Florida Short Sales With Multiple Lienholders
A short sale with multiple lienholders can prove difficult but with the right short sale negotiator to help you through the process, it can be done. It is important to understand the different types of liens and how each should be handled.
Alma Korshak, owner of Short Sale Facilitators in Casselberry Florida, has processed short sales for sellers who have various types of liens on their property. Some liens are related to the property and some are not. This is a critical distinction when it comes to whether or not a lender is willing to contribute monies to the secondary, or junior, lienholders.
“On a short sale a lot of times the seller has a question regarding the liens that are on the property. Do we talk to the lender the short sale lender about the liens that are on the property? Well it just depends what type of liens we’re talking about, “ Alma said.
“Normally any liens that have to do with the property itself if they’re mortgage liens the lenders, the short sale lenders, will contribute some monies towards those liens. However, if it’s credit card debt, the lenders do not contribute anything towards credit card debt and also towards Federal tax liens. They will not contribute any monies towards those.”
What About Tax Liens in a Short Sale?
Alma explains that oftentimes the IRS may release a Federal tax lien on a short sale property.
“Yes, the IRS usually will waive what is owed by the seller if they have a Federal tax lien so that we can move forward with the short sale process. They won’t forgive any of it but they will, normally there is some forms that are filled out that we send to the IRS if there’s any Federal tax liens and the IRS will usually release that lien from the property so that we could move forward with the short sale process.”
It is important to remember that even though the lien may be released from the property, that does not mean the debt was eliminated.
Liens from Credit Card Debt
Credit card debt resulting in a lien on your property is not directly related to the property, so the mortgage lender will not consider making a contribution to the lienholder in order to have the lien released.
“If you have liens on your property from credit card debt, this is a situation the seller may need to address. Credit card debt is not related to the property therefore the lender will not make any contribution to that lienholder in the short sale.”
Property Related Lienholders
Mortgage lenders might contribute to a junior lienholder on a short sale if the lien is related to the property, but there is no guarantee.
Alma Korshak want sellers to understand what they may be up against when they have multiple liens against their property. “Normally if there is the first lienholder is normally the mortgage and then a lot of times sellers have two liens. They also have maybe an equity line of credit or a second mortgage, so a lot of times in a short sale you’re gonna see the mortgage then you’re gonna see sometimes an equity line of credit or a second mortgage and normally the short sale lenders will contribute something to that second lienholder.”
HOA Liens Can Be Difficult to Resolve
Alma recommends that sellers keep up with their HOA dues so the HOA does not put a lien against the property. Since mortgage lenders have limits on what they will contribute toward HOA liens, the HOA can choose to foreclose.
“The short sale lenders are normally paying six months in delinquent dues, HOA dues, to 1% of what the delinquent dues are, so they’re not very flexible at times with how much they’ll pay. And the only reason why the short sale lender would contribute any monies towards the delinquent HOA dues is because it has to do with the property.”
Code Enforcement Liens Can Be Costly
Another type of lien that Alma talks about is code enforcement liens. These liens often have a high dollar amount associated with them.
“Those are liens that we do try as long as they comply and they’ve taken care of the code enforcement lien meaning the seller and there is a balance due normally we can try to bring down that code enforcement lien as long as the seller has complied and taken care of whatever that code enforcement lien is.”
“Some of the short sale lenders will contribute some monies toward that. I don’t know how much but usually they will help with those as long as it has to do with the property.”
If you have questions about a short sale involving multiple lienholders, call Alma Korshak to schedule a meeting to discuss the details of your short sale.