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How does deficiency judgement work in Michigan?

Are lenders still able to obtain a deficiency judgement after sheriff sales on foreclosed homes in Michigan? It is very confusing. Before they issued a 1099c for your forgiven amount. However, I understand that these 1099c are not being issued any longer. Does this mean that deficiency judgment is assumed? Also, does Michigan have anti-deficiency laws? If the mortgage is for the purchase of a dwelling occupied by the purchaser, is the purchaser not responsible for any deficiency?

larry2's picture
larry2 | Joined: June 27, 2007 02:50 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi puppa,

Welcome to the forum.

The lender can still sue you for delinquency judgment. Michigan is not an anti-deficiency state. So the lender can ask you if the sale price less than the amount you owe to the lender.

1099c is only issued if the lender forgives you debt but now you need not to pay tax on the forgiven debt as per the Mortgage Debt Forgiveness Tax Relief Act. Know more about it at - http://www.mortgagefit.com/tax/debtforgiveness-reliefact.html

Feel free to ask if you have any further questions.

Best of luck,
Larry

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Do you know how long they have to decide to file for a judgement? Also, can I request a 1099c? to make sure they cannot get a judgement?

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jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Martin,

Welcome back.

The purchaser of a property in Michigan is responsible for the deficiency judgment if the court orders him to do so. The judgment is filed only after the sale because the lender doesn't know exactly what the bidding amount will be.

Most probably the statute of limitation, that is the period up to which the lender can file the deficiency judgment is 4 years in Michigan. The statute varies from one state to another.

Now, if the lender cancels the deficiency as a result of negotiation, then you may be sent a 1099-c form just to keep in writing that the debt has been canceled. But this does not mean you'll have to pay tax.

Thanks

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

what can a bank really come after in terms of my assets if a foreclosure happens...can they take my pension income and my social security income?

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jerry's picture
jerry | Joined: October 17, 2005 03:24 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi distressed,

As far as I know, social security income cannot be garnished or taken away in case of foreclosure. Protection of pension income accounts may vary from state to state. Employee Retirement Income Security Act of 1974 (ERISA) may or may not protect the pension accounts. You will have to check your state laws if the pension accounts are protected or not.

Thanks,

Jerry

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I HAD 2 MORTGAGES WITH HSBC. I LET IT GO TO FORECLOSURE. I SETTLED ON THE FIRST FOR 21% AND NOW ON THE 2ND THEY HAVE FILED SUIT WITH A DIFFERENT COLLECTION AGENCY/LAWYERS. THEY WANT 65% WHICH I DON'T HAVE. THE AMOUNT WAS ABOUT SAME $33,000. I HAVEN'T RECEIVED A SUMMONS YET. THEY REFUSE TO EVEN CONSIDER MY OFFER OF $6,600. WHAT RECOUSE DO I HAVE?

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jerry's picture
jerry | Joined: October 17, 2005 03:24 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi STACKFIS!

I think you should try and some how pay back the debts to the collection agency. You might take up a personal loan as well. If you do not pay the debts, it will keep on accumulating and the collection agency may even double it up. They may even file a law suit against you.

Thanks,

Jerry

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

My house foreclosed and was sold at a sheriff sale. If I can come up with the amount to redeem my home, can I still be sued for the deficiency of the original mortgage?

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I am unemployed and may face foreclosure. If I let the home go, what can my mortgage company to me legally, if I cannot pay the balance owed after they sell the home? I live in Michigan and my mortgage company is Green Tree Financial. Can I file for insolvency to rid myself of the taxes on the balance, if they file a dificiency suit? What legal fees can they charge me with, after the foreclosure?

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smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi!

Welcome to forums!

To Guest!

If you pay off the required amount to the lender and get back the property, then the lender would not sue you for the deficient amount.

To Webee,

If you let the property go into foreclosure, the lender will be able to sue you for the deficient amount resulting from the sale of the property. If you cannot pay the deficient amount, then the lender may place lien on your other property or can garnish your bank account.

You can definitely file for insolvency but I would suggest you to contact an attorney and take his opinion on this issue.

Sussane

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

My name and my wifes name are on the deed to our house, only my name is on the mortgage. In the state of michigan can the mortgage company go after my wife for the deficiency judgement also? If we purchase a new home and it is in my wifes name only can they put a lien on it since her name wasn't on the mortgage that was forclosed on?

