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Is it normal typical for the 1st lender of a short sale to ask the buyer to pay the 2nd lender....?

...we have been waiting for this short sale for about 3 months now and then when were were close to the end we were told that the home would have to go on Hubzu online auction and we would have to resubmit an offer on that site, which adds $7,000 more to our original offer because of auction fees so now we have been again,waiting for approval and today our agent calls and says that the 1st lender(Ocwen) will only pay the 2nd lender (Citibank) 8 prrcent and that leaves a balance of $1,700 and they want to know if we would be willing to pay this so we can close before the month is up. Because we are in temporary housing, this was going to be a cash deal so we could close sooner, but are they asking for this extra money because they assume we have it since we are paying cash?? Do lenders asks buyers to pay the 2nd lender? And why cant they pay them and the home will eventually foreclose which seems like it will cost them more than $1,700. Any advice??
  • October 15 2013 - US
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Answers (4)

That happens all the time. My advice to you is to ask the buyer to come up with that amount if you don't have it, or you can make arrangement for monthly payment with them.
  • October 15 2013
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Profile picture for CallTheSisters
If the 2nd does not agree to accept 8 percent the deal will not go through.  The only way to get rid of the second is for the 1st to go through with the foreclosure.

It is much harder to do a short sale with two banks holding their hands out.

Banks don't care how much they tie you up.  It's a no win situation.  You might have to consider your options.  Whether you want to pay the extra money or walk away and find something else.

  • October 15 2013
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Profile picture for wetdawgs
Why can't Ocwen pay Citibank?   Oh, boy, this is the joy of short sales when the second mortgage is short changed far more than the first mortgage.   It has nothing to do with you paying cash, it is simply that the second mortgage holder can hold out for full payment and hold up the sale for months.  Neither of them have to accept being shorted if they don't want to, even though the consequence may be that it goes into foreclosure.     Not everything is logical in short sales, but as they are getting shorted considerably, it isn't surprising they hold out for every cent.
  • October 15 2013
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Yes, that often happens since both lenders are losing money. Cash means little to a bank losing money. More cash means much more to them.
  • October 15 2013
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