Second mortgages will often lose everything if the home goes to foreclosure auction as an action of the 1st mortgage. Another interesting fact is that typically 2nd mortgages are recourse, meaning that the lender can go after the borrower for a deficiency in paying off the balance, if the mortgage was not part of the purchase of the home. You see this alot with HELOCs and debt consolidation 2nds. However, in our 80/20 case, the second mortgage was definitely a part of the purchase and is therefore non-recourse.
I give you this background information because OCWEN sent me a short sale packet to fill out for my clients. One of the forms caught my attention:
Notice that there is not a check box for not signing a promissory note. It's kind of like the options I give my kids at dinner: You can have mash potatoes or you can have mash pototoes...its your choice.
Getting into the short sale with OCWEN should be interesting. Hopefully they will realize the loan is a purchase loan and waive the promissory note requirement. If they demand one, it may scuttle our success in accomplishing this particular short sale.
Let me know how it goes. I quit doing short sales and just turned them over to another agent who specializes in them. I got too tired of all the banks STUPIDNESS. I had one approved and the name changed on the contract and everything else was the same. Guess what they did? Sent it back. No they are going to loose another 10-20k. Good luck.
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