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My husband is the only one listed on the mortgage but I am the co-owner.
He doesn't have income but I have. I am NOT on the mortgage. Can the 2nd lender come after me??
2nd question.The 2nd mortgage money was used to purchase the house. I am doing a shortsale but the 2nd lender doesnot agree to settle but telling us that they can only release the lien on the property. That means we have to carry the whole mortgage amount even after the closing. Some people say that we don't have to pay and after one or two years, the lender will give up and will settle for small money. But the others warn us that the 2nd lender can sue us and come after our pay check and bank accout. Can they sue us even though the 2nd money was used to purchase the house?? and can they sue me when I am not on the mortgage???
I live in New Jersey and desperately need help on this matter. The 1st lender's short sale approval expires next Friday (Mar. 19).
... 2nd lender can sue us and come after our
pay check and bank accout. Can they sue us ...
Anyone can sue anyone else for anything.
"pay check" -- do you make a lot of money?
If so, just pay them off. If not, you're not worth it to them.
"bank account" -- Do you have huge quantities of cash?
If so, just pay them off. If not, you're not worth it to them.
Quote:
Originally Posted by rjrcm
Consult an RE attorney ...
This is definitely worth the money.
Prepare questions in advance and pay for an hour of lawyer time.
If you are a typical American and have no savings, lots of consumer debt
such as auto loans and worse, no savings, etc. then you probably have
nothing to worry about. There are millions and millions of people the
lender will be looking to sue also. ( So many lawsuits, so few lawyers ... )
Your RE attorney might ( or might not ) tell you that after, say three years,
creditors cannot pursue you any more. It's going to take a lot longer for
all the current mess to unwind than three years.
If you do have some money, make sure that it is sheltered in an IRA
or 401k. It's up to you to figure out how to get it there. If you have extra
after that, you can buy a couple of gold coins and stick them in a safe
deposit box. If you have so much money that this process is going to be
really difficult, just pay off the deficit and get on with your life.
No expert here, but here's my experience. The last house we tried to buy fell through because the 2nd lien holder would not agree to the short sale. They would drop the lien for a fee, but only if the owners took out a new loan to pay them off. We were not allowed to pay it for them. They were offered favorable rates and terms on the new loan, but the owners refused. This 2nd mortgage had been used as their downpayment also. So, the owners refused, the bank said they would sue the owners rather than forgive the amount, the sale fell through and we bought a similar house in a better neighborhood.
... 2nd lien holder ... would drop the lien for a fee, ...
Do you mean that the 2nd lien holder would agree to allow the
sale of the house and turn the unpaid balance of the 2nd lien
to become an unsecured debt to the home seller?
I'm just curious if 2nd lien holders are into doing such things.
From what I've heard, that doesn't happen. Maybe it just
doesn't happen very much.
It absolutely happens. The seconds are taking hits like there is no tomorrow.
If the first gets 80 cents on dollar the seconds are getting pennies. BofA used to crash deals because they demanded 10% of the loan balance on their seconds. They have reconsidered and now demand 5%.
This is huge, because most first will give $1000 or $3000, $5,000 if over $100,000...it ain't pretty.
No one has a crystal ball. If the collection agency can determine the hardship is over, they have a right to seek a judgement for the unpaid balance.
HAMP may help, (Starting April 5th) it would certainly do more good if Fannie and Freddie loans were included.
I put $120k down on a house that is now underwater.
If I wanted to sell, I'd have to come with $60k to the
table to satisfy realtors, closing costs, etc.
Walking away with a note would be preferable.
I just figured that the 2nds were too stupid to know that
someone willing to promise to pay is better than someone
walking whilst they got nothing.
I'm not leaving, but having that option would be good.
My husband is the only one listed on the mortgage but I am the co-owner.
He doesn't have income but I have. I am NOT on the mortgage. Can the 2nd lender come after me??
2nd question.The 2nd mortgage money was used to purchase the house. I am doing a shortsale but the 2nd lender doesnot agree to settle but telling us that they can only release the lien on the property. That means we have to carry the whole mortgage amount even after the closing. Some people say that we don't have to pay and after one or two years, the lender will give up and will settle for small money. But the others warn us that the 2nd lender can sue us and come after our pay check and bank accout. Can they sue us even though the 2nd money was used to purchase the house?? and can they sue me when I am not on the mortgage???
I live in New Jersey and desperately need help on this matter. The 1st lender's short sale approval expires next Friday (Mar. 19).
Experts, PLEASE REPLY ASAP!!!!!! THANKS!!!!
The fact that the 2nd was taken out to buy the house original comes into play only if some portion of the loan is forgiven. If you have debt forgiven, normally you have to pay taxes on it as if it were normal income. However, if it is your primary residence, and it was debt used either to buy or fix up/improve the house, you can apply to have the IRS waive the deficiency judgement so you don't have to pay taxes on it.
In your case, that doesn't apply, because the 2nd lender isn't agreeing to forgive the debt. That is their option, and either the 1st can buy them out, if it is financially adventageous to do so (can't imagine this ever happening, but they could), or they can let the house go to foreclosure (in which case the 2nd usually gets nothing)
If you aren't on the mortgage, I don't think they can attach to your wages if you aren't on the mortgage, but I'm not sure about that, and it may depend on state. If you are in a community property state, it might work differently.
I'm pretty sure that there is a short period of time in which they have to sue if they are going to. And I'm pretty sure the time period is different for a short sale than it is for a foreclosure. I second (third?) the advice to consult a real estate attorney.
Do you mean that the 2nd lien holder would agree to allow the
sale of the house and turn the unpaid balance of the 2nd lien
to become an unsecured debt to the home seller?
I'm just curious if 2nd lien holders are into doing such things.
From what I've heard, that doesn't happen. Maybe it just
doesn't happen very much.
Yup! That was exactly what they wanted to do, but the homeowners refused. They felt that since that money was used as a down payment on the house, it should be forgiven along with the shorted amount on the 1st mortgage. When we had to walk away, the bank's plan was to sue the homeowners rather than forgive anything.
The second trust loan is the biggest roadblock to all short sales. It's estimated that over 45% of our mortgages have a second lien or heloc.
HAFA (Home Affordable Foreclosure Alternatives) goes into effect in early April. HAFA has very minor incentives to the second lien holder to approve the short sale - no where near close what they have in the way of a lien. Will second lien holders bite? We'll see. In order to participate in HAFA, both lenders must indemnify the borrower from the amount owed. HAFA also provides a small stipend to the owner occupant to relocate. If I were a 2nd trust lender, I would bet on the potential future deficiency judgment and not the token handout with the requirement to indemnify the borrower.
We have a long way to go with 5 to 7 million more foreclosures in our future.
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