Second mortgage of foreclosure house (loan, personal property, California, non-recourse)

[forestpark]

My house in GA was foreclosed last year. I had two mortgage with the same bank. After my house was foreclosed I did not receive anything from the bank for a whole year. Now the second mortgage start to send bill to me. Can the second mortage go after me?

[Leavethetable]

Short answer is...it depends. First you need to check the laws of your state regarding this topic. Second, is your loan considered recourse or non-recourse? Here is an example.

In CA, there are "anti-deficiency statutes" that protect homeowners from mortgage debt when the loan proceeds were used to purchase the property (purchase money mortgage). In CA, a purchase money mortgage is non-recourse and the bakn cannot go after you for any deficiency (e.g. the second is out of luck).

However, let's say you obtained the second after you purchased the home. That would likely be considered a recourse loan and the bank could come after you for the deficiency or amount you owe them. Also, if you took a second to purchase the loan and then later re-fied that second and took cash out, it could make the loan recourse; again you are liable for the deficiency.

Just some food for thought.

[Modification Specialist]

Originally Posted by forestpark

My house in GA was foreclosed last year. I had two mortgage with the same bank. After my house was foreclosed I did not receive anything from the bank for a whole year. Now the second mortgage start to send bill to me. Can the second mortgage go after me?

Leave/table - California foreclosure laws are some of the tedious in the county. You are a non practical judgment state.

forestpark

I speak to a lot be people facing foreclosure. The state of GA, is a mess.

The answer to your question is yes on your second, and on your 1st.

The line holders position, the 2nd mortgage is behind the 1st mortgage. All they can do is file a judgment, that will go on your credit report. If you try and buy a future property, you will need to satisfy that amount.

You best option right now - is to negotiate a lower settlement, before the courts award a judgment. Once there is a judgment, you can not ask for a lower settlement.

As for your 1st mortgage - letting a property go to a foreclosure, it can be listed your credit report for up to ten years. When the property does sell at an amount less then what you owed on the property. The lender can file a deficiency judgment.

Worst case - once there is a judgment, a sheriff can confiscate person personal property to satisfy the judgment.

If you get hit will a substantial deficiency judgment in the future- your two choices are paying it or filing bankruptcy.

The longer you wait to clear you your mess, the more it is going to cost you............

Let me ask you a question - what are your plans in 10 years, in five years, next year? Do you have any goals? What are you doing for yourself today, that will benefit yourself tomorrow?

Trying to take short-cuts today, will result in a longer route tomorrow......

The secret to success is scheduling yourself.

..

[MikeLima]

I'm in a somewhat similar situation...I tried a Short Sale back in 20010, but they Forclosed on me anyway after an investment company as the acting Trustee on the property went belly up and Deeded property back over to me in 2009.

I stopped making the 2nd loan note back in Nov. 2006 as the Trustee took possesion, but now after 6yrs. a collections co. is coming aftre me for a Settlement of $10K on a $40K deficincy balance stating paymets were made on loan...though it wasn't me directly.

I' have been issued a Summons, but on the summons what looks like Transfers of three different lenders...Quicken Loans...to GMAC...to the Bank of New York Mellon a Trustee of GMAC...the Stamps from each on the Ballon Note document All say ""Without Recourse"...does this give me a leg to stand on ?

Or should I just setle and take my lumps ???

[Modification Specialist]

Originally Posted by MikeLima

I'm in a somewhat similar situation...I tried a Short Sale back in 20010, but they Foreclosed on me anyway after an investment company as the acting Trustee on the property went belly up and Deeded property back over to me in 2009.

I stopped making the 2nd loan note back in Nov. 2006 as the Trustee took possession, but now after 6yrs. a collections co. is coming aftre me for a Settlement of $10K on a $40K deficincy balance stating paymets were made on loan...though it wasn't me directly.

I' have been issued a Summons, but on the summons what looks like Transfers of three different lenders...Quicken Loans...to GMAC...to the Bank of New York Mellon a Trustee of GMAC...the Stamps from each on the Ballon Note document All say ""Without Recourse"...does this give me a leg to stand on ?

Or should I just setle and take my lumps ???

This is a first.....foreclosed upon and the property was deeded back to you? - ..

Non pun to you - do not see this happening this way because the local county/state is in a silent first position. If the mortgage taxes don't get paid, the property is subject to a government auction. Next is the first lender - I do not know and cannot explain after a foreclosure the property deeded back to you.

The settlement you mention - this happen regularly when there is a second mortgage. The first lender settles (buys out) the second to release their claim to the deed. Then the first lender can sell the property. In your case - the second is now coming after you for the difference between what was settled and the total amount you owed.

Without Recourse? - guessing you're in a non recourse state. If a borrower defaults the lender can foreclose, the lender's recovery is limited to the property. Because the second released themselves from the mortgage, now they can come after (sue) you in civil court.

Now a collection company is looking settle for $10K on a $40K deficiency of the second mortgage. This happenings when it would be too expensive to try to collect on a past due debt, so the debt is sold for penny's on the dollar to collection company's.

First ask them to show you the original loan note you signed when you took out this loan. If they cannot provide proof you owe this debt. There's a very good chance not paying them.

One option is bankruptcy though for a debt of $10,000, it would not be a smart move for your future filing bankruptcy. The debt is a collection dept right now, if the collection company took this to court and received a judgement. Worst case is a sheriff coming into your home to confiscate property to auction to satisfy your debt.

Another option is to settle for less - say you have an appointment to speak to a bankruptcy attorney about filing a chapter 7 to wash away your debts. Also say you have a relative that can provide the funds for a settlement. Tell them you want to settle for $2500.

The rationality when settling unsecured debt, doing a chapter 7 will wash the debt away. The collection company was looking to collect as mush as possible. You doing a bankruptcy, they stand to lose everything. You mentioning a relative is providing the funds, you dont have to provide any income or bank statements. Settling doubt at $00.25 cents on the $1.00 is standard. What every amount you settle for has to be paid in one lump sum. An additional note - state you want them to report to your credit report as "Settled as Agreed".


.. Good Luck