If I walk away from my home, can the lender come after me for the loan and/or garnish my wages, in the near future?
Submitted by tamara.durente.j92t
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- 05/06/2008 - 2:15pm
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Hi Tamara - That depends a bit on which state you live in, whether or not deficiency judgements are allowed, and which loan is foreclosing. Perhaps you can give us some more details?
Sorry. I live in California, my first is with Chase and my second is with EMC. I believe it's a non-judicial foreclosure, and Chase (1st) is the one foreclosing.
Hi Tamara - Yes, if the 1st is foreclosing the 2nd can still try to collect at some point in the future. Whether or not this will happen on any widespread basis is yet to be seen. We have heard rumors of collection agencies buying up charged off 2nd's for pennies on the dollar for exactly this purpose - but have no idea if that is true.
Whenever possible you should try to do a shortsale. Next you should try to force the 2nd to foreclose before the 1st. You can do this by continuing to pay your 1st, while no longer paying your 2nd. You may be surprised to find that the 2nd does not foreclose, and at that point you'll have to decide whether to keep paying the 1st or let them foreclose.
I my name is sharon and I am looking to buy homes just email skyltc@hotmail.com
I live in MI and bought a primary and an investment home. I got married and my husband bought a house before we got married. He is not on my houses and I am not on his. We are renting out my houses but that is not going so well. To make up the differance in the mortgage its over $500 a month and becoming too much for us. My concern with letting the houses go is that my dad put some stocks in my name. I am the primary name on the account and he is the secondary name. Can the banks come after that? I am not sure how much is even in there but my guess would be under 10k.
I am in the State of Georgia would this apply there? (responding to Tamara's question)
WE ARE APPROVED FOR A SHORT SALE BY THE FIRST AND WORKING WITH THE 2ND. WHILE THE FIRST AGREED TO SETTLE FOR LESS AND CONSIDER THE DEBT PAID IN FULL, I AM WONDERING IF THEY CAN PURSUE COLLECTION OF ESCROW SHORTAGE OR UNPAID LATE FEE'S? OR IS EVERYTHING WIPED OUT WITH A HAFA SHORT SALE?
Sean -
Good point on not paying the 2nd and just paying the first - great home retention strategy - The 2nd lender usually waits for the 1st to foreclose.
Tamara - where in CA is your property located? Has a NOD been filed? A short sale can be way better then walking away. I negotiate short sales for Sellers and always work to negotiate a final settlement.
BOB
Hi Bob~
We live in La Quinta, CA. and the NOD was effective 4/18/08 with a sale date of 8/8/08. We are desperate at this point, so all help is welcome.
Tammy
Tammy, we will buy your home under value and also we will allow you to stay in the property too. You can have other options to purchase or Lease Option even you have bad or no credit. For more info call The Home Savers at 1-877-263-4632.
Hi
What is a NOD
Hi Scotty,
A NOD is short for Notice of Default. This document is prepared as the first step in the non-judicial foreclosure process.
Tammy -
My apologies for not replying sooner. I just saw your reply here. In most cases a short sale is better then a foreclosure. Contact me directly at bob@inspiragroup.com or 949-600-5404 and I will review your specific situation.
Banks dont want to foreclose. The short sale process is not short and requires constant pushing by the Realtor and/or person negotiating on your behalf. Also, the short sale needs to be "packaged" in a way that states your arguement and supports the value to the bank. Their needs to be a "win-win" and patience and persistance to have a successful short sale.
Call or e-mail me if you would like your situation reviewed. If you post here, please send me an e-mail so I know you have posted.
Thanks,
BOB
It is my understanding that a short sale is a sure way of having to pay the difference in the trustee sale and what is owed. Is it wise to advise someone to go for a short sale. In our case, we cannot afford to pay the difference on our property for it is unsidedown. Could be a lot. What is the chance of the house selling for what is now owed on it. The loan was given in 2005, before the big losses. I wonder about advising on short sales under these conditions. If there is a second, maybe that would be cheaper in the long run or payments can be lowered or whatever.
Wyoniar - the entire point of a "short" sale is that lender accepts less than what they are owed as payment in full. Your lender does not have to agree to do so, and may ask you for the difference, but that is not typical. Your goal should be to end up free and clear, with no further liability, and a bit less damage to your credit than a foreclosure.
Sean -
If Tamara's second was purchase money, then it will be non-recourse and the lender would not be able to come after her for any deficiency - Just wanted to confirm that you see this the same way. If it was refinance, then the bank could collect should they choose to.
Wyoniar - depending on where you live and how much you put as a down payment - chances are, from what you are describing, you owe more then the home is worth. If you can't continue to make the payments then a short sale is better then being foreclosed on. Acting quickly is in your best interest. We have worked with clients who completed the entire short sale in 90 days and are left with a 60 day mortgage late which is really minor considering how much the bank wrote off and how long it could have taken. I would review your options, hire someone who knows short sales - have the agent see if the bank would do a note modificaiton (while marketing the property for sale) - If you wanted me to review your situation, feel free to send me an e-mail to bob@inspiragroup.com or call 949-600-5404.
Have a great day.
BOB
Yes, In CA, purchase money is non-recourse. Lender can pursue judicial foreclosure which allows recourse on refi's, but this is highly unlikely. Judicial foreclosure is too time consuming and costly in CA, so nearly all foreclosures here are non-judicial (trustee sale) which are always non-recourse as well.
My ex-husband kept all the paperwork but now he wants to foreclose. No one lives there, we're seriously upside down (inland empire, ca), and he said the lender is uncooperative. I'm pretty sure we don't have a second, (it's Countrywide.) He's unemployed and so he says he doesn't care if his credit's ruined. He says he'll let me get my name off the deed and says I could get my name off the loan. I'm skeptical about the loan part--is that true? How can he get me off the loan without the lender's approval or unless he refinances? And who would let him re-fi? And why would any lender let me (the one with a job), get off the loan? I just want to be sure that the lender can't come after my personal liquid assets.
Very unlikely he will be able to get your name off the loan or foreclosure. To be sure the lender can't come after you, it would be best to have a lawyer review all the details of your situation.
the deficiency in a short sale can be eliminated, and one should always get this in writing by the lender.
Wow - that is great for homeowners (ie non-judicial sale that wipes out any future obligation) -
How does it work when a lender sells the note to a bill collection company?
BOB
Remember only the loan that forecloses gives up the right of recourse. So if a 1st forecloses, the 2nd has their security wiped out, but they have not given up their right to recourse. Those 2nds are what the bill collectors buy.
As a homeowner then you are better off trying to force the 2nd to foreclose first. Only problem is that many 2nds won't foreclose, leaving you in limbo of continuing to have to make the payments on the 1st to insure you don't end up with a 2nd that still has recourse.
This is one of the primary reasons I always recommend short sales, when properly negotiated they really are the best way to clean things up and move on.
My loans are a result of refinancing in the year of 2005; for relocating (retired to Idaho) and we use dour equity for the purchase of our present home here in Idaho. We had a lease option that looked good at the time, to close escrow April 2008. Unfortunately; the buyer lost her job as a new car salesperson, and now does not qualify as she should have. We gave her the option to purchase to give her more time on her job as I understood her lender to lower her interest rate; as oppose to her purchasing it in 2006. I had the home on the market (I was a broker owner in California for 32 years), her credit is perfect, but job and now income is her problem. At any rate, It does not look as good for us now, does it?
I deal with Country Wide on both the 1st and 2nd TD. All payments have been on time and prompt until July if my renter moves out as she plans. Then we are up a creek. Total on both loans are appx. $500,000.00. Appraisal at the time of the transaction was $535k We gave her the option on $510k.
Wyonia - how much is the home worth now? If way upside down and you will be completing a short sale, then you would be best off starting now before you are late on your payments. This way when the process is complete in 90-120 days, you will only have a 60-90 day mortgage late reported.
BOB
949-600-5404
bob@inspiragroup.com
The value has to be determined. I have a agent that use to work under me in El Cajon, She is going to try and get a CMA done. I think probably $459k-$475k. But, to tell the truth I do not know.
Wyonia
My home was a foreclosure, now I saw on the news, there are rebate's to people who tried to get there loans modified. where do I find the info on that?
Hi Debora,
I am not aware of any "rebate" program for people that tried to modify but the bank ended up foreclosing.
My husband and I were going to retire and purchared a home in Jackson Missippi while still living in California. Well things did not work out, he left me and moved back to his home state of New York. We were married there and both headed to California in 1998. After he leftt me in California, I filed for bankruptcy here in California in 2005. Apparently the property in Mississippi foreclosed in 2003, the bank filed a lawsuit against me in New York in 2005 even though I live in California, I just found out about it they said I owe the bank $30,000 because the house in Mississippi had a mortgage insurace protection (rider) and since the insurance paid for the loss, I have to pay them. Can they do this even if I did not live in New York which is a non-recourse state, and I live in California and the house is in Mississippi which both are non-recourse states. Please help they have taken $ thounds of dollars out of my savings account
Hello Worried,
We've just started to hear about these PMI recovery claims and I don't know much about them. I'd strongly encourage you to contact an attorney. Setting aside whether or not the PMI companies can collect, a couple of other issues come to mind - if you never lived in New York did their court even have the right to allow the suit and issue a judgement and it seems an attachment of your savings account? How did the case go forward without your being aware - were you properly noticed?
Again, I think you'll need an attorney to help you with this - just be careful to find someone good. Ideally find someone who has references online, or that blogs so that you get a feel for them first. Hopefully in the near future we'll have some in our Directory and participating here.
My house was sold at a "trustee sale" on August 15, 2007 and since then I have not heard anything from anyone. The house I am talking about is in Airizona. Today I received a letter from a company called First Amherst Financial Partners saying that they purchased my 2nd mortgage from Onyx Bank and that I owe 83, 815.00 and they want to
settle for 56,519.00. I never heard of this company before or during the sale. Am I responsible for this.
Hi Linda,
Can we get a couple of more details... Are you still living in the home? If not do you still have access and control of it? Also, when your house sold at trustee sale, was it the 1st or the 2nd that sold?
the house sold at auction last august and i believe it was brought my the lender holding the 1st mortgage. The 2nd mortgage was for "purchase money" to buy the house. Arizona is a nonrecourse state if the property is less then 2 and 1/2 acres and it is a single family home which covers my house. No I am not living in the house and since the the "trustee Sale" the house
has been purchased my someone. This company that brought the loan from Onyx seems to be a company that probably brought "bad debt"
and are now trying to get money from us.
Remember I'm not an attorney, but it seems to me that you should be in the clear under Arizona Revised Statutes 33-729. Tell them that they have no recourse under that statute and to go away. If they persist I'd contact a reputable local attorney. You can read the statute here: http://www.azleg.state.az.us/ars/33/00729.htm.
Thanks, Sean, that's how I also understand the law. I am working on a letter to send to them.
Hi i haven't seen anyboby post the price they paid for their house i guess mine was cheap i got it in 2005. We paid 230k now my same kind of house is going for 150k we have lost 80k in value and would like to keep our house but the payment is very high and hard to pay. Is there a way to keep our house, like a forgiving loan or something we can work out with the bank?
You should absolutely contact your bank regarding a loan modification. While it varies greatly by bank we are starting to hear of people getting loan modifications that reduce the principal balance of the loan to reflect the current market. Don't expect it to be easy, but certainly worth pursuing vigourously before considering foreclosure.
Sean -
There are lots of loan modification companies (seems like the subprime call centers have retooled to assist with loan mods) - most charge upfront fees and some have a partial refund policy if the mod doesnt take place.
