Two Loans on a Sacramento Short Sale

two loans on a sacramento short saleOne of the reasons I write a daily blog is to educate and share my real estate knowledge with other people, and I hope it’s entertaining along the way. My secret to being so successful at blogging is that I write about what I know; I don’t write about what I don’t know. I might not know how to keep a souffle from falling or a yogurt from curdling so I don’t write about cooking, but I do know how to negotiate and close a Sacramento short sale.

As such, I recognize those who do not. It’s like a secret club in Sacramento. Nobody wants to admit that they don’t really know much about short sales, but most agents rarely deal with a short sale. I wish they would just tell me they need help, and I’d gladly help them, but some of them don’t want anybody to know. It’s like a badge of shame or something, which is ridiculous. While I can understand that reluctance, they’re not doing anybody any favors.

For example, an agent who doesn’t know much about short sales might tell their buyer that the buyer should not write an offer on a short sale with two loans. The agent might erroneously believe that it won’t close or the odds are it will be more difficult, which isn’t necessarily true. Two loans on a short sale provide less excitement than, say, a Bank of America FHA short sale or certain lender’s HAFA short sales or even a Fannie Mae short sale. Sometimes the two loans are held by the same institution, in which case even if the second loan was hard money that loan is probably exempt from recourse in California, so the lenders are more likely to cooperate.

I just closed a short sale recently that had a loan for almost $500,000 and that bank accepted a $6,000 pay off from the first lender. Don’t let the fact that there are two loans on a short sale frighten you away. Of course, there is one exception that could cause difficulty, although I haven’t yet encountered it, but I see it out there on the horizon. That is when the first lender refuses to issue an approval until the second lender issues its approval, and the second lender refuses to issue its approval until the first lender issues its approval. Yeah, it’s a Catch 22, and I did not much care for the book, either. One bank eventually caves in.

The reason a first lender might not want to issue an approval letter is because of the new law that went into effect on January 1 of this year which says after an approval letter is issued, the lender must stop foreclosure: The Homeowner Bill of Rights. It’s the only way to stop dual tracking. But I have ways to work around it, so if you’re looking for an experienced Sacramento short sale agent, make sure you call an agent like me who has closed hundreds of short sales. Don’t draw the short straw when it comes to your very own short sale agent.

A guy told me yesterday he had been talking with his property management company about doing a short sale. The property management company admitted that it does not sell real estate, it only manages rentals, but offered to do the short sale for him. What? How insane is that? It’s bad enough to give your listing to an agent who doesn’t sell real estate, but give it to an agent who doesn’t do short sales? Why don’t you just cut off your head now and leave it rolling in the street?

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