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What If I Have Two Loans?

by Charlie Allred

A great many people in today’s marketplace facing foreclosure or an eminent short sale find themselves in a position of having two loans. It could be 100% financing where the down payment and the loan amount are mortgaged, or it could be a situation where there is one purchase money loan, but then there is a home equity line of credit in addition to that.

Either way the result is two loans and in the case of a short sale, both lenders have to agree.

So let’s say one loan is with Bank of America and the second loan is with Chase. If BOA agrees to a short sale price, then Chase must also agree to the terms and because Chase is in second position on the loan, they usually have to eat the whole amount or agree to accept a small payment like 3 or 4 thousand. The second mortgage holder must agree though for the short sale process to be successfully used. This can cause a problem mind you, BUT… it does not have to in all cases. Usually, a skilled short sale professional can make arrangements with both lenders and get the deal done.

Competent short sale experts make all the difference in situations like this. Just understand that these situations, while being more involved than your standard short sale with one loan, are possible to overcome and your short sale can be done properly and successfully. As with all short sale processes and procedures, we recommend you speak also with your accountant and your attorney to ensure that you will not be liable for any loan deficiencies.

The second and possibly simpler case of having two loans is when they are both with the same lender. In a situation like this, the lender will have the ability to look at both loans simultaneously while making their decision to move ahead on a short sale. This is a much quicker scenario. And, the risk of having a disagreement among principles is mitigated. Because of this, there is an even higher likelyhood of being able to get the short sale approved and executed without issue.

For more information on short sales and what to look for in a short sale expert just follow this link:

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{ 2 comments… read them below or add one }

Las Sendas homes guy October 21, 2011 at 8:39 am

Great article… I get this question a lot and I know people are confused by this situation. Short sales with 2 loans scare people I think.


John Urban March 21, 2012 at 8:27 am

Short sales with 2 loans can be scary… Its hard to know who to believe, but Charlie and the team at Arizona Short Sale Tips was able to provide help and clarity. We are now moving forward!


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