Posted by B.L.Renfrow on October 18, 2003 at 08:42:32:
The homeowner would approach it essentially the same as an investor…if they get a purchase offer which is high enough to cover the first and maybe a few bucks toward the second, they call up the second and say something like: “Look, Mr. Lender, we are getting a divorce and there’s no way we can afford this place another minute. The only way we can get out from under this would be if you are willing to take less than the full amount owed for your loan. If you can’t do this, well, I guess we will have to just let it go back to the bank, or maybe file bankruptcy…”
They should ask the lender for their short sale package, and promptly provide all the information requested. They should be sure the second understands that the property is encumbered for more than it’s worth, which means if the first forecloses, the second likely will be left with nothing at all.
As far as the homeowner negotiating this themselves, it’s entirely possible, although it would take some knowledge and persistence. There are people out there whose business is consulting and negotiating short sales, for a fee, which might or might not be an option for your homeowners. Some real estate agents are good at it also, though most aren’t knowledgeable about short sales.
Bottom line is that if the second won’t negotiate and just sits tight, and if the first is already starting foreclosure, the second likely will be left with nothing (assuming your numbers were correct), so this is the chain to yank to get their interest.