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savior70's picture
savior70 | Joined: March 25, 2009 05:14 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi

If you're the only one on the mortgage your wife can't be held liable for the loan, even though she's on the deed to the property. So, if she purchases a new home in her name, the mortgage company can't put a lien on her property.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

my Judgement of divorce holds us equally responsible for any deficiency even though my ex-wife's name is not on the mortgage. Should the home go into foreclosure - will the Judgement of Divorce stand to hold her accountable for her part? I am in Michigan and with the Citigroup.

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jenkin7's picture
jenkin7 | Joined: June 4, 2007 11:02 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi mjohnbaur,

It is most likely that the lender will come after you in case of a foreclosure, if you are the only one on the loan. The lender approved your loan based on your credit, income etc. Thus, if you default they will hold you responsible for it, not your wife. But if the divorce clearly states that she will also be responsible for the deficiency, the lender may hold her liable for her part. It is up to them.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

My house went to foreclosure after trying to sell it for over two years and more than a few personal complications. The house was sold at sheriff's sale for almost $60,000 less than I owed. Will I be sued for the difference or will the mortgage company decide on a lesser amount and set up reasonable payments? I obviously can't afford much. I have a primary residence that is also worth less than I owe but with a different mortgage company. My name is the only one on the foreclosed property but my husband and I are both on our primary. We bought it assuming we could sell my old house. How will he be affected? Can I quit claim off of our primary and remain on the mortgage? Can I save our home?

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savior70's picture
savior70 | Joined: March 25, 2009 05:14 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi

[quote:fb1ed8a87d]My name is the only one on the foreclosed property but my husband and I are both on our primary.[/quote:fb1ed8a87d]

Since your name is the only name on the foreclosed property, your husband's credit should remain unaffected. But if the primary residence goes into foreclosure, both you and your husband's credit will take a hit as both of you are on the primary residence. A foreclosure on your other properties will not affect your primary residence. You have no fear of losing your principal house, if you keep making the mortgage payments on time. As for the deficiency due to the foreclosure on your other property, you can negotiate with the lender and settle for an amount less than owed.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

File bankruptcy. List the home and any equity loans, junior loans, 2nd mortgages, etc. Then they cannot come after you for anything, except what the judge states will be paid to the lenders. Bankruptcy is worst thing to happen in most people's lifetime, but if you lost your job, are paid less than you once were, or over your head in high interest credit card debt, this will relieve you of all those lenders threatening, harassing and suing you forever. There is no limitation on suing for money with unpaid loans. It could go on for a long time, and they will just not go away. People will think a lot lot less of you, if they know you filed bankruptcy, they may not even want to be near you, but life will be livable.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

How long does a bank have to go after a deficiency judgment on a foreclosure in the state of Hawaii?

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

If my divorce papers indicate that I should not be held liable for the mortgage but my name is still on the mortgage bills will I be responsible for the deficiency now that my ex has let it go into foreclosure?

Thanks!

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

We have a home in michigan that is now in foreclosure. The mortgage company would not accept a short sale offer and now we're on our way to a full forced foreclosure. We live 800 miles away in another state and the house has been on the market for 14 months with zero offers. The mortgage company has also turned down a [url=http://www.mortgagefit.com/deed-lieu.html]deed in lieu of foreclosure[/url].

My question: What happens if we file for bankruptcy when the mortgage company comes to collect? We are speaking with an attorney .... just wanted some other opinions.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

i owned my house for 22 itook a small loan they sold my loan 5 timesthe bank kept ratstng the mortgage iwant to sue

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

well the attorney work for the banks ;court;mortgage companies they do not take a ioath to you only a oath to the courts not you figure it all out.....

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savior70's picture
savior70 | Joined: March 25, 2009 05:14 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

To questioning,

If you file [url=http://www.mortgagefit.com/bankruptcy/chapter7.html]chapter 7 bankruptcy[/url] and include the debts in it, your house will be sold to pay off the mortgage. After the discharge from bankruptcy you will no longer be liable for the mortgage. If you want to keep the house, you can reaffirm the mortgage with the lender prior to the discharge. If you file chapter 13 and make payments as per the repayment plan under the court’s supervision, you can pay off the loan and [url=http://www.mortgagefit.com/foreclosure/17ways-avoid.html]avoid foreclosure[/url].

To sadand,

[quote:3dbcdbd7e2] i owned my house for 22 itook a small loan they sold my loan 5 timesthe bank kept ratstng the mortgage iwant to sue[/quote:3dbcdbd7e2]

Can you elaborate on the situation? Why do you think this is a fraudulent mortgage? Are you facing any problem regarding mortgage payments? On what ground do you want to sue the lender?

