Junior Liens and the Short Sale

A Junior Lien is usually a second mortgage or home equity lien of credit but can also be mechanic’s liens, child support liens, credit card liens, attachment for repossessed automobile or a number of other situations.  Many home owners financed their home with a combination of two loans.

They are called Junior Liens because they are junior or second in line to the primary or first lien (usually your first mortgage).  The order that the liens are filed are usually the order that they get paid off. This means the first or primary lien must be paid out completely before any of the junior liens can be paid out.  Usually in a short sale their is nothing or very little left to pay junior lien holders.

When we structure a short sale file we show the first bank getting a majority of the funds with several thousand dollars being allocated to junior lien holders.  In a short sale, we still need to get the permission of junior liens to release the home for sale.

It is not unusual for my negotiating team to work with a first and second mortgage, where the first allocates a few thousand dollars for the second.  Where it starts to get sticky is when there are other liens behind the first and second.

In Massachusetts, municipal liens (tax or utility) and HOA liens, supersede any first liens and will need to be settled before closing.  Sometimes the bank will pay these liens sometimes they wont….. These liens can not get wiped out in a foreclosure, where most other liens will get cleared  against the property in a foreclosure.  Just because these Junior Liens get wiped out in a foreclosure, does not mean that you do not owe the money, it just means the liens will not follow the property, but it will follow the homeowner who incurred the lien.   While difficult, we have negotiated releases on third mortgages, IRS Tax Liens, automobile liens and credit card liens.

Short sales are complex transactions and the more liens the more difficult they can be.  Definitely consult your short sale agent, attorney and accountant when considering a short sale.

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If you are a Massachusetts homeowner that has missed mortgage payments, or facing foreclosure or a home buyer interested in buying a foreclosure or short sale call Kevin at 978-360-0422.  I will explain your possible options to foreclosure.  Every situation is different and you have about five options to consider.  If a short sale is your best option my short sale team will work to complete a successful short sale on your home.  Combined we have successfully closed 100′s of Massachusetts Short Sales.  My closing ratio is almost 100% on Massachusetts Short Sales.

Other Short Sale Information:

Short Sale Realtor Services in northeast Massachusetts,  the Merrimack Valley and surrounding area  including the towns of Andover, Billerica, Boxford, Chelmsford, Dracut, Georgetown, Groveland, Haverhill, Lawrence, Lowell, Merrimac, North Andover, Newbury, Newburyport, North Reading, Rowley, Tewksbury, Tyngsboro, Westford, Wilmington, West Newbury.