan backed by his house, and since that loan had a personal guarantee it could not be dissolved in Bankruptcy court.
The listing agent had this method to get around the investor rights. Which I still think is illegal. But I would to have some people let me know their thoughts.
1. To write the PSA with the purchase value as much as you are willing to pay the First.
2.Next write a separate addendum were you bring more cash to pay more of the second lien holder.
3. Then create a HUD where the payoff’s are disclosed. And tell the bank to take it or leave it.
Does this raise any red flags for anyone like it has for me?
PS…Hands down this is Illegal. Just got off the Phone with my Real Estate Attorney! Do not participate in anything deal that the listing agent is trying to involve you something like this. This is Mortgage fraud.