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

how much time does a lender have to request a deficency judgement ? I can't tell for sure. Thanks in advance !

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

My condo is in foreclosure and i have an 80-20 with the primary is aurora and second with citi, i had a short sale offer and it took aurora 4 months to approve it and the buyer walked. Now i was going to try a dead in liu of foreclosure but wasnt sure if i even could with an 80-20, can anyone help me out?? My second question is if my primary loan does foreclose, does that wipe out the second or 20% mortgage?? thank you for your help.

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jenkin7's picture
jenkin7 | Joined: June 4, 2007 11:02 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Toolman,

It depends on your state laws, how much time your lender will have to obtain deficiency judgment after the foreclosure sale of the house. For instance, in Ohio the lender gets 2 years to sue the borrower for deficiency. After they get a judgment, they will have about 21 years statute of limitation to collect the debt from the borrower. Which state do you live in?

Hi Nick,

If you want to do a deed in lieu on the property, you will have to take permission from both the first and the second lender. If the first lender does foreclose on the property, the [url=http://www.mortgagefit.com/second-mortgage.html]second mortgage[/url] will not be wiped off. You will still be liable to pay it off. The second lender can sell off the debt to a collection agency, who can sue you even after the foreclosure to collect the remaining balance on the loan.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I live in Michigan. My lender foreclosed on my house and the same lender bought said house at the sheriff sale auction at about half less than the mortgage. Could the lender still come after me for deficiency?

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jerry's picture
jerry | Joined: October 17, 2005 03:24 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Guest,

Did the lender pursue a judicial foreclosure? In case they did, they have the right to obtain a deficiency judgment against you. However, in case you can prove that the actual value of the property was more than what the lender bought it for, you will not be responsible for the entire deficiency. But if at the time of the sale, the house was actually worth about half less than the debt owed on it, you will be liable for the entire deficiency.

Thanks,

Jerry

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

A judicial foreclosure, they did. How can one prove the actual value of the house at the time of auction? How do lenders figure the dollar amount that they pay for the auction? Don't they factor in the amount that they can recoup with their bidding price. BTW, nobody else bid on it.

THANK YOU, Jerry.

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jerry's picture
jerry | Joined: October 17, 2005 03:24 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Guest,

When there's no potential buyer to purchase the property at the auction, the lenders often buy the property and then sell it off in future to recoup the loss. As a borrower, you can use a recent appraisal or the tax assessed value of the property to prove how much the property is worth and whether the lender purchased it at a fair price.

Thanks,

Jerry

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I attempted to sell my home in Michigan in a short sell, but my home was foreclosed on 2-14-10. Recently married, moved out of state. Will our joint bank accounts be at risk by the first and second mortgages that I am liable for in Michigan.

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jenkin7's picture
jenkin7 | Joined: June 4, 2007 11:02 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Franklin,

If there's considerable amount of deficiency from the foreclosure sale of your house, the first and second lenders can come after you to collect it. They may get a judgment against you and garnish your wages or come after your bank accounts. Thus, your joint bank accounts could be at risk. It's better to have the bank account solely in your spouse's name to make sure the lenders do not come after it to recover the loan balance.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I have an 80 20 loan my first is 85,000 when it goes to the sheriff sale and the bank buys it back for 85,000 do I have any deficiency? Even if they sell it at a later date for less can they come back at me for the difference?

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savior70's picture
savior70 | Joined: March 25, 2009 05:14 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

To snowfanatic,

If your property is auctioned off at the sheriff sale and the lender purchases it back for an amount same as the outstanding balance on the loan, you will not be responsible for any deficiency. Thus, if the balance on the first mortgage is $85k and the property sells off at exactly the same price at the auction, the lender cannot come after you for any deficiency. However, since there is a [url=http://www.mortgagefit.com/second-mortgage.html]second mortgage[/url] on the property, you will be liable for a deficiency on it and the second lender can come after you for it.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

My ex boyfriend lives in the house that is in both of our names. He is supposed to take care of the house but isn't making any money. We are in Michigan. If he files chapter 7 and is released from the house and I going to be responsible for the whole deficiency? Should I file chapter 7 first to make him responsible?

