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Old 07-27-2008, 07:33 PM
 
43 posts, read 189,901 times
Reputation: 32

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My condo is worth about 260,000 in today's market. I owe 348,000. I made my last payment in June and my lender is starting to call. I don't have any intention of paying for various reasons.

***Now hold on right there, you holy rollers. Before you add your reply about me being a deadbeat and you having to pay for my mistake, please go to another forum or start your own, thank you.***

Eventually my condo will end up in foreclosure. The second mortgage was a cash out equity line, that has been frozen by CW for over a year because the value has dropped so much. CW will have a right to pursue a deficiency judgement against me in court.

My questions are these:

Will they?

Who determines the fair market value of the condo?

What happens if I simply don't pay the judgement?

By the way, other factors are; I now live in another state, I bought the condo as a primary residence and relocated, I now own another house, have no debt nor need of credit cards, I was single when I bought it - now I'm married.

Thank you, and I will not reply to those of you that want to; talk me out of it; verbally abuse me for my decision, or offer alternative suggestions (I know them all).
I simply am looking for answers to these questions, especially if you've been through this before.
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Old 07-27-2008, 08:42 PM
 
Location: NC
1,264 posts, read 2,120,620 times
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1) The market determines fair market value. What do I mean? Recent home sales are the definition of "the market", therefore what people have recently paid for a property of similar size, age, condition and location will determine your property's value.

2) Probably what will happen with the deficiency judgment is that it will be on your credit for the next 7 years which obviously will afect your score. And since you are basically just walking away from this, the resulting foreclosure will prevent you from acquiring another mortgage for 5 years, but you seem set with having another home.
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Old 07-28-2008, 11:40 AM
 
43 posts, read 189,901 times
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So, there can be a judgement against you, and you just don't pay it? What happens then?

Let's say the fair market value is 250K and the foreclosure sale nets 225K. Then I'm liable for 25K?

Last edited by formerLVguy; 07-28-2008 at 12:09 PM..
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Old 07-28-2008, 12:42 PM
 
Location: A little suburb of Houston
3,702 posts, read 15,936,761 times
Reputation: 2047
No.
If your loan amount is is 348K and it sells for 225K you will owe 123K which will be the amount of judgement. BTW judgements are renewable and they could conceiveably put a lien on you new home for the amount owed. So do not count on just the 7 years on your credit report which is pretty much automatic whether there is a judgement or not.
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Old 07-29-2008, 06:11 AM
 
Location: NC
1,264 posts, read 2,120,620 times
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Quote:
Originally Posted by Poltracker View Post
No.
If your loan amount is is 348K and it sells for 225K you will owe 123K which will be the amount of judgement. BTW judgements are renewable and they could conceiveably put a lien on you new home for the amount owed. So do not count on just the 7 years on your credit report which is pretty much automatic whether there is a judgement or not.
True, a lien could be put on your house, BUT in years of looking at credit reports, I have found that to be relatively rare.

Things to consider on being concerned about a judgment lien:

Is your new house in a different jurisdiction? A different state? That could slow the lender down if they were intent on on slapping a lien on your property. It take time and their money to track you down.

Are the lenders going to come after the thousands, the tens of thousands and maybe the hundreds of thousands of deficiency judgments that they will be dealing with? They could, but time and money and common sense will dictate it will be easier for them to NOT do it.

The same thinking applies to renewing the judgment. Judgment renewals happen more often when someone is pissed and wants to keep after a debt. Lending institutions will have such a large number to stay on top of, this also seems unlikely in this case.
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Old 07-29-2008, 07:29 AM
 
Location: A little suburb of Houston
3,702 posts, read 15,936,761 times
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Ya, the chances are slim but they are possibilitiesthat could happen and he wanted to know any potential ramifications...so I put them out there. I have seen that some companies are becoming a bit more aggressive on this issue, especially if the debt is sold to a 3rd party.
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Old 07-29-2008, 11:53 AM
 
Location: NC
1,264 posts, read 2,120,620 times
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Quote:
Originally Posted by Poltracker View Post
Ya, the chances are slim but they are possibilitiesthat could happen and he wanted to know any potential ramifications...so I put them out there. I have seen that some companies are becoming a bit more aggressive on this issue, especially if the debt is sold to a 3rd party.
You were absolutlely correct in pointing out the possibilties. I was just trying to point out the probabilities as I saw them.
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Old 07-29-2008, 07:15 PM
 
Location: Southeast Georgia
65 posts, read 216,019 times
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The issues I see on why they would are that this is a pretty good size deficiency and you have collateral (in having a new house) meaning they would be more likely to get some money out of you than someone that didn't have anything.
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Old 07-30-2008, 05:20 PM
 
Location: Pawnee Nation
7,525 posts, read 14,552,278 times
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Frankly I think you could get a retro appraisal independent of the lender showing what the house was actually worth at the time of purchase/refinance. I would BET that they did NOT do any sort of significant review of the loan package before it funded, and if the original appraisal can be shown to be inflated, then they don't have "clean hands" in the whole deal, simply due to their lack of due diligence.....after all, they are the ones who are supposed to be the experts in real estate and lending, not you. If they failed to adhere to their own guidelines, I think a case can be made that not only should they NOT get a deficiency judgment, but they should NOT issue you a 1099 for the forgiven portion of the note.
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Old 08-02-2008, 06:58 PM
 
43 posts, read 189,901 times
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Thanks for all the replies. Yes, I knew some of the hardcore possibilities of foreclosure...Liens, judgements, etc. Thanks for the comment about retro appraisal, I hadn't heard that one. The lender on the cash out refinance was a joke. I initially approached them and said I wanted take out 20K to get through a rough spot. They said I needed to take out 79K to pay off my car and credit cards in order to net 20K. 20K cash, 33K for car, 22K for credit cards, 4K closing costs. Hindsight is 20/20. I should have told them to GTH and worked out my debt. 79K plus paying off the original 50K second meant a total refi of 129K. Ha! I only wanted 20K! I went ahead and did because I still felt the condo wasn't upside down. Similar condos went for 374K at the time of my refi. That was a long time ago, and I've floated the condo for 2 years. Enough is enough, now it's time to walk away and deal with the repercusions. Does anybody know what happens if you ignore a judgement? Does it go away if not renewed?

FYI, I accepted a short sale contract on my condo this week. $240K saleprice on $329K debt. I think the lender would be lucky to get that in a foreclosure sale, more likely they'll get less. Irony is that because I've never been late, they probably won't entertain the short sale.....Thoughts?
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