Will I be liable for a deficiency judgement on defaulted mul

brendalmiller · Joined: 21 Dec 2007 Posts: 2 1.73 Dollars($)

I am defaulting on 8 single family residence and multifamily properties in Michigan. I have an 80% 1st mortgage only, I put down 20% of my own money for downpayment. 2 questions: Will a deficiency judgement be issued or will a non-judicial foreclosure be sought, and second, will my house I reside in in California be at risk for being sold to pay a deficiency judgement.

larry · Joined: 27 Jun 2007 Posts: 3328 473.51 Dollars($)

Hi brendalmiller,

Welcome to this forum.

I think in the state of Michigan, the primary method of foreclosure is non-judicial foreclosure.

Are you right now in the foreclosure process? If the lender has not sent you a foreclosure notice yet, then you should try to avoid it because foreclosure will have a huge negative affect on your credit report. Consult with you lender ASAP and see if you can afford any repayment plans.

If you can't afford any of the repayments plans, you can try out deed in lieu of foreclosure. Here you have to request your lender for DIL. but the lenders don't always agree for DIL. the advantage in DIL is you need not to pay deficiency judgment.

Hope that will help you. Feel free to ask if you have any further questions.

Thanks,
Larry

brendalmiller · Joined: 21 Dec 2007 Posts: 2 1.73 Dollars($)

Hi Larry, thanks for the response. I can't afford repayment plans, I am already in foreclosure on one property. What is the tax implication of a deed in lieu and would it make sense to go with Deed in Lieu if one property is already in foreclosure? If I go foreclosure route, it sounds like a deficiency judgement in Michigan will most likely not be sought and my house in California will not most likely be at risk from the Michigan foreclosures?

blue · Posted: Fri Dec 21, 2007 12:07 pm Post subject:

Hi Brendalmiller,

Welcome to Mortgagefit discussion board.

I agree with larry that you should try to avoid foreclosure. Foreclosure is considered even worse than Bankruptcy.

Samantha · Posted: Sat Dec 22, 2007 12:38 pm Post subject: RE: michigan foreclosure

Yes, I agree with Larry here. Michigan allows for non-judicial foreclosure, that is, without involving the court.

"Will a deficiency judgement be issued or will a non-judicial foreclosure be sought"

The deficiency judgment will only be issued if the lender goes for a foreclosure and then realizes that he cannot cover the entire motgage balance through the foreclosure sale. However, if your state is an anti-deficiency state and the loan is a first mortgage taken to buy your primary residence, then you are not responsible for the deficiency payment.

I think Michigan is not an anti-deficiency state and as such, the lender can ask for the deficiency, if any.

Hope this helps...

God bless you.

Samantha

lisascherzer · Joined: 04 Jan 2008 Posts: 755 1.03 Dollars($)

If the homes that are delinquent go to auction then in most states the lender can get a judgement for the deficiency. The judgement can be placed on your primary residence. However, it is unlikely that they would foreclose on that home. You may want to contact a lawyer about a chapter 7 that would include any deficiencies. If you put money down on these homes, I would try and sell them to break even before giving them over to the bank, if at all possible. If you cannot sell and break even, then you can consider deed in lieu of foreclosure. If you do this, there is no deficiency.

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