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jerry's picture
jerry | Joined: October 17, 2005 03:24 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Sazzle,

If your ex-boyfriend files bankruptcy Chapter 7 and gets discharged from his debts, he will not be personally liable for the mortgage payments. As a co-borrower, you will then be left to repay the mortgage. However, if you also file Chapter 7, you will be released from the liability of the mortgage. However, in that case the lender will foreclose the property to satisfy the mortgage lien. If you do not intend to keep the property, you can file Chapter 7. But this will affect your credit negatively and the bankruptcy will remain on your credit report for about 7 years.

Thanks,

Jerry

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi
I lost my job and found a new one out of town. I was able to get a mortgage for a 2nd house before selling the "old one". Now that I'm selling it has to go through shortsale since the house has lost 40% of it's value...I'm concerned that if the shortsale is not approved (most likely) it goes to foreclosure and then after it I can be sued to pay for the deficit between forclosure sales price and my current debt (principal)?

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savior70's picture
savior70 | Joined: March 25, 2009 05:14 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

To shiven,

You will remain liable for the deficiency from the short sale of the property. The lender can sue you for the deficiency and obtain a judgment against you. In case you live in an anti-deficiency state and the statutes of the anti-deficiency laws apply in your situation, you can claim protection against deficiency judgments.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I have a 1st mortgage (70k) that was sold at sheiriff sale in Michigan, and I am in the 6 month redemption period. I also have a [url=http://www.mortgagefit.com/home-equity.html]home equity loan[/url] (85k). The bidder at auction is telling me that the 85k will go away after foreclosure, and I will not owe anything. They are offering me a cash for keys $5000 to waive my redemption rights. does this sound right?

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Niicss's picture
Niicss | Joined: October 3, 2005 11:54 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Your query has been replied to in the given page:
http://www.mortgagefit.com/michigan/owe-secondloan.html#163198

Take a look at it. Hope it helps you.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I have no savings but do have two other investment properties that
are paid in full. I am on retirement and social security.

Can the lender take my investment properties to pay for a deficientc
judgment?

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adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Welcome Annie,

The lender may place a lien on your investment properties in order to recover his deficient amount.

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nguyenlo10's picture
nguyenlo10 | Joined: August 7, 2010 04:41 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hello,
I have a rental property that may go into foreclosure. I didn't buy it as such, I lived there for 5 years, but then my family outgrew it and my wife bought a house in her name only. I've had tenants in there for the past year, while subsidizing some of the mortgage payment. I cannot afford to keep this up, since I've had a 20% salary cut and my wife has had reduced hours at work as well.

I had a FHA loan in my name only on the rental. Does the FHA cover the top 20% in case of default? There's only 1 mortgage note as well, and if there is a deficiency judgment against me, can the bank sell the 1st mortgage debt to a collection agency? I never had a 2nd mortgage. Thanks so much!

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smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi nguyenlo!

Welcome to forums!

Rather than letting the lender foreclose the property, it would be better if you could apply for a deed in lieu of foreclosure. This will not only help you in selling off the property, you won't be liable for paying off the balance dues as well. The lender will forgive the balance dues.

Feel free to ask if you've further queries.

Sussane

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nguyenlo10's picture
nguyenlo10 | Joined: August 7, 2010 04:41 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Thanks for the info Sussane. I've contacted my lender for a deed in lieu of foreclosure, but they don't seem willing to work with me. They say it's a rental and they're not going to do a deed in lieu on a rental. It's a rental, but I lived there for 5 years and then my situation changed, so I didn't purchase it as a rental property.

I think I am willing/have to foreclose, and as a last resort, if I get slapped with a judgement, then I will declare Ch.7. I've already been speaking to an attorney regard this.

Can you tell me if the FHA will cover the top 20% of the loan? This will help my decision. After all, that's why I've been paying monthly fha mortgage insurance. I know it protects the lender in case of default, but it also indirectly helps me by lowering the deficiency.

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adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi nguyenlo,

As you have insurance, it will help you in covering the deficiency judgment which results from the foreclosure sale of the property.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

if i let home foreclose, what are the consequencies for me. i live in michigan

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Niicss's picture
Niicss | Joined: October 3, 2005 11:54 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

You will be able to get rid of the property after the foreclosure. However, you will have to pay the deficient balance resulting from the sale of the property. Also, your credit score would get reduced by 250 points and you won't be able to get a mortgage in the next 3-4 years.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

If there is a judgement against my husband and his bank account is being siezed can they sieze my account if his name is on it?

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adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi lissy,

If your husband's name is on your bank account, then your husband's creditors will be able to seize your bank account as well.

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