My questions are:
1) do you feel someone should complete a loan mod if they owe way more then the property is worth? For example, I have a client who owes $630,000 purchase money in CA. The home is worth $380,000. If the mod simply lowered her payment then she's owe $250,000 more then the home is worth. I have seen some "partial" reductions of prinicple balances but nothing in the magnitude of the actual value. Any comments on if you feel someone should mod when they will be severly upside down?
2) do you feel someone should work with an agent concurrently on a short sale ? The logic being it will take 60 days to figure out the mod - most wont happen and I hear most mods end up in foreclosure (i dont have data on this, just have heard this).
3) with the near complete breakdown in the process flow of loss mitigation, how many homeowners have the knowledge and stamina to actually go full term and get the mod done?
BOB
Hi Bob, here is my two cents:
1. If they are ok with the new terms, like the house and don't want to move does it really matter if they are "upside down". It's not like they've given up the right to walk away and let the home go into foreclosure later, so why not mod if it meets there needs now regardless of the equity position.
2. I usually tell folks in foreclosure to pursue all options. That said I think they need to be honest with the agent. Short sales are hard work, and it wouldn't be fair to the agent to pull the listing to do a loan mod without at least keeping them in the loop.
3. I hear you, but if they don't try they certainly won't succeed. I'm a big believer that it is better to have tried and failed, then never have tried at all.
Best -Sean
I don't want to sound dumb but ""how does a loan modification work"". I still keep my house right? just the bank takes the loss from the market? and can they back charge me once the market is back up? Sorry i have been looking for answer and haven't found any. Thanks
Yes, a loan modification could be any of those things, and more. Generally it just means that you and the lender have agreed to new terms regarding the repayment of your loan. Could include changing the term of the loan from 30 to 40 years, making an adjustable mortgage fixed, forgiving some of the principal, or a combination.
Another option is a forbearance agreement which typically allows you to make up past due amounts over time on an agreed upon schedule.
These and a few other options are generally referred to as "workout" agreements. What the lender may or may not be willing to agree to depends on the lender and the particular situation. They key is to start the conversation and explore the alternatives.
I hope this does not sound to complex...I am going through a divorce - no attornies involved, can't afford it. I live in Las Vegas, NV I owe $375,000 on my 1st that is from Chase and I have a 2nd HELOC from Countrywide, which I owe $28,000. Here is the thing my name is on the loan and my soon to be ex- wife and my name is on the deed. I know that I am responsibile for the first since it is in my name. What happens to the second are we both responsible for that or does that forclose with the first. If we don't make the payments on the HELOC can CountryWide come after both of us. Also, what happens to our property tax, are we responsible for that, and if we have a yearly HOA fee can they go after us, and lastly, my home insurance policy and auto are all together, so if my insurance policy does not get paid, can AAA cancel my auto insurnace? Some one any one, please advise....
Thanks.
I have been hearing a lot about Short Sales that is something i'm interested in. From what i've gathered you sale your house at the current market value and if the bank agrees you walk away from the house not owning anything back. my question is, are you really free of your mortage? and sencondly what happends to your credit if you want to by a house some time after a short sale?
Yes, you have gathered correctly. Whether or not you are completely free of your mortgage depends on what state you are in, whether or not the loan was a "purchase money" loan, and what you negotiate with the lender. Currently it appears you may be able to buy another house as soon as 2 years after a short sale vs. 5 years for a completed foreclosure.
I don't understand all the ins and outs of forclosures. I have a loan for 170 K, with an ARM interest only, due to life changes, and wanting to stay in my house. Remarried, boy what a mistake. Had to take BK and was left with a house thats half finished on remodeling, takes almost 3 paychecks to make my house payment as long as I don't pay my federal tax out of each check. I've managed to keep current but the arm comes off in may. To start the new year I can not hold back federal taxes any more. I can not physicall do up keep on the house, and it's just way to much for me. I've been told to walk away and stop paying. I live in AZ and I'm upside down in the loan. I don't know how to proceed. I just want out of this nightmare. Thanks
Dianne -
Do NOT walk away and stop paying - This is maybe the worst of options - If you e-mail me specifics, I will find you a Certified Distressed Property Expert in your area who will give you accurate information on your options. If you are not going to pay, why not live there until you need to leave? Most banks will even pay you "cash for keys" at the end. I am not an advocate of screwing the bank - In fact, I believe in cooperation with with bank and assisting with a short sale, where the Realtor sells your home and negotiates with the bank. This is a win-win and most of the time way better then foreclosure. However, you MUST, work with a specialist - If you e-mail me at bob@inspiragroup.com, I will send you a specialist who advise you on your options and will competently assist.
Best of luck.
BOB
949-600-5404
bob@inspiragroup.com
OK! Looks like I'm in the same boat like dianna and the rest of us here. I live in TX I have a 1st and 2nd. The first being the highest. My wife and I can not afford our house anymore. Our wages are just to low in this area and we have tried to better our selfs with picking up 2nd jobs and so on. This isn't even helping. We have an option to move back to CA and move in with my parents. So what would be best? 1. File Bankrutpcy? 2. Let the home go into forclosure? 3. Short Sale? Now here's my other question. If we were to walk away from the home and move back to CA, I'm sure the bank will find us and will advise they have started the forclosure process on us, but could we face other then the legal obligations on the home; well could we face jail time for abobanding the home and turning off all the utilities and just moving back to CA? Can any body offer any advise? We have also tried on numrous occasians to work and offer and ask for help, and our mortage company doesn't want to help. What do I do folks. This is really affecting our perrsonal lives.
Neal - I agree with Bob, you should try to do a short sale. Beyond that don't let this stress you out too much. Your worst case is having to declare bankruptcy (though likely as a last resort if the house is your only problem debt). No debtors prison here in the US, so you don't need to worry about jail time.
Thanks Sean,
I have been in touch with Bob and he is refering and trying to find someone in my area here in Texas that may be able to help. It's also ggo to know that if we were just going to walk away altoghter, we would not be faceing any repercusions, in the since of being inprisoned.
Neal -
Chances are #3 - short sale will be your best choice - BK and Foreclosure are really last resorts and there are many benefits of a short sale vs BK or Foreclosure. We do need to review the specifics of your situation and coordinate with any legal and or tax advice from your lawyer and accountant.
For now, let me introduce you to a Certified Distressed Property Expert in your area. It is CRITICAL that you only work with someone who specializes and is experieced with these matters. Too many people say they can help, yet, too few actually have the training and persistance that it takes to help homeowners such as yourselves.
Please e-mail or call me and we'll get you in touch with someone who will help.
BOB
bob@inspiragroup.com
(949) 600-5404
HELP! My husband and I purchased our 2nd home in 2005 in Florida which we planned on using for our retirement. We live in IL and we are both thankfully gainfully employed. Regrettably, we are in the midst of divorce and our FL property is upsidedown by $200,000. There are over 900 homes on our Island that are distressed/for sale/bank owned, preforeclosure, etc.
A few questions:
1. Short sale- the best option, but dont you need someone to buy the home? If there are no buyers since there are SO MANY homes on the market, what good does a short sale do? Many people are in the same boat that we are and investors are not out there buying our homes.
2. Foreclosure- we would like to just stop paying so we can get divorced. We are aware of our credit being ruined but we are the fortunate ones. Neithere one of us can afford FL home on our own, but collectively we can. Can the banks come after us for the financial obligation if they ever do find a buyer? Can they put liens on our homes in IL? Can they garnish our wages?
3. Shouldnt the FL home be enough collateral for them? We did not sign any personal guarantees.
4. We have two mortgages on the FL home and both are with the same bank.
Oh so many questions and no answers!
PLEASE HELP! THANK YOU
LJ -
Let me refer you to a Certified Distressed Property Expert (CDPE) in your area who would be best to assist with the entire process.
Send me an e-mail with the location of your home and I'll send you a top agent who is specializing in short sales in your area. They will be able to answer all your questions.
BOB
bob@inspiragroup.com
949-600-5404
Bob, I sent this message about 8 months ago. Do not know why it pops up again all of a sudden. We are about to close on a Short Sale. Praying I don't get stuck with anything in the future.''
Here’s one you may have not seen before:
In Aug 2007 I bought a home in So. CA for $1.160,000, I have a Originating Loan that is “interest only” at 6% and a HELOC for $119k that was given me to help get me in the home. My total costs are $4,600 a month for the original 1st and $500 for the HELOC and of course $10,500 currently a year for property taxes. Current value of home is $850k
Here’s the second part of the night mare…At the same time I was selling my condo for $400k and was planning to use the proceeds (I still owe $116k on the condo) Well needless to say the buyers in Aug 2008 could not qualify and we ended up renting the condo up until January of this year, the condo is EMPTY right now and costing me $1,700 a month and at the same time the value is maybe $235k right now..
In the past year and a half my income went from 6 figures to pretty much $2,500 a month ( because my industry has come to a screaming halt).
Even if I was Incredibly lucky to have a debt forgiven of an incredible amount of $310k and get a loan for $850k, I don’t think with the recent laws I could get a conforming loan modification at 5% or lower and still be able to afford the payments because of my income.
I was thinking of just walking and moving into my condo since it is currently empty. I understand I get a black mark on my credit but I still have my condo to live in.
Since the loans on the home are ORIGINATING loans… If I was to walk away …can I walk away clean or can they come after me for any income or place a lean on my condo?
I guess the main questions is: What recourse if any does the banks have? (by the way it was IndyMac)
I have been told by many that since it is the ORIGINATING loan that they cannot come after me… and that they only could if the loan was a refinanced loan.
I thank anyone for your input… it is greatly appreciated.
The term you are looking for is "purchase money loan" not "originating loan". California Civil Code of Procedure 580(b) states that no judgement shall be rendered for any deficiency on purchase money loans. In practice there have been exceptions to this: specifically fraud (did you over state your income or assets on the loan app?), and waste (did you diminish the value of the property through your actions - no not just the market dropping, more like tearing out fixtures).
I'd suggest reviewing your case with an attorney to gain confidence this code section will apply to both your first and your heloc before walking away. And as always I'd encourage you to try to do a short sale as that keeps you at the negotiation table vs. a foreclosure.
Good morning Sean: I have a piece of vacant land in a subdivision (10 acres) I bought this for $350K and it was a good price at the time when others were going for $425K. I owe about $258K on this property with Bank of The West. One property just sold in the same subdivision for $144K. I've tried to negotiate a short sale with the bank, however they say that I will have to sign a note for the difference. They also mentioned that if I let it go to foreclosure they will come after other assets of mine. This was a purchase money and no second. I just received an offer on the property for $150K. The Bank won't negoitiate with me and say I have to sign a note for the difference. Do you have any advise for me where I should go from here? I'm willing to sell the property and give them some additional money ($25K-35K) but they won't negotiate. Can they file a deficiency judgement against me and attache other assets on a purchase money? My loan docs do say they reserve the right for a judicial foreclosure. Reading your civil code 580 (b) does that just pertain to your residence or would a purchsse money first DOT on vacant land apply also? Thank you for your time
Hi Anonymous,
Purchase money loans are non-recourse loans. Provided the amount owed on the HELOC was used to purchase the property then this would also be a non-recourse loan. It sounds like you have really thought this through. You may want to explore a short sale on your existing home which could be less of a credit ding than a foreclosure.
Sean -
There are other benefits of Short Sale vs Foreclosure:
- The Seller usually lives in the home during the process and knows when the close of escrow date is and when they are to move out.
