Posted by phil fernandez on November 27, 2000 at 17:22:48:
Your scenerio will absolutely not work assuming the seller will have to sell the $20,000 2nd. No way will the 2nd be only discounted to $15,000 and sold for that, for cash to the seller.
Let’s look at this deal.
Sale price = $230,000
Assume 1st = $210,000
seller 2nd = $ 20,000
First off the 1st mortgage LTV is 91%. Note buyers probably aren’t going to do more than 80% LTV.
With the $20,000 2nd, the LTV is at 100%. The buyer has nothing invested in this deal and he can walk if a cold front comes through. In my opinion the $20,000 2nd has a value of about zero. Of course job history, credit, income and other factors do come into play, but I still can not see a note buyer even biting on this one due to the 100% LTV.