Do banks typically sue after foreclosure sale to recoup losses? (Detroit: renters, 2nd mortgage)

The_Cadillac_Lawyer · 10-15-2009, 08:27 AM

I've read about judicial judgment action banks can take after the sale of a foreclosed property with the ability to seize assets (cars) and garnish wages. Has this happened to anyone in recent times given the climate of the foreclosure market? I've read typically they will on 2nd mortgages or in case of fraud, or where the homeowner has the funds to pay. But has anyone had any experience or heard about this? I live in AZ and my MI home was in foreclosure, until I was offered a re-modification that basically came back with a payment that has higher than the initial payment. I just can't pay it, and don't have renters anymore. I feel like my only option is to let the house go, but I'm scared to death of being sued

JGatti · 10-15-2009, 08:33 AM

They tried to sue my neighbor after he walked away from his house. He filed bankruptcy and that was that.

MTUCache · 10-15-2009, 09:05 AM

This is a real concern of mine as well... my renters have stopped paying me, and are moving out, and I'm not having much success finding another renter. Foreclosure seems inevitable (and frankly, it's also the easiest route I think), but bankruptcy is something that I'd really like to avoid. As of next week I'm not going to have any unsecured debt, we're making things work right now so I don't need to declare bankruptcy, but I'm definitely not making enough money to pay two house-payments.

Sparrow_temp · 10-15-2009, 05:52 PM

I don't think they normally do -- I have relatives who have let their property get foreclosed and the bank did not come after the difference. Unless the owner is unemployed, I kind of think they should though. I have sympathy for those that got layed off but not so much for those that made poor financial choices and are in effect getting a bail out.

MTUCache · 10-16-2009, 08:45 AM

Quote:

Originally Posted by Sparrow_temp

I don't think they normally do -- I have relatives who have let their property get foreclosed and the bank did not come after the difference. Unless the owner is unemployed, I kind of think they should though. I have sympathy for those that got layed off but not so much for those that made poor financial choices and are in effect getting a bail out.

How about those of us who have had to move out of state (taking on another rent/mortgage payment) in order to find that work?

This is the second time I've done this. The first I spent six months making both payments, putting the rest of my bills on credit cards, and it almost tore my family apart. I left a great job, took a huge pay cut, but managed to keep everything together (and move back to Detroit). That won't happen again. This time if it comes down to saving my credit or feeding my family, the place in Michigan is going to have to go.

malamute · 10-16-2009, 09:10 AM

I don't think foreclosing lets someone off the hook. A house selling at a foreclosure auction will likely be sold for less money and the borrower made a legal agreement to the bank.

The_Cadillac_Lawyer · 10-16-2009, 09:23 AM

Quote:

Originally Posted by malamute

I don't think foreclosing lets someone off the hook. A house selling at a foreclosure auction will likely be sold for less money and the borrower made a legal agreement to the bank.

Well thats what I'm trying to figure out. Is if they seek a judicial judgement for the remaining balance.
I had to move out of state for a job, and I can NOT afford to pay rent here and a mortgage there for a empty house. This really sucks to be in this prediciment and its definately not something done by choice. I just don't want to face wage garnishments in the future

malamute · 10-16-2009, 01:27 PM

Quote:

Originally Posted by trudawg

Well thats what I'm trying to figure out. Is if they seek a judicial judgement for the remaining balance.
I had to move out of state for a job, and I can NOT afford to pay rent here and a mortgage there for a empty house. This really sucks to be in this prediciment and its definately not something done by choice. I just don't want to face wage garnishments in the future

Maybe it depends on where you live now -- what if you got a mortgage where you live while your credit is still good before you let go of the other house. I don't know if some states would garnish wages for houses foreclosed in other states.

I don't know what people can do when they have no jobs. Globalism is not grand.

Toymeister · 10-16-2009, 02:58 PM

You sound like very intellgent people. You can esily search on the web for your answer if you know what to search for. You need to seach to see if Michigan is a recourse state (yes it is). Can they sue you, yes. Will they, now that depends, if the loan is with the VA yes they will, FHA will not, commercial banks will likely sue you although it may be two years down the road. It does not matter where YOU live it matters where the HOUSE is. Yes a Chaper seven bankruptcy will eliminate this debt.

Sparrow_temp · 10-16-2009, 06:57 PM

I had to do the same thing. Well, technically I had the option of staying in MI but chose to move to NM (job offers came back to back). The job was not really a paycut but I had to pay both rent and mortgage for 9 months while watching property values go down by the day.

But to answer your question -- no I wasn't talking about anybody who was forced to move for work or simply couldn't find work. I was pointing fingers at those who were living beyond their means, owning way too much house for their income, and simply hoping that property values would continue to go up while interest rates stayed flat. And then borrowing money against their unrealized profits from their house to further live beyond their means.

And it really urks me that these people then get to walk away from debt, get government help, all at the expense of those who did things right. These people don't have to pay tax on any debt forgiveness and I don't get to declare any losses on my tax return. I'm not sure how that's fair.

Quote:

Originally Posted by MTUCache

How about those of us who have had to move out of state (taking on another rent/mortgage payment) in order to find that work?

This is the second time I've done this. The first I spent six months making both payments, putting the rest of my bills on credit cards, and it almost tore my family apart. I left a great job, took a huge pay cut, but managed to keep everything together (and move back to Detroit). That won't happen again. This time if it comes down to saving my credit or feeding my family, the place in Michigan is going to have to go.