My Property Has 2 Mortgages, Can I still do a Short Sale??

This is a question and real short sale example we are currently working on in Fort Myers, Florida.

If there are 2 mortgages, will the second lien holder ruin or complicate the short sale??
The answer is YES, IF the short sale process if not done correctly... 

It is imperative when your agent submits your short sale package that it includes a complete and correct HUD (Department of Housing and Urban Development Settlement Statement) showing a "payoff" to the second lien holder. 

The HUD is your settlement statement which shows ALL costs, prorations, credits between buyer and seller.  You actually reviewed one of these (below)and signed off on it when you initially made your purchase.

Now this form (usually drafted by a title company or attorney) acts as a net sheet to show what your lender will net after all costs in order to move forward with the short sale.
In this, needs to be a "payoff" to the second lien holder (which is paid by the first lien holder).  This payoff amount is usually a small percentage of the second lien say 3-5%.

EXAMPLE:

Here is an example of a current short sale file for a Fort Myers, Fl property:  (Names Changed/ Info not disclosed for privacy)

Billy owes a total of $350,000 ($280,000 first mortgage and $70,000 second mortgage).
The value for this short sale is $200,000 and we have a ready and willing buyer for this price. 



Most second lien holders are aware that if they do not accept a short sale they will get nothing if the property forecloses.  The old saying "something is better than nothing" rains true...  This Fort Myers property (like many others we have transacted in Lee and Collier County) is approved and should close shortly.