The litmus test for this is the same as for everything: Transparency. The second keeps telling the realtor, if you tell the first the deal is done…they’ll foreclose….you’ll kill the deal. The FBI is starting to investigate this form of bank fraud. Most buyers dont want to put up the money to the second before closing day, so there will be evidence that the second wasn’t innocently “paid down’ prior to close.

Watch your licenses people. Realtors, attorneys, everybody.

I’m not going to argue that the banks are stealing money from Americans. Goldman Sachs and others have. But I saw a lot of people “buy” a house they couldn’t afford and GET CASH BACK on a no doc loan. I wanted a house and free money too. But I chose to be responsible instead.

Please call 1-413-531-5030

So here’s the deal. Evidently Old Republic wanted a $6,000 payoff from the investor in order to move forward – I’m assuming they insured the loan. Well, the investor will only give them $3,000 and has also agreed to pay the errant HOA dues to the association, which is roughly another $3,000.

I got a call from the BofA short sale rep two weeks ago saying that Old Republic wanted $3,000 out of the agent’s commissions in order to proceed. Now the sale is $186,900 so the commissions are not that big to begin with. I asked him if the first position creditor would agree to that since they refused to give more but I could not get an answer back from him. Instead, he sent me a secured email stating that the short sale was declined after 7 months of effort on my part. Yet they (BofA and the investor) had only worked on the file for 2 weeks – they had been ignoring me the whole time prior to this taking place.

So I’m not sure if they were going to disclose to the investor or not but it sounded a bit fishy.

Cheers and good job on your reporting guys!

Either way, short sales are not binding for the seller/buyer, have the 2nd lienholder put it in writing what they will take, and ask the buyer to come up a little higher in the price, or put it back on the market as an approved short sale at the higher price and you will probably get it if you close quickly.

Have the first lienholder issue their approval indicating a “net proceeds to first lienholder” then if you get a little in that area, the contract price just needs to come up a little to accommodate it or the buyer needs to come in with some more cash, or whatever. The real estate agents need to stay out of it, and it all has to go through the HUD.

As for being “illegal”, it is probably not, if paid in advance of closing. The note is an amount owed to the second and we know half of these people probably “have” the money to make their payments, or at least a payment on the 2nd for heaven sake. If it is 15 days before closing and the borrower makes a “regular” or at least a big payment on an open loan that they legitimately owe the money and the payment on, there isn’t anything wrong with that. It can easily be stated as “have the borrower pay down their balance to ‘x’ and we’ll approve the remaining $8k or whatever from the first as fine. There isn’t anything wrong with that at all, it’s called paying their obligation they committed contractually to do. It doesn’t matter either whether its the borrower, mom, dad, or the man on the moon, but if they haven’t made a payment in 7 months, its a legitimate request.