Case Study: In Scottsdale Owed $542k to Wells Fargo

Location:  Scottsdale, AZ

Details:  Owner had two loans on his property.

  1. First loan had a balance of approximately $415,000.
  2. Second loan had a balance of approximately $127,000.
  • Total owed against the property:  $542,000
  • Our client’s house was short sold for $215,000.

Scenario:  This owner did not have protection under Arizona’s anti-deficiency statute with their 2nd loan.  Therefore, it was paramount that Kelly Cook and the Cook & Associates Real Estate Advisors negotiate well with the 2nd lien holder to not only grant a release of the lien on the 2nd loan; but to also and most importantly, get protection for our client (seller) by having the 2nd lien holder provide full mortgage debt relief and satisfaction.  Our main objective was to ensure that the 2nd lien holder waive their rights to ever come after the seller and pursue a deficiency judgment against them.

In many cases like this, there is a very good chance that the 2nd lien holder will ask for some sort of cash contribution toward their loss.  This number can vary dramatically, but a general rule of thumb is that the lender will ask for some amount equal to 10% of the outstanding loan balance.  The lender does this because they know they have leverage due to the fact they will have legal recourse to come after the seller if the property forecloses.  If this occurs, we use all of our techniques and experience of completing 250+ short sales to do all that we can to minimize this contribution amount for the seller.

Outcome:  Please see the attached SHORT SALE APPROVAL LETTER proving the details of our successful negotiations on this short sale.  We were able to get full debt relief for our client (seller) protecting him from ever being pursued for the difference the banks settled on.  Because their loan balance was so high ($127,000), the lender did require a contribution from the seller.  We were able to negotiate this down as low as 9% of the loan balance for a settlement of $11,000 –AND- negotiate $6,000 of it to come from the 1st lien holder!  However, because the seller didn’t have any money to give the bank, we were able to negotiate a 0% interest promissory note for $7,500 paid out over 5 years making the monthly payment very manageable for the sellers.  That is a total of $13,500 we were able to settle with the 2nd lien holder (with only $7,500 the responsibility of the sellers) to get out from under their mound of debt of $127,000 completely free and protected!  The seller literally took out the 2nd loan of approximately $127,000 and spent that money at their discretion; then were able to settle that debt completely by only having to pay back $7,500 of it on the short sale.

Recap:  Our client, the seller was able to walk away from $327,000 ($542,000 – $215,000) of mortgage debt for only $7,500 paid out over 5 years at 0% interest!!  All because he decided to pick up the phone and contact Kelly Cook and the Cook & Associates Real Estate Advisors.  We have many other examples just like this we would love to share with you as well.  We truly are short sale specialists working the entire Greater Phoenix, AZ area and would love to speak with you today about your current situation and how we can help!  Call today!

Actual Approval Letter

Click for Full Letter