Short sale is a process in which a debtor sells his house for an amount that is much less than that he owes to the lender. Usually, a mortgage is taken out against the property a person intends to sell. Sometimes, there are instances when a person has two mortgages in a short sale. When there are two mortgages in a short sale, the proceeds are used to pay off the first lender. The second lender will be getting his dues thereafter. However, it may be so that after paying off the first lender, there is no cash left to pay off the second mortgage. And even if there is, it may be very less as compared to what the person owes to the second lender.
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In such circumstances, a person can offer his second lender the cash that is left after paying off the first one. If the amount is too less, the lender may either forgive the debt or ask the debtor to shell out an amount. Most of the time, the second lender may compel the debtor to let the house get foreclosed. Another option for the second mortgage lender is to release the lien-only for filing a deficiency claim. In case the second mortgage amount is not very high, the borrower may be spared. However, in some cases it is seen that the second lender does not spare the borrower and tries to retrieve the owed amount. However, the lender also realizes that the chances of recovering the loan is low because if the borrower is unable to pay off, he (the borrower) either files bankruptcy or tries to negotiate for a certain percentage. There is another way the second lender tries to recover his dues. He can sell the debt account to a collection agency. Once the account is sold to the collection agency, the debt is treated as an unsecured one as there is no collateral to secure it. He may also urge the borrower to sell his assets for recovering the cash.
The possibilities mentioned above may differ from one lender to another. It also depends on the value of the property and the amount owed to the lender. In case the second lender refuses to budge and is trying to get the home foreclosed, a borrower can always take help of a short sale attorney who can guide him properly.
If you need a short sale attorney, Miami is one such place in the US where many people are benefitted from the services of Jorge Gaviria Law Firm. To know more about them visit http://www.miamiforeclosurelawyers.com. They are a highly reputed law firm with a team of experienced short sale attorneys. Contact them today to know how to best deal with your second lender.
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