Getting creative with 3rd Liens

Here is a sample of a short sale transaction we closed in late December 2009. The 3rd lien was an attorney bill for unsuccessful modification work. He charged roughly $200 an hour at 36 hours with little to no results. He then placed a $7,500 third lien against title against the distressed seller. I explained to the attorney you are accidentally pushing this transaction into an foreclosure auction situation. The first lien is almost getting paid in full and the second lien is taking an approximate $33,000 discount. Would you rather make some money ow or lose out completely when the bank takes the property back thru auction?

He argued that because the first and second lien were being serviced by the same bank therefore he is in second lien position and should be paid min. $3,000. Upon our mutual discovery it was the same servicer, Bank of America however different investors. The first was Bank of New York and the second investor was Barclays. He settled for min. $3,500 to release his lien. Meanwhile we had lost our first CASH buyer but quickly found a replacement offer. We explained to the buyers agent and the buyer how you need to construct this offer. Come in a same or lower purchase price but be willing to bring additional CASH to the table to pay the attorney directly but thru the title company so they will be comfortable in releasing the lien. The results were the attorney collect half of his fees the buyer bought a great investment property with instant equity. Our AVM came in a 191,000 and his purchase contract was $147,000. His total acquision cost was $154,000. Nice equity of $37,000 in a declining market.

Sometimes you just have to get creative with multiple liens. We hope this Coastal Mitigation Partners realtor tips helps you close more short sale transactions