Bob,

Here's a link to another thread by Joe Leksich.

https://www.reliberation.com/blogs/joerealestatefw/archive/2007/06/19/short-sales-a-good-resource.aspx

Has your client spoken with the lenders to determine if they're willing to restructure?  It's working pretty well in some cases.

Also, if you search "short sales' in the upper right hand corner of the Relib page (search all relib), you'll find a ton of information.

Bad situation for your seller. Most secondary lenders will not do a short sale because of the chain of title.

who ever is the lender holding the current notes is who I would start with on both.

will the short sale be enough to pay off the first? If so then it would have to be the second that would take the short sale, you need to read the deed and see what it says about defaulting.

I have tried just a couple short sales with seconds and got no where with the secondary lender. the first don't mind because they normally will be the ones to get all the cash from the closing proceeds.

ALso there would be a good chance with the secondary lender the seller would be looking at a pay back of the difference. ( the way the title/deed is wrote they have option for pay back or   addressing default and different type of procedure for aquiring monies than than first lean holder)

Some thing has to give with these types of 80/20  interest only because more and more people are going to be in the same postion as your seller very soon. The foreclosure market is about to explode.

Good luck and would love to hear how it all worked out for you.  

Bob,

Here is another post I did that should help.

https://www.reliberation.com/blogs/joerealestatefw/archive/2007/06/29/hints-and-tips-in-handling-a-short-sale.aspx

You need to determine how much the home will sell for and then compare that to what is owed by the 1st & 2nd.  If only one will be short, it will help.  Don't forget to include taxes and commissions!  

Start with the current 2nd.  You will want to create a hardship package to submit to them.  The more complete this is the better chances of getting them to respond.  

Good Luck

Bob, I have run into the same problem twice today.. I am contacting the first mortgage holder simply because he is first in line. If the 2nd morgage holder wants the procedes he needs to pay off the first mortage holder in order to step in first place.  These are my thoughts, I do not run into a lot of these but they seem to be coming a lot more often in this market.  Best of luck!