Short Sale CASE STUDY: 013

Don’t Forget Jr. Liens!

When I first spoke to the seller he mentioned getting some State assistance to help him make his payments.  At first I just assumed that this was some sort of disability program because of his medical problems.

It turns out he was actually lent $20,000 and they placed a lien against his property to get repaid!  Truthfully this looks like a good program because it was interest free and the balance was reduced over a period of years until it disappeared (to make sure you truly used it to stay in the home). It was through the Oregon Affordable Housing Assistance Corporation.

Never heard of ’em…

FHA won’t allow more than $2500 to go a junior liens so this could be a problem. Will they accept a short sale?

More Information Please

My first step was to contact my very helpful seller and have him send me any information he had about this program. What does he remember about the program?  Did he sign a Note? or anything else that said he promised to repay?

He promptly faxed me a few pages that allowed me to get the contact info for the right department of the government in Salem, OR.  I think it took me all of 2 phone calls and 3 minutes to find out I needed to email my request to a specific email address and someone would get back to me.

I was not going to hold my breath…

Fortunately they responded the very next day and said they would allow a short sale and all that was needed was for the Escrow Officer to order a payoff in the short sale amount and they would issue an approval.

Let The Negotiations Begin

Being that this is a branch of the government I was sure there was going to be some policy in place that was going to conflict with the FHA guidelines.  Did they think they were going to get a full payoff?  Would they just release the lien and he still had to pay back the rest?

It took another 24 hours for the approval letter to be received by escrow. As expected they stated that the payoff was over $16,000 but contained these magical words…

 If the closing is a “Short Sale” or “Sale” with insufficient net proceeds to pay off the OHSI principal balance due in full the payoff amount is $2,500.00.

Bullet Dodged…

So now I have my 2nd lien approved for a short sale and it took all of 3 days.

That never happens…

All that is left is to have the banks negotiator submit the offer and this approval to HUD for approval and we will be ready to close this!  I say this because the offer will net them more than required on the Approval to Participate I talked about in the last post. No reason to decline!

Woo Hoo!

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