- The Seller can purchase a home with the current Fannie Mae guidelines in 2 years vs 5 years with Foreclosure.
- Foreclosure is a question asked on the loan application vs short sale is not referred to.
- Sometimes a waiver of the banks right to pursue a deficiency judgement can be negotiated.
- Sometimes the homeowner lives in the home longer, esp when the bank delays during the short sale process.
- Its unclear the exact credit score difference, however, I would imagine there will be less of a "ding" esp if it was early loss mitigation.
- The banks loss will generally be less, so the deficiency would therefore be lower.
I'm sure there are other benefits. I would recommend NOT walking away from a home, but to work with an experienced Realtor, preferably a CDPE (Certified Distressed Property Expert) who can assist with the sale .
Also, the Bank pays the Realtor and required closing costs. Sometimes sellers are concerned with the costs, however, the bank pays in most instances. They do this because they don't want to complete a costly foreclosure and have a non-performing asset on their books.
For additional information or a referral to a CDPE in your area, please e-mail or call.
Bob Dalsimer, CDPE
bob@inspiragroup.com
949-600-5404
Hello, I'm from California I owned a home in 2005 and my home forclosed at the end of 2006. I had two notes the first was $512k and the 2nd note was $131k. The first note forclosed but not the 2nd did not. I recently received a letter from the collection agency "attorney's network" somewhere across the states telling me that I owe $140k. Can the bank try to collect from me if the home was forclosed and now has been bought by someone else? I am very worried that they will try to garnish my wages. I know our realtor who helped try to do a short sale was in contact with both banks so both new my situation. I need advice.
If your second was taken out after you purchased the home, then yes they likely can pursue collection. Click the following link to find out more about your rights under the Fair Debt Collection Practices Act.
If you received the second at the same time you purchased the property the lender may not have any recourse against you. I'd recommend having an attorney review your case and drafting a letter to the debt collector if this is the case.
I have the same situation as yours, my house foreclosed in California. My first mortgage has been foreclosed and it went to non-judicial process but my second home loan which is a cash-out to pay my other debt was been sold to an insurance co and then the insurance company bring me to collection agency which is calling me everyday. I'd like to know if this is legal, when the bank sells the lien to others and can they bring you to collection agency. my credit report already shows a charge off. can they sue me?
Any advice would greatly appreciated. Thanks
It is our understanding that they likely have every right to collect on that debt given the info you provided above. As in my earlier suggestion, I'd talk to a BK attorney -- see if you can find one that is specializing in mortgage loans. They should review your loan (sometimes referred to as a forensic audit) to see if there were any violations when the loan was made that they may be able to use as leverage.
I have a property in Las Vegas that has just been a cash outflow from the very beginning. I'm currently paying a lot of money every month just to keep it and it is not only becoming financially draining, but emotionally draining as well. I really just want to get rid of it somehow, but I don't know what my options are. I hear a lot about short sales, but I don't think I qualify because I still have a job. I'm afraid to foreclose because i don't want them to garnish my wages or come after me for the difference. I owe way more than the home is worth. What can I do? Is there any way out for me? Any advise is appreciated!
I live in CA and owe 417,000 on my first..I put down 20%,,I owe 210,00 on a HELOC...my house is worth pretty much exactly what I owe..I have lost my job and pretty soon I will not be able to make the payments. What should I do? I am 60 years old and chances of me finding a job soon are very slim.
I bought flat land and developed the land. The estimated cost was $850,000. That was the amount of the construction loan. The project went over budget and cost $1,200,000. I took out a line of credit to complete the house of $350,000. I am currently living in the home as my primary residence. Due to the economy my income fell substantially. This forced me to be behind in my payments. I have not made a payment on the second for 6 month or more. They are now saying they will charge off the loan. I have completed a forbearence plan with the first and it seems they are going to modify my loan. I want to keep the house enven though I am upside down. I like the area and would like to stay. My question is can the 2nd once they charge off seek my other assets or is their only recourse to forclose on the property? I am in california and as I believe this is a non recouse state. I do not know if my second is a non recourse loan. If I continue to pay the 1st what can the second do? They are unwilling to reduce the principle. If they would significantly reduce the priciple I may be inclined to negotiate a repayment plan. They seem to be unwilling to negotiate or foreclose. What is the best course of action? I know the statute is 4 years in california on breach of a contract. I do not see the real estate market coming back in 4 years.
Hello we have gone thru a divorce and have been trying to sell house during this period. Our home is in Lawrenceburg Indiana. My X went thru alot of mental health problems, lost job for a while had various surgerys and we could not afford our 1st and second mortgages thru Citimortgage. We have both moved out of home living separately I have moved in with my folks . We have had several offers on our home good offers at the time and no response back from citimortgage on any of them until now.
The newest offer is low and there are saying they need a certain amount from the buyer and $10,000 from us.
Well if this does not sell this time with this buyer.. this will go to foreclosure its going on 9 months we have not paid a dime to them. And not sure How we can pay back the $10,000. A hardship letter was sent to them 3x this has been awlful. I dont think I will ever buy a home again.
What can they do to us if it Forecloses? I am at the point that I dont care I just want out of this mess.
help me if you can with advise
Gail / Indiana
I have recently retired. I have a primary residence and then I own a second dwelling(a condo). They both have a mortgage. The condo gets rented for approx. 3 months of the year. I cannot afford to keep the condo but I owe $30000 more then it;s worth. It was worth a lot more. I have tried to sell it and I am ready to just walk away from it. They are both in Florida.What will happen if I walk away.
Hi. I have a very similar question to all others but I want to know a little more about back owed property tax. We are about $400K upside down on our condo in So Ca. We have 1st (negativa ammortization ARM) with original loan of $1MM and now the blanace is about $1,060,000 and we also have a purchase money second, both from the same back, WaMu, now Chase. I understand the 580b code, we seem to be covered since it is our primary residence and both loans are purchase money loans. We quit making both loan payments cold turkey, last payments were made in January 2009. We only got letters from our bank/collection department informing us that we are "late" (dah). We also get daily phone calls from the bank but ONLY on our second loan.
1) Why isn't the 1st calling?
We keep on paying our homeowners insurance, but we did not pay property tax due by April 20th. Our property tax over $13K a year, which is another issue and we are trying to work with the county to look into the correct current value.
2) will we owe any back property tax once it forcloses. SHort sale was not an option for our bank becuase all we got was $700K and the bank somehow figured they could get more through forclosure sale (dumb). I think the value is in the area of $750-800K.
Our credit is so ruined that at this point I don't even care if forecloure shows up. We told the bank to remove the lates aka clean our report and we would consider tyring to do a higher shortsale, they said they had "no authority" to remove any lates from our credit report. BS
i also want to mention when we got the house I was an employee of the bank and the loans were "employee loans", underswrited by a separate department, we did a full doc loan, provided them with every piece of our financial world with all honesty. The loan was approved with my $7K a month income (our total houing expense on this condo is/was $5600 with tax). now that this is gone as of December, I have no way of making payments. I have 2 very small children, 1 and 2, and 3 out of 4 have a preexisting madical condition si we are stuck with COBRA of $1300/mo because no other health insurance company would cover us to save some money. We live of credit cards, and now ALL of my credit cards got their limit dicreased to $500 or the baance owed, and raised my APR
The property tax is a lien on the property, and should be brought current by the next owner. To the best of my knowedge the county can not pursue you directly for payment... there only option to collect is to sell the property at tax sale, which obviously the new owner (bank or other) won't let happen.
Given that both loans were purchase money it sounds likely you'll be able to walk with only the damage to your credit. Still you should review your specifics with an attorney and an accountant - I'm neither. :-)
We own a house that we purchased to live in & lived there 3 years. We have a 1st & 2nd on the house ( a refinance). We moved out due to an accident & my husband could no longer climb the stairs. Our kids still live in the house. The house is upside down approx value at this time is $184,000(going market value) * we own $440,000. We are not behind on the payments as of yet & the taxes are current as well as the HOA fees. We can not continue to make the payments, taxes & HOA on this house & the house we live in. If we walk away from the house can they try an attach our retirement account? If we don't pay the taxes after we walk away can the Tax accessor try & collect the back taxes from us, or does the tax liability go with the house? Will the HOA try & collect back HOA fees if we stop paying them? Canl the lender try an put a lein on the house we are now living in? My wife & I both work at this time, but pay decrease are going into affect in July. Can the Lender, Tax Assessor & HOA garnish our wages for the back payments if we walk away? We can not seem to get anyone to answer our questions. What are our alternatives.
I have a house in Michigan that I bought in October 2005 for $106K. I left in late May and moved to KY because my work was drying up there and one of my daughters in law unexpectedly passed away and my two sons living in KY needed me here. I have an FHA mortgate that Bank of America (formerly Countrywide has). B of A will get their money back from FHA, right? Since it's a government-backed loan? If that is the case, will FHA come after me? I sent B of A my letter of hardship. I have gone through 4 realtors and they don't want to bother trying to list it for short sale because they all said it wasn't worth the work only to have the lender turn it down and the homes wind up going into foreclosure, anyway. The houses in that area are going for $20K and LESS in auction. Will I have to pay taxes on the difference? I'd like to know if I should file bankruptcy now rather than wait to get that kind of tax liability that I could not discharge through a bankruptcy.
We have a 2nd home in California that was purchased 7 years ago for 60k. 2 years later we took 100k out to payoff a 2 2nds attached to 2 different rental properties. The loan balance is 180k and it is worth 130k. We are now in a much different situation and aren't able to keep the 2nd home. If we walk away and let it go into foreclosure can the lender come after us for the difference?
Thank you,
Jenny
I live in California. I could no longer keep up on my 7% subprime (interest only first five years and then fixed interest and principle remaining term of twenty five years). I stopped paying and have now missed two payments. My lender (B of A, who purchased my refinanced loan from Countrywide) has not even contacted me yet. I am assuming due to being overwhelmed with late pays. Should I wait until they contact me? I would like to not pay for as long as I can which will allow me to pay off other debts with money saved. Can they start forclosing without notifying me? I will negotiate a loan modification when necessary but didn't want to start soone then I had to.
I have a property in Palm Desert, in the Brava Development on Country Club Drive and Monterey – which has seriously depreciated in value... Bought for 525K, now worth less than 300k. I have a 1st with Wells Fargo of 297k and a 2nd (HELOC) with USAA for 130k. I am paid up as I have a renter which will keep me mildly afloat until summer ‘10... Then, I must get out as I do not intend to move back to California. Ironically, I am a RE Broker in CA, but wanted to let you know that. I presently live in TX and do not have the time to deal with this, and lenders have been very unwilling to help unless I stop paying... I am up to date on payments, and wanted to know how to proceed. Your assistance would be greatly appreciated. Thanks, Craig aka SeaDoc
Good morning Sean: I have a piece of vacant land in a subdivision (10 acres) in California. I bought this for $350K and it was a good price at the time when others were going for $425K. I owe about $258K on this property with Bank of The West. One property just sold in the same subdivision for $144K. I've tried to negotiate a short sale with the bank, however they say that I will have to sign a note for the difference. They also mentioned that if I let it go to foreclosure they will come after other assets of mine. This was a purchase money and no second. I just received an offer on the property for $150K. The Bank won't negoitiate with me and say I have to sign a note for the difference. Do you have any advise for me where I should go from here? I'm willing to sell the property and give them some additional money ($25K-35K) but they won't negotiate. Can they file a deficiency judgement against me and attach other assets on a purchase money? My loan docs do say they reserve the right for a judicial foreclosure. Reading your civil code 580 (b) does that just pertain to your residence or would a purchase money first DOT on vacant land apply also? Ironically I'm a Realtor also and do prescribe to your site. Thank you for your time
Just a quick question, I have 2 mortgages toal 490k
1st mortgage =430k 2nd =60k
house could sell (If possible) for around 375 k
Im NOT a US citizen and thinking of going home to australia
so-If I walk away what do you think would happen-as back home I would not be using my US SS number and would not have a need for my US credit report.
so would they find me ? if so what could they do?
