[toad pad green]

"Short sale" of my house. The second mortgage says it will report the transaction to the credit bureaus as “Charged Off”, and show the balance remaining still owed.

1. Will the bank go after my other house?
2. Is it likely that I will have to pay off the full amount of the loan?
3. How can I walk away from this house, With nothing further owed.

[KD Hawaii]

Originally Posted by toad pad green

"Short sale" of my house. The second mortgage says it will report the transaction to the credit bureaus as “Charged Off”, and show the balance remaining still owed.

1. Will the bank go after my other house?
2. Is it likely that I will have to pay off the full amount of the loan?
3. How can I walk away from this house, With nothing further owed.

1. It depends on your situation. If you give the key(s) to the bank and let them know, they'd probably will not go after your other house..I could be wrong.
2. Yes unfortunately.
3. Mail the keys to the bank and explain why you're walking away from this house. You have nothing to worry about BUT your credit will be ruined. Are you willing to take that risk?

[olecapt]

Originally Posted by toad pad green

"Short sale" of my house. The second mortgage says it will report the transaction to the credit bureaus as “Charged Off”, and show the balance remaining still owed.

1. Will the bank go after my other house?
2. Is it likely that I will have to pay off the full amount of the loan?
3. How can I walk away from this house, With nothing further owed.

There are generic answers.

The second holder has to agree to a short sale. If they don't you can't short sell it. Sounds like they don't agree.

If they do agree then generally they have no further recourse with you. They can launch an action for a deficiency judgement but that costs money and takes time and mostly does not work. Classically in a short sale the primary mortgage holder buys off the second holder for ten cents on the dollar.

If an owner has significant assets the bank may go after them. It basically won't agree to the short unless you take an unsecured note.

The bank has no basis for going after your other house. They can however go after you.

The owners threat is that he will walk away. The can go after you if you do so but almost never do unless you have significant resources. It is still unlikely that they will go after you even if you have significant resources...but it can happen.

To proceed approach your lender. See what they say. Or hire an agent who does a lot of shorts. And then follow the agent's advice.

People who are well off and get caught in a badly underwater property are very likely to end up eating the problem. It is a reward for having assets.

[airics]

is the second house "under water" also with a mortgage.. is it free and clear? if it is, you can bet they are going to lien it..

[olecapt]

Originally Posted by airics

is the second house "under water" also with a mortgage.. is it free and clear? if it is, you can bet they are going to lien it..

By what mechanism. You can't get a lien because you want one. First you have to go to court and get a default judgement. And then there is likely a big issue about what the place is worth. And then you have to get a court to agree to a lien on the property. Which may turn out to be very difficult in another state.

And then the guy goes bankrupt and the whole thing gets written off.

It is not simple.

[airics]

maybe its different in nevada.. 2 homes ohio...one worth 200, owe 300 sells at auction for 200, balance 100... house number 2 no mortgage worth 200... bank forces foreclosure and then sells house to pay for #1 even if in bankruptcy, if its not owner occupied its going to be sold

[olecapt]

Originally Posted by airics

maybe its different in nevada.. 2 homes ohio...one worth 200, owe 300 sells at auction for 200, balance 100... house number 2 no mortgage worth 200... bank forces foreclosure and then sells house to pay for #1 even if in bankruptcy, if its not owner occupied its going to be sold

The second house is virtually always owner occupied and has the homestead exemption. A default judgement is not a secured investment and cannot penetrate the homestead.

As a practical matter there have been virtually no filing of deficiency judgement actions. And those are complicated. Part of the reason is that the counter to a deficiency judgement is almost always a bankruptcy.

It might well be that one could go after the second of three houses...but anyone with any sense would spread the load so that both rentals are well mortgaged but not the owner occupied.

I still advise people with lots of money that they need to ride out the down or work a deal with the bank. NOte that worked right the feds help with the bad news.

I have watched some of the idiots who had six and eight and ten manage to walk away and get away with it. So anything is possible.

[airics]

must be different there.. so if i have 2 houses (1 rented, mortgage under water and the other owner occupied - not under water), i could homestead the owner occupied and it couldn't be touched?

[Buzz123]

It's a good reason to have PMI insurance.

Get a lawyer that deals with these things. It'll probably cost you about $3,000, but it will be worth the peace of mind. I have a phone number of one around here someplace. Just make sure you get one that comes recommended. Some are just crooks preying on people in your predicament.

[olecapt]

Originally Posted by airics

must be different there.. so if i have 2 houses (1 rented, mortgage under water and the other owner occupied - not under water), i could homestead the owner occupied and it couldn't be touched?

How bad is the cash flow? There are consequences to a short or foreclosure..they are not pleasant.