I am a real estate agent negotiating second lien with Chase
During the course of my negotiations on the second lien with Chase through their agent I was told by that agent that he would not submit the request for second lien release to his investor unless he gets (Chase) 8% of the total ORIGINAL second loan. Usually and as a normal practice rule and mutual understanding between lenders, a max of 6% of the current purchase contract or $6,000 whichever is less is allowed to the second lien from the proceeds. I certainly pointed that fact out to the negotiator. However, his response was that it is a new RULING that was recently passed by the Department of Justice that the first lien holder must allow 8% of the ORIGINAL second mortgage and that the first lien holder would not object to that amount according to the ruling. My question is: is it true? I called the Department of Justice and I was told that they never heard of that.
I had to check with a real estate broker friend and here is what he said.
“Unfortunately this sounds all too familiar. It happens all the time when 2nd mtg’s are involved. I have not heard of anything to do with the DOJ requiring 1st mtg’s to offer 8% or 2nd mtg’s to take 8% (although I wish there was, my life would be way easier).
He is correct 6% is the norm, and most major banks servicing 2nds understand this and will (reluctantly) agree to accept it, knowing that they will probably never get more than the 6% being offered. I’m going to take a wild guess here though, and say that this 2nd is sitting with Chase Recovery, the same guys that collect on the pre charge-off Chase cc debt. They are known for bullying agents around on short sales, and many times don’t pay much attention to what is customary with a normal short sale.
In the end, this doesn’t sound like they are too far away, one side or both will almost always budge, but they can make it a huge pain in the butt, wasting a lot of time.
If I find that we’ve reached an impasse I will ask the buyer to come up a little to cover the difference to the 2nd, this can work if the buyer is already getting an incredible deal.
As a last resort, I will ask the Seller’s to accept a prom note for the difference, especially if they have plans to file BK after the short sale is complete.”
Please post your responses and follow-up messages to me on this in the comments section below.Collector Says DOJ Told Chase They Don't Have to Release Second Lien in Short Sale Unless They Get Some Cash by Steve Rhode