I am a new jersey resident, I helped a friend of mine by being a co-borrower on his 2nd mortgage (home equity), my name is not on the deed. My friend stopped paying his mortgage for a year now , but he continued paying interest on 2nd mortgage. he received a pre-foreclosure notice from 1st mortgage in august, he has being trying to short sale but no offers yet. Does he still have time to do a short sale. I have an investment property that is fully paid which under both my wife’s and my name. I am afraid that if the 1st mortgage foreclose, the 2nd mortgage will be left with very little on the table. In that case 2nd lender might come after me to recover the balance of the loan. Should I put my investment property under my wife’s name to protect myself against the 2nd mortgage if they decide to go after me. If I declare bankruptcy then would I be out of the hook. Please help.
Given that you have significant assets potentially on the hook for the entire 2nd mortgage you should find an attorney to explore options. Honestly you'd be insane to rely on internet advice in this situation.... even from me. :-)
I live in Texas my taxes on my home is not included in my mortgage payment I am going to let mortgage company forclose t on my property because i just can't afford it anymore, I can't go to the doctors I don't have any extra money. when the mortgage company forclose how long before i have to get out of the house? will i still have to pay the property taxes ? i owe some from last year? i owe 75,000 the house is appraised at 100,000
Please help i don't know what to do
You owe more than your house is worth, so no reason to let it go to foreclosure. I'd recommend contacting a Realtor and having them sell it for you. If your numbers are right you should end up with some cash from the sale.
i live in dc and have been unemployed 9 months. i was doing fine with my mortgage and bills until a few months ago and have fallen almost 4 months behind on my mortgage. the bank recommend i short sale but the market here isnt good and homes sit for upwards of 8 months unsold. i cant afford to stay here (cant afford anything actually). i'm soo stressed out i dont know what to do or who to contact. i cant modify the loan because i'm not employed. i'm considereing moving in with family, well i have to actually since my savings have long been used up. if both loans are with the same bank, will the second mortgage be sold to a collection agency?
I'm married and in 2004(IL) we bought a house,I mean bought it in my husband name only.The question is if we would face foreclosure would are both credit be ruined or my husband only
Hello,
Last year we forclosed on our home in Littlerock CA, the bank sold it at auction. We have recieved nothing from the bank, taxes and/or mortgage company. A friend told us we may recieve a 1099 for taxes out but this is the 2nd year we didn't get anything. I am nervous that we are going to get hit with a big bill. I did a credit it check on us, and where our mortgage is concerned it says paid, late but special circumstances..What gives?
* that should read we may recieve a 1099 for taxes owed. And I should add we only had the one loan. We walked away 2 years ago and the house sold last March in auction.
Hi, Can anyone please tell me what some of the laws/rules are in NC if you have two mortg. w/the same bank? my first mortg. is also an escrow acct. I am currently about 9 mths behind and have been trying since last Feb of 2009 to get the bank to work w/me as far as Loan Modification is concerned. I keep getting the run around in many different ways. I'm very interested to hear if anyone has any suggestions or can offer some diff type of advice that I have not already tried. Oh, and I have gone to a Credit Councilling Service he wasn't much help either. Other than helping me get an extension to avoid foreclosure earlier in the year.
Good Evening, My wife and I purchased our first home for 378k in April of 2007 in a new subdivision of Gilbert, AZ. We did finance 95% of the home in a single loan due to a good first time buyer program that allowed us to get a 95% loan at 6% fixed. Because my wife worked for the home builder, we purchased for about 100k less than others in the area, thus we had equity the day we purchased the house. We then took out a second for 54k to pay off some other bills and do some additions to the house. The bubble has burst.... we never intended to make a bunch of money but the whole reason we purchased instead of renting was the investment factor. Our home is now worth 230k and we owe 412k. Although the second was our fault, the collapse of the market puts us 130 down itself.
Now for the questions... I have contacted Chase (our 1st) and Citi (our 2nd) in an attempt to get a modification. Of course this was denied because my income says I can continue to pay the mortgage. Wisdom in my mind says my credit is not worth over 100K. Do I try a short sale now? How about deed in lieu? Do I try to get rid of the second first so they don't come after me for the money? Is it smart to try to drag out the process as long as possible to live in my house mortgage free? I know that sounds a bit dishonest but if I can try each of the programs only to be denied and it allows me to stay in the home for 6 months, I can recoup some of the money I have thrown away. What would you advise as the best course to head towards? Who can I contact locally to talk about this to get some direction, what/who do I search for?
Hi,
I am a local realtor right here in the east valley and would say you should try to Short Sale the home. I have worked on Short Sales with both these lenders and they both are usually receptive. Also, know if you do walk away, there is a chance the second loan could come after you through a collection company, therefore tarnishing your credit even further. I would be happy to help any questions I can, just drop me a note.
Deje de pagar mi hipoteca al banco hace 5 meses. es en Miami Ya entre en foreclosure en una segunda propiedad en Tampa. Que pasa con la deuda?, me pueden embargar el sueldo? Mi casa ha bajado demasiado de precio, vale la pena salvarla?
I am married, but I am the only one on the mortgage that is going through foreclosure. I am about to file my taxes, but if I file joint, will they go after my spouse for the amount due on the mortgage? Even if I file joint, we still owe to the IRS - we will not get a refund. If I file separate, we will owe even more to the IRS.
Hi Alex,
The foreclosure will only appear on your name since your wife is not a signor on that note. Deficiency judgements on foreclosures vary from state to state. You will want to discuss the IRS issues with a tax professional.
my husband and i refied our home, he died intestate and the title is fee simple and we did not know his children were heirs and others on it. i can not afford the homeand they will not sign the deed to me for a short sale. I live in south carolina would they be accountable for the loan also and what can i do to have them sign it over to me for the short sale
Hi Annon,
We do not cover South Carolina so we are not familiar with the laws of that state. It sounds like you need to consult with a probate attorney to find out what rights you have and settle your late husbands estate.
thank you
I have my home foreclosed in Georgia. I live on Military Survivorbenefit, SS, Retirement. I own a Mobile Home in FL and live there now. Can they garnish my retirement/SS or put a lean on my Mobile home? Thanks
I have my home foreclosed in Georgia. I live on Military Survivorbenefit, SS, Retirement. I own a Mobile Home in FL and live there now. Can they garnish my retirement/SS or put a lean on my Mobile home? Thanks
Hi Maria,
I am not that familiar with Georgia foreclosure laws but I do know that deficiency judgements are allowed. Although it is highly doubtful that they will seek a judgement you can always go to makinghomeaffordable.gov to find a housing counselor that can answer your questions.
i guess no one can answer my question
My home is worth 315K I owe 270k on my first and 150K on my NON-purchase money second (its a HELOC). I have 200K in a 401k. I want to pull 40K out of my 401k to buy a new home and walk away from my 2nd. What am i liable for???
Hi Tim,
The laws vary from state to state. You will want to consult with a real estate attorney and a tax advisor to make sure you understand the potential legal and tax consequences.
If you are in CA there is the one action rule. If the 2nd foreclosed then that would be their one action and they would not be able to pursue a deficiency judgment. If the 1st foreclosed and essential wipes out the 2nd they have not taken their one action and since this is not a purchase money loan they could pursue collection as unsecured debt.
You may want to consider reaching out to the 2nd to see if they would settle the debt for a much lesser amount. Although rare I do know of folks that have had a substantial amount of their second forgiven and settled the account for cents on the dollar.
You could also consider a short sale. In your case the first would be paid in full so you would only need to negotiate with the 2nd. If they understand that foreclosure in imminent then they may be willing to accept a lesser amount and allow you to move on with you life. There are real estate agents in your area that specialize in short sales. I would suggest reaching out to one of them and exploring that option as well. The key is to do your research before you take action so that you understand completely the risks and consequences.
My home is worth 315K, I owe 270K on my first and 150Kon my second (its a HELOC) I have 200k in my 401K. I want to pull 40K out of the 401 and buy a new primary residence. I would then walk awat from my current home, what would I be liable for???
My wife rents the a house she and her ex-husband owned. He was awarded the house in the divorce and was to remove her name four years ago, but did not. Now we have a court order stating my wife is not responsible for the loan or any collection thereof. However, the bank is starting foreclosure and I am being included, even though I do not and have not lived in the house. Any suggestions to help my situation and my wife from this hitting our credit?
Thanks,
Pretty Pissed
We see this from time to time where the court orders that one party is responsible for the loan and not the other. What most people don't realize is that order only applies to the two parties and NOT to the bank.
This can be a little hard to follow, but basically that court order does not stop the bank from coming after your wife (and possibly you depending on community property laws in your state - check with an attorney) for the debt. What the court order will do is give you and your wife a claim for against her ex for any damages that it causes her (and perhaps you), because the court clearly did say that it was his responsibility to take care of.
Bottom line, I doubt the court order will help you stop the banks collections efforts, but I think it will give you a case against the ex.
Hope that makes sense. And please note that I'm going on limited info, and I'm not an attorney. Given the stakes, I'd highly recommend you talk to one about the specifics of your case.
My husband lost his job about three years ago. He bought a house shortly after we got married. His unemployment is about to run out. We have been sending in some money to our mortage company but not the full payment. I was give a house thru family and it doesn't have a mortage and my husband what's to forclose on his house. My name is not on his house can they come after me an my credit if he does this? I live in Michigan. I don't know what to do. He was a friend who wants to buy it but not what we payed for it. What to do?
I am thinking of letting my home go as I just cannot afford it any longer.. My significant other has lost their job over a year ago and cannot find employment.. I just cannot keep up on the mortgage, car payments and everything else... We only have the one mortgage, no 2nd mortgage at all.. Live in Indiana but am afraid they will come after us for the loan or garnishment of my wages... If this was to happen I don't know what I would do... I mean I really hate to say it but I believe the embarrassment of it all I believe would make me leave my job and town...
we bought a house in oct.2005 in florida. when we bought it was $295.000 but now it is no where near that .we filed for a refinance in 2007..so we have 2 large morgage payments.our income is les..and working 2 jobs is not making it..basicaly our first loan is $1,700 and the second is $325.00 now this does not include our property taxes nor our house insurance.we pay that when it comes in ...if we have the money of course.our finace has changed.our mom was at one time living with us.she moved in with us..saying she will pay for 1/2 of the morgage..well she moved out...so for the past few years..we been paying it all.now the money is short and basically 4 checks go to the bills ,i was on disabilty and they cut me off of it..for i had to forse myseft to work..to try to keep us from loosing our home.still we are a month behind on morgage now.our money a month is gone..so we are straped.we love our home...but we can not keep up on the payments....what can we do.we tried for a loan modification threw chace...what a joke.got denied.not enough income coming in.NO JOKE.....why do you think we tried to lower down our payment...CHASE is a peice of crap.they do not work with you.so what can i do?we love our home.but can not afford it.it has all the upgrades in it.it is a 4 bed.2 full baths.with huge living room and dinning room eat in kitchen.. and family room..it is great...but we can not afford it.and need help to figure out what to do....rox
i ment to say was....ALL of our checks go to the morgage..only have a few dollar to pay utilies and other bills.we are always in the neg.help with some advice.
