Need advice on a discounted 2nd mtg. - Posted by mvm

Posted by John Corey on June 17, 2006 at 14:40:50:

MVM,

Clarify why you have a concern.

How were you going to complete the subject-to sale? Were you expecting to get title insurance to protect your interest? How is title going to be held?

John Corey

Need advice on a discounted 2nd mtg. - Posted by mvm

Posted by mvm on June 17, 2006 at 12:31:27:

Hi All,
I was hoping to get advice on a situation I’m facing right now with a discounted payoff on a 2nd mtg.I have a property with 2 mtgs on it. The first mtg payoff is 343k and the 2n mtg original principal is 80k . 2nd mtg has agreed to take 10k to release their lien. Also, they want the homeowner to sign a promissory note for another 10k that would be paid over 8 yrs.
The homeowners have agreed to sign the promissory note.
My intention is to reinstate the first mtg and payoff the 10k to the 2nd mtg and take the property subject2.
The problem I have is that the 2nd mtg wants to see the final HUD-1 one day prior to the closing for final review.
How do I get around this situation.
Do I just send the 2nd mtg the 10k check and tell them the closing got delayed and ask them to accept the check.
Am I risking my 10k in this situation?
Has anyone faced this before.
Please advice.

Thanks,
mvm

Re: Need advice on a discounted 2nd mtg. - Posted by Brian Profits

Posted by Brian Profits on June 17, 2006 at 22:56:05:

I have discounted 2nd mtgs and the 2nd mtg lender just wants to see the final HUD prior to closing. It’s common lender practice to check closing figures to make sure the amount paid to 2nd lender is not less than $10K. This should not be a problem. Just fax them the final HUD and close the next day. This would be a purchase and sale transaction at the closing where you buy “subject to” existing 1st mortgage and payoff the 2nd for $10K. Simple.

Re: Need advice on a discounted 2nd mtg. - Posted by Dan O’Connor

Posted by Dan O’Connor on June 17, 2006 at 20:02:11:

Did you ask them why they wanted to see the HUD1 for final review?

They know the amount of the 1st and they realize they’re taking a hit on the 2nd.

It may simply be to ensure that the homeowner isn’t receiving funds at closing.

Dan