Listing agent using commission to pay part of seller's 2nd lien

I am a buyer going through a short-sale. The seller had an 80/20 on the house. The first and second lien holders are in disagreement on the final proceeds so the listing agent has agreed to use their part of their commission to satisfy the disagreement (i.e. 1st wants $280k and the 2nd wants $18k but the 1st only wants to give the 2nd $10k leaving an $8k difference that the listing agent will give up from commission). My lender is telling me that this cannot be done. Is there anything wrong with this or is this a legitimate transaction? This is the only thing that's preventing my lender from drawing docs.

1 Answer

Your lender is incorrect as it is has nothing to do with your financing! Unfortunately, many things need to happen to complete a short sale and there are times such as this where everyone must figure out a "LEGAL WAY" to make things work out. The issue is not if the Listing Agent is willing to use some of his/her commission to pay the 2nd Lien what they are looking for, as the issue is if the 1st Lien Holder will allow this to happen. This request can be made to the 1st Lien Holder to have their Written Short Sale Approval Terms note the fact that the Listing Agent is contributing additional funds to the 2nd Lien Holder. If all the facts are presented and agreed up by all parties, the transaction will be able to close with no issues as all calculations and figures must be presented on the HUD-1 Settlement Statement with Full Disclosures! This is how the transaction MUST be! Contact me with any further questions! Good Luck!