HI Rox,
I wish I could tell you that there was some magic answer to your question that would allow you to stay in the home that you clearly love. Unfortunately there is no easy answer. There is no reason for the lender to modify your loan if at the end of the day you still cannot afford to make the payments. Although you love your home the key statement is that you cannot afford it. Instead of telling you to fight and try to keep the place I would suggest that you really take stock in what is most important in your life. There is not a house in the world that is fabulous enough to live as a prisoner of the debt. You deserve a life where you can sleep and night and pay your bills and still have a little extra left over for emergencies or eventually retirement. Instead of holding on so tightly to this house it is time to take a good hard look at your situation and make some strategic decisions about your short term and long term goals. Enjoy the time you have in the house and then figure out what the next chapter of your life should look like. There are much more important things in life that the wood and materials that make up a house. It sounds like it is time for you to start living and not just surviving.
I have a 28X76 manufactured home in Tennessee. My home is titled like a car (value will always depreciate) and my land is deeded. I want to walk away. I have had this house for 10 yrs on a 30 yr loan. I have paid $99,000.00 + in interest + downpayment and approx $8000.00 in principle. In 10 yrs I almost went into default 4 or 5 times. I have begged the lender to drop the interest rate to lower my payments. I have told the lender time and time again I can't afford to maintain my property. I couldn't and can't even afford to pay the $500.00 deductible on home owner's insurance to fix up 10 years of maintainance/ repairs. I have had bids on what it would take to get my house back to the original condition ($80,000.00 + is the lowest bid). There is not one piece of sheet rock in my house that needs replacing. The insulation is poor. My house wasn't wrapped. I have 3 windows that need replacing. All interior doors need replacing with door knobs. one of my showers needs repair. I need 2 plastic fixtures for both showers (using a wrench to turn on water. In my utility room the lenolium needs replacing. Some light fixtures need repair or replacing. My 2 skylights need resealing. My gutters need resealing. My decks need to be stained My siding has damage that needs to be replaced. The city and county assess my property to be $40,000.00 for house and $20,000.00 for land. I got some life insurance money and HAD to replace all appliances b/c of damage or wearing out. It was more cost effective to replace with new than repairing. All my carpets are beyond shampooing anymore. I know my sub floor in many areas are damaged.The carpet was cheap and falling apart. I had to replace my decks. the deck in the back collasped 2 yrs prior and the front deck was on the verge of collasping. I got some shingle damage. My house is worthless. If I walk away, will I get garnished or forced to pay on property or should I file bankruptcy and then let it go into default? Please help me and advise. I know if I file bankrupty it would reflect 10 yrs on credit report.
I have a 28X76 manufactured home in Tennessee. My home is titled like a car (value will always depreciate) and my land is deeded. I want to walk away. I have had this house for 10 yrs on a 30 yr loan. I have paid $99,000.00 + in interest + downpayment and approx $8000.00 in principle. In 10 yrs I almost went into default 4 or 5 times. I have begged the lender to drop the interest rate to lower my payments. I have told the lender time and time again I can't afford to maintain my property. I couldn't and can't even afford to pay the $500.00 deductible on home owner's insurance to fix up 10 years of maintainance/ repairs. I have had bids on what it would take to get my house back to the original condition ($80,000.00 + is the lowest bid). There is not one piece of sheet rock in my house that needs replacing. The insulation is poor. My house wasn't wrapped. I have 3 windows that need replacing. All interior doors need replacing with door knobs. one of my showers needs repair. I need 2 plastic fixtures for both showers (using a wrench to turn on water. In my utility room the lenolium needs replacing. Some light fixtures need repair or replacing. My 2 skylights need resealing. My gutters need resealing. My decks need to be stained My siding has damage that needs to be replaced. The city and county assess my property to be $40,000.00 for house and $20,000.00 for land. I got some life insurance money and HAD to replace all appliances b/c of damage or wearing out. It was more cost effective to replace with new than repairing. All my carpets are beyond shampooing anymore. I know my sub floor in many areas are damaged.The carpet was cheap and falling apart. I had to replace my decks. the deck in the back collasped 2 yrs prior and the front deck was on the verge of collasping. I got some shingle damage. My house is worthless. If I walk away, will I get garnished or forced to pay on property or should I file bankruptcy and then let it go into default? Please help me and advise. I know if I file bankrupty it would reflect 10 yrs on credit report.
Hi everyone, I am wondering what would happen if i were to lose my home, due to not being able to afford it. What can the mortgage company do? I live in AZ and I really don't want to file for bankruptcy. Any info will help.
Hello,
I am in the middle of a short sale i have a first mortage with P... and a 2nd who was with B of A (bought out by Green Tree) i listed my home in April, 2011 as a short sale with being late on my payments come May 31, 2011 my 2nd loan was already behind and they had sold it off to Green Tree (collection Agency) Mid June i had an offer on my home for the full price it was listed at 98,000 i bought my home in 2005 for 254,00 with a blance on my 1st at 180,00 and 48,000 on my 2nd. we have finally made it to the point where the 1st mortage is offering 10% (4,800) to the 2nd however the 2nd would like 7K just to release the lein and 19K to release me of the deficency. is this normal for a 2nd to come after you for this much? i am not sure what to do or how i should proceed. I can't afford the 7K or 19K. by the way i live in Nevada. any advice with the 2nd lender would be greatly apprciated.
I recently got approved to have my home refinanced. The following day I received notice that there is a lien filed against my house. It was filed back in 2007. The lien was from my ex-husband's ex-wife for back child support. The "child" is now 42 years old, by the way. I was never notified that there a lien had been placed against my property. We divorced last December, then he passed away in January. I basically have no equity in my home, plus now have a lien that is almost $50,000 on my home. I am unable to refinance nor sell my house. Would it be best for me to "walk away" from my house?
I recently got approved to have my home refinanced. The following day I received notice that there is a lien filed against my house. It was filed back in 2007. The lien was from my ex-husband's ex-wife for back child support. The "child" is now 42 years old, by the way. I was never notified that there a lien had been placed against my property. We divorced last December, then he passed away in January. I basically have no equity in my home, plus now have a lien that is almost $50,000 on my home. I am unable to refinance nor sell my house. Would it be best for me to "walk away" from my house?
Hi Terry,
You can certainly contact family support to see if there is any way to get the lien released or to do some sort of work out program. They may be willing to subordinate the lien to allow you to refinance the property. Although the lien is legal you would want to try to negotiate before you allow this to be the reason you walk away. The family support folks know that they would be wiped out in a foreclosure so maybe they would be willing to negotiate.
I live in Mississippi...long and short of the story, husband left me with a huge mortgage. I couldn't afford it alone. I called the bank and was pushed from one person to another...everyone telling me they couldn't help me. To any extent, the bank forclosed...I got a divorce and the bank finally sold the house. Now, they have sent me a letter saying that I owe $91,000. apparently for what they lost on the house. I only paid $120,000 for the house 5 years prior to the foreclosure. I know I didn't have much equity, but there's no way they only sold the home for $30,000!!! My question is this...how long after the foreclosure is final do they have to come after me for the money? Also, what can I do about repayment?
Hi Karen,
Mississippi allows deficiency judgments provided that the sale amount meets certain standards of reasonableness. Any action seeking a deficiency must be filed within one year of the sale date.
Thank you for this interesting article.
I learned a lot reading you.
It will definitely help me solve issues I encountered with collection letters.
Sarah C.
If you do a short sale vs. forclosure don't you have to pay taxes on the short sale? If you have $0 equity in your home, what good is a short sale?
A short sale helps you avoid a foreclosure and potentially recover more quickly so that you can qualify to buy a home. Lender recourse depends on the state where the home is located (laws vary from state to state) and the status of your loan (purchase money/non purchase money). There are potential tax consequences either way. Any debt forgiveness creates a taxable event. You would want to consult with a tax professional in your area that can advise you.
Hello, I filed for bankruptcy in 2009 Chapter 7, everything when under the bankruptcy , I mentioned to my attorney I will keep my home. I have a first and 2nd, if I can't afford to make payments on both my first or 2nd, can I walk away if I have to, can they still come after me even if I walk away or do a shortsale, I was told that the home is still under bankruptcy whether I keep paying or not. If I can't pay any longer on both mortgages and I do a shortsale, can anybody come after me?, we are trying to do a loan modification but I still want to know if I am liable for any future debt, walking away or shortsale, is there any future debt?
Hi Edna,
You should really consult with your attorney. The chapter 7 should have already been discharged. If you are now walking away or considering a short sale make sure you understand the terms of your BK before you proceed.
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I have a primary house in NY with 100K in equity and a FL house that is upside down by about 100K. I can no longer afford the FL house. What is my best option to let go of the FL house while protecting the equity in my NY house along with the house itself?
I have two houses both financed through Wells Fargo. I have the primary house in NY with 100K in equity and the second house in FL that is upside down by about 100K. I can no longer afford the FL house. What is my best option to let go of the FL house while protecting the equity in my NY house along with the house itself? Since both mortgages are with Wells Fargo, will that make it more easy for them to come after my NY house?
Hi Alan,
You will want to check the laws in the state of Florida. Florida does allow the lender to seek a deficiency judgment. Although it is unlikely that they can attach the property in NY you would want to consult with an attorney and a tax adviser before making a decision to walk away.
I was married in 2009, in 2005 my husband purchaed a property with his mother. She stopped paying in 2010 we received legal papers from an attorney it says unknown spouse. Can I be sued even though the propery was purchased before we were married?
Hi Nadine,
The community property laws vary from state to state. I do not believe that this would affect your credit but in a state that allows deficiency judgments this could become an issue. You should consult with an attorney to make sure you completely understand the laws in your state.
Hello, I just finished negotiating with the 1st (Wells Fargo) and got nowhere. So now I have to default on the second (EMC/Chase). Can a 2nd forclose on me in Fairfax County VA if I am current in the 1st?
...or do you know where I can find this information free (since I can not afford a lawyer)?
Yes, a second can foreclose even if the 1st is current.
Note that while I'm no attorney fanboy, I think its ridiculous that you'd risk making mistakes that could cost you tens of thousands of dollars because you say you can not afford a lawyer. Most attorneys will provide an initial consultation at no charge, and having one review your situation and provide advice on all your options should not cost more than a few hundred dollars. It is important to find a good one, which requires doing some online research, reading reviews, etc, but foreclosure is complicated and you need an expert in your local laws.
I can't tell you how many people I've seen waste thousands on payments, trial loan mods, only to end up doing a short sale after having thrown good money after bad, or even with a foreclosure. Even then they often screw up the short sale and fail to negotiate a full release (because they've never heard of it), and end up having to hire an attorney anyway to help them declare bankruptcy. Had they spent a few hundred up front, they would have saved thousands, and had better credit. But nope - they couldn't "afford" to be that smart.
Hopefully I'm being clear enough - go hire a decent attorney.
Thank you for your response. We are scared and don't know what to do. Please forgive my ignorance but where can I find a decent lawyer? Where to even start looking online?
Hi Paul,
You can certainly reach out to a local Realtor in your area. They should be able to point you in the direction of a good attorney in your area. You can also find a list of free HUD approved counselors in your area by going to www.makinghomeaffordable.gov. We have heard of lenders on a 2nd settling the account for less than what is owed. Does not happen often but does happen.
Hi Paul - sorry if I was a bit harsh. I sure wish the laws were more clear cut and it was easy to figure out exactly your options without a thorough review of your situation be someone with legal knowledge, but that just isn't the case.
