This Islander Beach condo in Fort Walton Beach Florida was approved for short sale. It was a complex process, since there were three mortgage liens on the property. Here are the details.
Senior Lien: Fifth Third Bank
approx balance: $140,000
Junior Lien: Fifth Third Bank
approx balance: $100,000
Junior Lien: Liberty Savings Bank
approx balance: $150,000
Current Market Value: $260,000
So, where to start with the challenge of three liens? First, find out if any lienholder will be paid in full from the potential sale. How do you do that? Start by asking each lienholder for a "payoff", or the amount it will take to pay off the note. Get it in writing, if you can. In this case, the Senior Lien, with a balance of $140,000, could be paid off in full with the market value of $260,000. Here is where calcuations get tricky, though. The *next* lien, another Fifth Third mortgage, would get something from the sale proceeds, but how much? That is the tricky part. When preparing a prelimary HUD-1 Settlement statement, your title agent must figure out the payoff for the senior lien months in advance. It's not easy, because legal fees and penalties add up each month, changing the amount to the next lien in line. My title agency, Touchstone Land Title is a master at estimating a future balance, but it is not a guaranteed figure, only an estimate. Just make sure you have enough on the HUD to pay the required approval amount to the second lien, and the "extra", if your HUD was overestimated (or the property closes early), will likely have to go to them, as well. Why is that? When you have three liens, and the first will be paid in full, it is really like working with "two liens"... The first only pays a set amount to the last lien. In this case, Fifth Third (junior), agreed to pay Liberty Savings Bank $9000. Liberty Savings required a promissory note for much of their balance, which the seller agreed to.
I hope your head isn't spinning with this Fort Walton Beach short sale. Wait until my next one, in process now, four liens!
It's Wendy!
Wendy Rulnick, Broker, Rulnick Realty, Inc.
Call toll-free 1-877-487-9639 or local 850-650-7883 ext 204
Email Wendy: itswendy@rulnickrealty.com
Wendy Rulnick, Broker, is a short sale and pre-foreclosure specialist and has been featured in "Kiplinger Personal Finance Magazine" and "Florida Realtor Magazine". She has successfully helped hundreds of families avoid foreclosure through short sale along the Emerald Coast of Florida. Wendy Rulnick is knowledgeable in all aspects of short sale, including VA Compromise Sale, FHA HUD pre-foreclosure sale, HAP military PCS, HAFA, Bank of America Coop program and more. She is also co-founder of www.ShortSaleSuperstars.com and short sale instructor to agents across the United States. Wendy Rulnick sells real estate in Destin, Santa Rosa Beach, Fort Walton Beach, Niceville, Bluewater Bay, Navarre, Seagrove Beach, Watercolor, Sandestin, Seaside, Crestview, Rosemary Beach, Mary Esther, Shalimar, Panama City Beach, Eglin AFB, Hurlburt Field.