To find an attorney you can start with simple online searches. Try googling "attorney review" with your city and state. I quickly found this which looks promising: http://www.avvo.com/search/lawyer_search?utf8=%E2%9C%93&q=Real+Estate&lo... (though I don't know anything about that site). Also most state bars offer a referral service, I found this for Virginia: http://www.vsb.org/vlrs/. Definitely interview 2 or 3. Avoid attorneys whose answer for everything is bankruptcy. That might be something to consider in the end, but they should explain all your various options and thoroughly reviewing your situation first. Also, they should be able to explain things like recourse, eviction, timeframes, releases after short sale or deed-in-lieu, etc. Ask questions about those things in your initial consultation.
Finally, don't be scared. MILLIONS are in exactly the same situation right now, everywhere in the US. Our laws are some of the most consumer friendly in the world (in some other countries unpaid debts pass on to your kids!!!), and you will get through this. You are already ahead of the pack by proactively working on it rather than burying your head in the sand. You'll be fine.
Hi, I claimed bankrupcy a few months ago and was told I would be covered under the bankrupcy law if I have any deficiency. I have stopped paying the mortgage, I am in Rhode Island. I want to just walk away from this home, we cannot afford the payments anymore, could I stay here until the foreclosure notices come and not have to pay the deficiency? thank you.
You should check with your bankruptcy attorney, but typically new debts that you incur after the bankruptcy are not discharged.
Did you lust your mortgage company as a creditor on your bankruptcy and was it for the full value still owed? As long as they were listed as a creditor and your bankruptcy stated you were not keeping your home you should be ok. So then yes you could stay in the home until you get your notice if sale.
Did you list your mortgage company as a creditor on your bankruptcy and was it for the full value still owed? As long as they were listed as a creditor and your bankruptcy stated you were not keeping your home you should be ok. So then yes you could stay in the home until you get your notice if sale.
Did you list your mortgage company as a creditor on your bankruptcy and was it for the full value still owed? As long as they were listed as a creditor and your bankruptcy stated you were not keeping your home you should be ok. So then yes you could stay in the home until you get your notice if sale.Big they were not listed as a part of your bakruptcy then you are still responsible for the debt. If you walk away they will could attempt wage garnishment etc.
Hi, I have an FHA loan which will now be placed out of the loss midigation department and forwarded to a foreclosure attorney. I'm in the state of Florida and my mortgage loan is with Suntrust Bank. I was given 3 options which I am having a hard time understanding and deciding which option to accept. Florida does allow the lender to seek a deficiency judgment and therefore I need some guidance. My loan is for 207k the home value is only 80k making this a extreme bad investment. I am looking to file Chapter 7 due to hospital bills and other creditors which I have defaulted on due to loss of wages. My question is if I file Chapter 7 will this protect me from having Suntrust/FHA seek a deficiency judgment against me?
Hi Maria,
This is a great question for your BK attorney. My understanding of Chapter 7 is that it is total liquidation and if you have listed the mortgage in the bankruptcy then they could not seek any collection or deficiency.
Hello, I live in Tn and have one mortgage through BoA originally the loan was from countrywide. We are having major issues trying to keep current and have fallen 3 months behind after our local city jacked up water rates from 25 a month to nearly 300. We don't have any debt other than this house and a couple medical bills. I am trying to do a loan modification through BoA but they don't seem very helpful. I am looking at ways to walk away any suggestions would be appreciated. Thank you.
Hello, I live in Tn and have one mortgage through BoA originally the loan was from countrywide. We are having major issues trying to keep current and have fallen 3 months behind after our local city jacked up water rates from 25 a month to nearly 300. We don't have any debt other than this house and a couple medical bills. I am trying to do a loan modification through BoA but they don't seem very helpful. I am looking at ways to walk away any suggestions would be appreciated. Thank you.
Hi Sarah,
Keep trying on the modification if you want to keep the house. The new Obama HARP refi program may not be an option for you because of the late payments. If your loan is a Fannie Mae or a Freddie Mac there may be other options available to you. You can reach out to a housing counselor at www.makinghomeaffordable.gov. They also have a loan lookup where you can check to see if your loan is a Fannie/Freddie.
The modification process is frustrating and can take a long time. Be patient and keep contacting them and sending in the info that they request.
i have a home with chase.can not afford payments.i am worried if i miss more than 2 payments they will come and kick us out...how many paymenst is it until they come and put a lock on the door and put forcloser papers in the work?i am not smart on this stuff...but we can not pay these payments.we have 2 morgages.one is the main one..0f $230,000 and the ref.is $30,000 owed on it....what does chase do to people who can not afford to make the payments...i had missed a payment last january.and the late fees are killers. i keep paying $200 more a month to keep up with the late fee's.what do i do..how long does it take before chase can begin to do forcloser papers...and are you allowed to stay in the house untill they process forcloser papers..what is the process?i live in south florida.help
Hi Rox,
It is very hard to tell how long you have once you stop making payments. We are in unprecedented times in terms of the number of delays in the foreclosure process. There was an article not long ago that said on average in the US it is taking over 500 days to foreclose. Typically a lender will start the foreclosure process after 3 missed payments. That means that they could start the process at any time now that you are 2 months behind. In Florida the foreclosure process takes 5 months. Provided you have not been served yet with the foreclosure papers you still have at least 5 months before you would need to move.
This is a fantastic resource. Thank you.
thankyou...i did not know the process...taken it is threw chase bank...i was tinking that after the 2nd or 3rd missed payment they would come and put a lock on the door or something....i am stupid when it comes to this stuff......our house was vauled at $300,00.now it is down to $125.00. i have seen the same house as mine for sale..with the price of $125.00.sad.we tried to remodified.but chase would not work with us.so this is why i ask what will happen after 3 rd month missed....thankyou.
rox
HI- WE LIVE IN MI AND HAVE BEEN APPORVED FOR A HAFA SHORT SALE WITH THE 1ST MORTGAGE. WE ARE WORKING TO GET A RELEASE FROM THE SECOND. I AM WONDERING IF THE FIRST CAN PURSUE COLLECTION OF UNPAID LATE FEES AND ESCROW SHORTAGE? OR WHEN THEY SAY THEY WILL FORGIVE THE DIFFERENCE AND CONSIDER THE DEBT PAID IN FULL, IS THIS INCLUDED AS WELL?
HI Deb,
The laws vary from state to state. In CA we have a law that took affect last January that prohibits lenders from pursuing collection after a short sale approval. Your best bet is to read your short payoff approval letter very carefully to make sure that there is full satisfaction language in the approval. A local agent in your area that handles short sales should be able to tell you if there are any laws that protect you from a deficiency judgment in MI.
Hi, My husband and I live in New York. We were asset for our taxes and now our mortgage went up $600.00 a month. Trying to refinance but having a hard time with the bank because our debit to income ratio and the value of the house has come down quite a bit. My question is if we can pay this. Can they freeze my banking accounts and go after my husbands retirement and what are the long term repercussions down the road. Thanks
Hi Fran,
It does appear that deficiency judgments are allowed in NY. There are several procedural requirements that must be followed before seeking a deficiency judgment. You would be best served to meet with an attorney familiar with the foreclosure laws in NY before you make a decision.Even if they get a deficiency judgment I do not believe that they can seize bank accounts or retirement accounts but I am not an attorney. I can tell you that if you have your mortgage with ABC Bank and your bank accounts with ABC Bank you may want to consider changing banks when going through a foreclosure.
Hello, my husband and i live in florida, we intend to purchase a new primary residence in the spring since we have outgrown our current 2 bedroom condo and have 3 children. We are sincerely considering letting our 2 investments property go. Specifically because we are way under water and would be paying $500.00 to keep them current. One condo is worth 40k and we owe 161K, the other condo is worth 17k and owe 81K. Can the banks come after our primary residence? Can they garnish our wages? Will we be subject to paying the deficiency, if the banks can not agree to a shortsale or deed in lieu on the 2 investments? Will there be a tax liabilty? We honestly are barely making ends meet and have other monthly obligations such as the basic living necessities and childcare. At this point, we do not know what to do. Can you make any suggestions or recommendations? Thank you.
Hi Jessy,
The laws vary from state to state. It would be worth every penny to consult with an attorney before you do anything. You need to clearly understand the consequences before making a decision.
I'm in the same situation and fretting about what to do. What I've found so far are two possibilities: 1) Even if the bank agrees to do a short sale they can sue you for the balance of the loan (though this varies by state), or 2) you can be on the hook for a big tax bill if the banks forgive the loans because the amount they forgive is considered income to you and taxed as such.
I live in California and my house is in Virginia Beach. about 4 years ago I co-sign my house with my then boyfriend. It is coming up for forclosure. Can the bank come after for the remainer of the loan?
Hi Elizabeth,
The laws vary between the states. The state of Virginia does allow for deficiency judgments. You would probably want to consult with an attorney that is familiar with the laws of that state.
I live in CA and have a investment property in CA. If I let it go to foreclosed, 1st loan can come to collect the balance? or that is it if forclosed?
Hello,
I live in Wisconsin. I live in a house that was flooded repeatedly in the last few years and my neighborhood was declared a natural disaster. I had my mom help us with the immediate costs to get the water out and the damage fixed (after the small insurance payout and money from FEMA), However, the damages are so severe that we're looking at having to put in at least another 30K in the next year. I don't have this. I don't know anyone that would buy our home. I am employed and make a decent salary (over $50K), but it's still way too much, and I am severely underwater. If I just let the house go, and moved in with family, could they garnish my wages or come after me in anyway?
Hello,
First off, I would just like to thank you for all the assistance you are providing to everyone here. With all of the unfortunate predicaments we are all in, any/all guidance we receive and you are providing is absolutely priceless....so again, thank you.
That said, in a nutshell, here's my situation.
I filed for Chapter 7 about a year ago, of course the property/mortgage is included. We had a first and 2nd mortgage with the 2nd mortgage already being written off. We are still living in the property (haven't made payments in over a year) that was included in the BK and are on the verge of finally moving on and walking from the property, starting over, restarting some rental history and getting a fresh start. The 1st mortgage co just got back to us and said they have approved us for a loan mod but they've said in the past they would not lower the principal, just interest rate and payment. We are in a townhome and are about 100k underwater!!!! Unless they come up with a ridiculous loan mod (we will find that out in two days (it's Saturday today - they're not open), are plan is still to walk. Let's say they were willing to lower principal and make it make more sense, would we still be out of our minds to stay for any reason? With the 2nd mortgage still foreclosing on the property, that could come back to haunt us, I assume...?
Anyway, ultimately, should we use the BK 7 to our "advantage", walk from the house and start fresh?
What do I say to MGC? Hand them the keys? See if they'll still work on doing a short sale..or does it even matter because of the BK?
Thank you for any/all guidance you may provide regarding our specific situation.
Eric
Sorry...re-reading my post...I should clarify: "MGC" is our 1st mortgage company.
Our 2nd mortgage company was Suntrust.
Hi Eric,
You would want to consult with your BK attorney. You sought protection from the bankruptcy courts on this debt. If you decide to "reaffirm" the debt then that could affect your bankruptcy petition. Be careful before you enter into any other agreements that you are not forfeiting the protection granted to you by the BK court.
My house is going into foreclosure (TN) first of January,2012. Would I be better off to walk away from the house or file bankruptcy? I bought the house end of '09 therefore do not have enough equity for an equity loan and have been unemployed and diligently seeking employment for past 6 mths. Plz advise
Hi Rusty,
In TN the lender is allowed to seek a deficiency judgment for any losses after a foreclosure. Filing BK could potentially eliminate the ability of the lender to seek a deficiency judgment. It would probably be in your best interest to consult with a BK attorney.
Thanks for your reply Michelle. I met with an attorney to file BK and was told they could NOT help me as I have NO income coming in. Unfortunately, my house HAS been foreclosed on and I am STILL seeking employment. My question now is when I file my taxes, how will this affect me financially?
Linda
Hi Linda,
It sounds like you may be insolvent under the IRS guidelines. Your tax preparer will be able to help you with this question.
I live in Florida; filed for bankruptcy in Nov of 2009 which was discharged by the courts in June 2010 including my house/mortgage. I have not resided there now for over two years and just now the bank is starting foreclosure proceedings. They just served someone who is not even me but with the same name in another city....(go figure). Am I not protected under the bankruptcy laws now that this was included in the discharge? Why would they still be persuing this when I tried to give them the keys 2 years ago and well......they just did not have their act together.. Thanks
Hello,
Can you please clear up something for me?.. I purchased a home in 2006 for 420,000 we are considering a short sale offer of 270,000 (with the banks approval of course) with a diff of 220,000. If my tax bracket is 15% does that mean that I will have to pay the IRS 25,000 when this is all said and done?
Hello,
Can you please clear up something for me?.. I purchased a home in 2006 for 420,000 we are considering a short sale offer of 270,000 (with the banks approval of course) with a diff of 220,000. If my tax bracket is 15% does that mean that I will have to pay the IRS 25,000 when this is all said and done?
Hi Scared,
Any debt forgiveness creates potential tax consequences. There are several ways that your tax preparer can reduce this potential liability. Some people qualify for a write off under the insolvency rules, if the home is your primary residence then that could help, if you did a cash out refi make sure that you document any home improvements before you leave (pictures of the kitchen, swimming pool, receipts etc). Your best bet is to consult with you tax preparer. There are 4 or 5 ways that they can potentially knock down the taxes that are due. The only thing that you do not want to do is to ignore this when you file your taxes.
My wife and I decided to walk away from our second home in Arizona we currently live in Texas; we are not one of those that purchase a home and are not able to make payments. For 5 years we made every single payment until I realized that I was just wasting tons of money the home is 60% less Thant when I purchased. I no longer can spend money on a home that is worth closed to nothing my family needs me and I prefer using the money to pay for medical treatments for family member and college for my brothers. I see a lot of people working 2 jobs and not getting the care they need because they have to make the payment on a home that is work 50% less than and the bankers are getting bonuses of millions of dollas I care more about my family and dont care much what is ethical or not. One thing "is unethical to let your family suffer" !we are ready to play the game! and we studied the playground very carefully
My wife and I decided to walk away from our second home in Arizona we currently live in Texas; we are not one of those that purchase a home and are not able to make payments. For 5 years we made every single payment until I realized that I was just wasting tons of money the home is 60% less Thant when I purchased. I no longer can spend money on a home that is worth closed to nothing my family needs me and I prefer using the money to pay for medical treatments for family member and college for my brothers. I see a lot of people working 2 jobs and not getting the care they need because they have to make the payment on a home that is work 50% less than and the bankers are getting bonuses of millions of dollas I care more about my family and dont care much what is ethical or not. One thing "is unethical to let your family suffer" !we are ready to play the game! and we studied the playground very carefully
My wife and I decided to walk away from our second home in Arizona we currently live in Texas; we are not one of those that purchase a home and are not able to make payments. For 5 years we made every single payment until I realized that I was just wasting tons of money the home is 60% less Thant when I purchased. I no longer can spend money on a home that is worth closed to nothing my family needs me and I prefer using the money to pay for medical treatments for family member and college for my brothers. I see a lot of people working 2 jobs and not getting the care they need because they have to make the payment on a home that is work 50% less than and the bankers are getting bonuses of millions of dollas I care more about my family and dont care much what is ethical or not. One thing "is unethical to let your family suffer" !we are ready to play the game! and we studied the playground very carefully
Hi Robert,
At the end of the day people have to do what is in their best interest. For some that means walking away and for others that means staying and continuing to make their payments. It sounds like you have given this a great deal of thought and understand the consequences. I always tell people that "home ownership is still the American Dream but we are also the land of second chances". We just love a good comeback story. If this means walking from your home, rebuilding your credit, taking care of your family and then buying a another home in 3 years then go for it. I can't wait to hear all of the stories that will be told in the next few years about people losing it all and coming back even stronger. That is the American way.
I purchased i house in 2002, my primary mortgage company is suntrust. i got a second loan to be able to pay for a surgery not covered by my med insurance for my wife in 2006. The second lender is greentree, I believe i owe apprximately 160,000 between both loans and the house is now worth approximately 60,000. I am now going throgh an unwanted divorce and am going crazy in the house so i really need to get out of there and i have to drive about 70 miles each way to work on the daily basis. what is the proper way to walk away from this and what can happen to me besides ruining my credit. I also heard there is a way to foreclose and ruin your credit for three years instead of seven. Please any advise will help me a lot. P.S...I live in the state of Arizona.
Hi Carlos,
You can talk to a local agent in your area about short selling the property. This would allow you to negotiate the payoff with both of the lenders and although it would damage your credit we are hearing about folks that have been able to get approved for a home loan 2 years after a short sale. If the first mortgage forecloses that would wipe out the lien of the 2nd but because this is not a purchase money 2nd this could effectively turn into an unsecured loan (like a credit card) and the lender could attempt to collect. You could certainly negotiate with them and settle the account for less than what is owed. If you are intending to file BK that could wipe out this debt. Although you can potentially get financing 3 years after a foreclosure under current FHA guidelines it may be longer if you file BK. Get all of your questions answered. That may mean talking to a local agent, tax professional, attorney or a housing counselor.
Hi. Not sure where to begin. Well, my husband & I knew nothing about homeownership when we bought our 1st hm back in 2004, still the case now sad to say. Its all so very confusing. What i can tell u is this shady seller had us paying him cash on the side instead of the mortgage company for so long until he began threatening to lock us out of the house, take it back,etc... So i then asked a realestate lawyer which said STOP paying him. Once i told him we knew his game b4 we could do anything, he vanished. I called the courhouse here in Jacksonville, FL & they said its our lose because we cant prove any thing wrong was done exceptt for our neglect in paying our mortgage. So we immediately filed bankruptcy becasue we didnt know what to do & didnt want to lose our hm(this is now by 2005). Had garnished wages for 5 long difficult yrs. We were 29yrs old & 32yrs old w/ 2 sons (3 & 9yrs). We were discharged in 2010, house was falling apart, nothing insulated, a.c broken completely, utility bills were more then our original mortgage paymts many times over $600 month & no help. Got DENIED for the OBAMA plan about 5 or more times, so earlier this yr, my husband & i had enough & for the safety & health of our kids, we felt backed in a corner & just moved out. Once discharged the debt became overwhelming, i begged for help, reductions in paymnts temporarily but tthey kept turniing me down (mind you, we sent them as much as $1,790 in june of last yr to try & stop or freeze the foreclosure as one rep put it, then i find out from another rep thats false & it stays active so i've always felt lost with everything. NEVER understood it & STRESSED it with EVERY rep i spoke with in the mortgage comp) so the house i guess stayed in foreclosure & still is. Im still gettn automated calls from them but not sure what to do or even say @ this point. I dont even think we can get ourselves away from this mess without getting in trouble for just leaving, can we? And my biggest worry is filing taxes this yr in a new address, will they ask why we moved from a property in our name? will they take our tax refund? We have kids & depend on that check every year? Someone plz help me understand some of this, maybe i can finally get a full nights sleep for once. Any info is appreciated, thanks for letting me vent & for taking the time to read my story, Jess
i forgot to add that we moved to another place but were paying rent, we dont own it. Also never took any loans out on the house in our name, what they said we owed in the original closing when we signed the papers (with no lawyers present not sure if thats relavent) which they have it as somewhere over $83,000 but seen propert appr online valued @ around only $22,000 (found this out just recently), jess
Hi Jess,
It sounds like you purchased the property subject to the existing loans and you did not formally assume those loans. If that is the case then that would mean that this is not going to have any affect on your credit. The loans are still in the name of the prior owner (who you were paying). Although you could have stayed in the property (without paying) until the bank foreclosed. There is no equity in the property so based on what you have said you are getting out of this completely unscathed. Just in case I am not understanding the situation completely you can certainly reach out to a FREE housing counselor in your area by going to www.makinghomeaffordable.gov. You can also feel free to tell the whole story to your tax preparer although I do not believe there will be any tax consequences.
If the loans are not in your name then your credit is not damaged and you could probably go out and get a home loan and purchase a property. Just make sure that the next home you buy you use a licensed Realtor, reputable closing company and get a title policy. Make sure you understand exactly what you are signing and keep asking questions until you feel confident that you understand what you are doing.
Hello:
I really need some advise, and was wondering if you can answer a question for me.
I recently foreclosed on my property here in Las Vegas , NV. CitiMortgage originally owned my loan, which was then transferred to Nation Star, which eventually sold at auction to Fannie Mae. NSRS (which I think is a collection agency hired by Fannie Mae) has been contacting me for a deficient amount of $14,900, that they are trying to recover from me. They are willing to work with me and have actually accepted a settlement with me for $2000 (which is a significant difference) here is my question... Is this legitimate? I mean, what company is willing to take almost a 85% loss to settle a debt? My other question is IF I don't pay them will they pursue a judgement against me as they are stating in all of their documentations? Will My wages be garnished? Will I have to pay the full $14,900 if they are?
I'm just really confused if this $2000 will in fact help me, or is it just another scam.
Hi Sandi,
The laws in Nevada do allow the lender to seek a deficiency judgment following a foreclosure. It is not unreasonable for the lender to negotiate a settlement for cents on the dollar. Before you sign anything or send them a check make sure you read the information carefully and make sure you understand exactly what you are signing. It may be in your best interest to consult with an attorney or seek the advice of a FREE HUD approved counselor. You can find a counselor in your area by going to www.makinghomeaffordable.gov. We hope that you will come back and tell us how this works out.
Hi Michelle:
Thank you for responding... I received the letter today on the settlement and it looks pretty straight forward. They are saying the amount of $2000 is a settlement on the balance of $14,900.83 and will have no further liability to me.... Here is my next question, Should I ask them to add in the letter that this settlement amount will show as "Paid In Full" on my credit reporting? And if I do, will they be willing to do so?
Hi Sandi,
I think it is completely reasonable to ask how they will be reporting this on your credit report AND see if you can negotiate this with them. It certainly cannot hurt to ask!!
I asked and they stated that they can not show it "Paid in Full" but it will show "Settled in Full".... I wonder if there is a huge difference?
Hi Sandi,
I doubt that would make a big difference. The key is to show that it is completely settled which "settled in full" provides. The major credit hits come from the late payments on a mortgage. Each month that you do not have a late payment on a mortgage now that this is over and all accounts are settled you will watch your credit score climb (provided all other credit lines are paid as agreed). You are now on your way to credit recovery!! I have heard people getting qualified for new home loans 2-3 years after a foreclosure or a short sale. No one thinks house values are going up any time soon so you have now positioned yourself well for the future!! Happy New Year.
Thanks Michelle, I really appreciate your advise.... I made my 1st payment today and I can't wait to get this all behind me. The only other concern I have is I will probably be hit with a 1099 which I think I would be protected under the Mortgage Forgiveness Debt Relief Act of 2007, but since the debt won't be paid off until January 2012, and the Act ends in 2012 will that NOT be an option for me?
Hi Sandi,
Check with your tax preparer but I believe that the loss and the debt forgiveness would be calculated in the year the foreclosure took place. There may be something in your agreement that says if you fail to make these payments they can attempt to collect the entire balance at which point they are not writing anything off and there would be no "debt forgiveness". Better to check with a tax specialist and make sure.
My husband bought a house in Arizona. We have lived in it and paid for 4 years. Now the house is worth less than we owe. We have it listed for sale, but so does everyone else around our town. The summer heat has us going to visit relatives, so we decided we wanted to move. We found another house we really like, so we decided to buy it. It's in Idaho. So....here's our problem now. We are buying 2 homes, and we only want one. We can't keep paying for both. What can happen if we walk away from the one in Arizona, the one we don't like and don't want? It's not going to sell.
Can someone please help with some sort of answer? I'd just like to know if we can lose our Idaho home, because of walking away on our Arizona home.
Hi LAO,
Arizona is basically an anti deficiency state. If the home is a single family residence on a lot no larger than 2.5 acres then the lender cannot seek a deficiency. Keep in mind that this does not cover cases where a lender could prove mortgage fraud. Although we rarely see cases of mortgage fraud prosecuted I am bringing this up because you are attempting to secure another home loan (assuming you are qualifying for both mortgages) with the intent of bailing on the other property. We call this a buy and bail. Lenders are on the lookout for people that are trying to do this and you may find it challenging to qualify for another home loan. I have seen people successfully pull this off and I have seen others that have had their new loan declined because the lender thought that they were attempting a buy and bail.
Michelle, We DID purchase another home. Yes, we qualified for both loans. We still have excellent credit. It was not our intention to 'buy and bail', it's just headed that way. We do not want the house in AZ, and we owe more on it that it would sell for. The AZ house is in a cul-de-sac of 9 homes, and including ours, 6 have for sale signs on them. We can't keep paying 2 mortgages. I just wanted to know WHAT would happen to us IF we walked away from the AZ house. I'm willing to try and rent the place, but, I've had friends that have done that and the places were trashed, and then they had repairs. We just don't want anything to do with it.
I live in NY on long island and purchased a modest home in 2006 for 305k. Houses like mine are now listing/ selling for 140-160k. I want to leave NY in a few years and plan on moving to VA to a rental property I own and live rent free for a while until we are working and back on our feet. I still owe 275k and have been advised that I might be able to foreclose and walk away from it all with some cash in my pocket. I'd stop paying my first mortgage and put it in to a savings account then after the foreclosure, settle with the second for pennies on the dollar and use some of the cash I saved to do it. My concen is the foreclosure sale not even covering the first. And what about late fees, interst - do they add that on to the balance? Would I owe each full payment that was missed? I am wondering - if i don't owe the balance of all the missed payments too, maybe the saved payments add up to more than the late fees and interest. But if they come after me for a balance still owed, could I put my rental property in an LLC and protect it? Then claim BK if need be to get them off my back? Would that work? People are walking away and starting over. I just read that it took an average of 386 days to foreclose in NY in the 3rd qtr 2011. Three years saving mortgage payments can add it up enough to the point of having ammunition to beat them at their own game and start over with a small nest egg to do it?
Hi Sam,
The laws vary from state to state. New York does allow for deficiency judgments. An application for judgment must be served within 90 days of the foreclosure. You would be best served to consult with an attorney that is familiar with the foreclosure laws in your state before you make any final decisions.
Hi,
I took an 80/ 20 loan out of college and ended up defaulting on both. The 80% went into foreclosure and the 20% 2nd mortgage collected on their insurance and now I am inundated with collection agencies hassling me over this. Is this even legal? I couldn't afford the condo and it foreclosed and now I am harassed by collection agencies from the 20% loan? The property went into foreclosure so to me logically the loan (s) specific to the property are a package deal. It doesn't seem right that an insurance company and collect payments and when they have to pay out, go after the borrower. What is the point of insurance then? Any advice I what I can do would be greatly appreciated.
Thanks,
Laura
Hi Laura,
The laws vary from state to state but in CA if the loan was a purchase money loan and you did not refi the 2nd then it would be considered a non-recourse loan and they could not collect on the second after the foreclosure.
HI...all....i live in California, i was planning to move Salt Lake, Utah back in 2007...right after the home there for not long ago, the housing market start slow down and eventually down and down....i have business in Cal, own a home....as i planned try to sell everything in cal, when the house is completed 8 months later....i try to sell buy can sell at the price, which is much lower then previous price....well to make the story short....i have foreclosed the house in utah in 2009...now when i do a credit search, there's a $80,000 that i owe the lender (Aurora)...so here's the question, Is the lender coming after me? how long will it come after for the amount? i have other 2 properties in Ca? Can the lender put a lien on my property? What is the worst cenario on my case?? thankyou very much!!!
Hi Terry,
The laws vary from state to state. Utah does allow for deficiency judgments. If the lender used the non-judicial foreclosure process then they would need to commence a separate legal action within 3 months of the sale to collect on the deficiency. If the lender did a judicial foreclosure then it is streamlined and the court would simply enter the amount of the deficiency. It sounds like you may need to see the advice of an attorney that is familiar with the laws in Utah.
How do i know if the lender used the judicial or the non-judicial foreclosure process,,,when the lender file the forescloresure process, does it have a record what they file? and also the house is foreclosure in 2009 in Nov. that shows on my credit report, if is a non-judicial, then i would be ok?? is that right??? Well...let said is a judicial, what the chances they would go after me for $70,000.....As far as i know this is a small amount, i think they are millions of cases like mine w/ all these foreclosure out there nowaday....Any one here know Utah?? Can give me some advice??? Once i go to the attorney, they going to start charging for arms and leg....anyone...please help...thanks
If it was judicial you should have received documents from the court, you were likely served those documents, and there was likely a Lis Pendens filed against the property. If it was non-judicial then you would have received a Noticed of Default or Notice of Trustee Sale, with no court involvement.
Sean....i recall i did received a notice of default and a trustee sale.....then is non-judicial....as of nov.2009, then i don't have to worry they are going after me now....then only thing that i worry about is that will they still have the chance to go after my other property that i own.....thanks for all the help info, Sean....T
Hello. My mother and father purchased a mobile home in Texas and my father passed away this last year. My father didn't have any life insurance and was the sole provider in our family. Now my mother can't afford to pay her mobile home payments due to his loss of income. What should she do? She did not tie the land to the mobile home, and there's no way a short sale can be done due to being upside down.
Hi John,
If the loan was just for the home and not the land then the mobile can usually be repossessed much like a car repossession. I am not familiar with the laws in Texas but that is how it works in CA. You may want to reach out to the holder of the note and see if there is anything that can be done. You may want to reach out to a housing counselor or an attorney to see if they can help.
What good is this site, when no one helps with questions asked?
Hi LAO, please see "Before You Post" directly below.
I did read it. I AM on topic!
Sorry, not trying to frustrate you, but while your question is certainly related, it is a NEW question for which we ask that everyone start a new topic. Its pretty easy, just click: http://www.foreclosureradar.com/node/add/forum
Can the mortgage company take assets if they have not completed foreclosure action or obtained a judgment of foreclosure sale in NY? My husband and I purchased home and he is in possession but has not paid the mortgage in almost 3 years since our divorce was filed. The bank has not foreclosed, can the bank take the proceeds of the sale of our other personal property if the Court orders us to sell all assets and divide equally. I am willing to sign a deed in lieu of foreclosure to surrender my interest in the property but fear that they will attach the other proceeds of the other assets and I will be left with nothing.
I have a lot loan in SC with Wells Fargo. It is up for maturity and the want $115K. The lot is worth $4K. They will not budge on a modification or anything. I try to give them the options I have however they just deny them. They approved a short sale 6 months ago with a $50K Promissory Note for 15 years at 0% but the prospective buyer walked away. They won't even honor that. I have nothing to give at this point.
If I walk away, can Wells Fargo come after my home in NY (which they hold the mortgage on)? Thanks!
Hi John,
SC is a judicial foreclosure state which means that the foreclosure happens through the court system. It appears that the foreclosure laws in SC are very complex. From what I can see, a deficiency judgment is automatic unless specifically waived. Although lenders typically do not "go after" other real property they can seek collection on the deficiency and report it to the credit bureaus.
It sounds like you need to hire an attorney that specializes in SC foreclosures. I am not sure what it takes to get them to waive the right to a deficiency but if they do they cannot demand it later.
i am current with my 1st home loan with B of A in the amt. of
$135,000 and i also have a second loan with the same bank in the amt. of $35,000 and i cannot afford to pay on the second now. i have missed my 4 last payments and continuing not to pay it. can the bank foreclose on me? thx for listening.
Hi Sergio,
A lender can foreclose on a second. Of course they would still be responsible for any senior liens and loans. Have you tried to talking to the second? If there is no equity in the property they may be willing to work with you and accept cents on the dollar to settle the debt.
I live in CA. I bought a house for 610k in 2007. got a loan mod (which is low rate for 5 years and after that rate becomes high again) and currently owe 475k while the house is worth less than 400k. I have high enough income that will not qualify for short sale. Can i stop pay and walk away from the house? a deed in lieu or foreclosure is fine with me.
Hi Kevin,
Before you close the door on a short sale you may want to reach out to a Realtor in your area that specializes in short sales. We have recently seen short sale approvals on folks that did not have a huge financial hardship. You may also want to try to renegotiate your modification to a 30 year fixed (we are seeing more of these as well). If you are not interested in a short sale or another modification you can certainly stop making the payments and wait for the bank for foreclose. In CA we are in unprecedented times in terms of the delays in the foreclosure process which means that on average the foreclosure process is taking over 250 days to complete once you stop making your payments. Do your due diligence, make an informed decision, and then march on with your plan.
Hello
We live in CA. Our bank the bank foreclosed on us despite our many attempts to modify as well as they denied us a short sale in May of 2011. They sold the house at an auction in July. My main question is regarding the fact that they are trying to make me claim this as income in full "fair market value" of the house. I have a bk lawyer on standby because we were waiting to see what way the bank would go. ANY help you have regarding this would be very helpful. Can they do this? I thought that after they took the house back and sold it they couldn't come after me. This loan is the primary loan.
Thank you.
Hi Renee,
In CA we have the one action rule which means that once the lender has foreclosed they have taken their one action and cannot collect on any deficiency. From what you have said it does not sound like they are trying to come after you. What appears to be happening is that you are having to deal with the tax consequences. Whenever there has been debt forgiven on any loan that creates potential tax consequences. Debt forgiveness is seen by the IRS as income. There are numerous ways that your CPA/accountant can address these tax consequences and there are bills that offer relief to properties that qualify as your primary residence or if you qualify under the IRS rules for insolvency that can also reduce or eliminate the taxes.
Hi everyone
I am another desperate citizen trying to make ends. We live in CA, and we have a house here which we bought in 2001. In 2005 we bought two investment properties in Vegas, and ever since we've been in financial chaos trying to deal with it. We paid off the second loans for both Vegas properties, were never late on the payments, but lately it is becoming impossible to keep up with these investments. They are terribly under water (each Vegas property was purchased for 100K, with second loans paid off we owe 66K on each property and they are about 25K each now). My question is if I try to shortsale them, will the lender put a defficiency judgement on our CA property, which is our primary residence. Please, if anyone had a similar situation, I would truly appreciate your help. Thank you.
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