Deed-in-lieu

Guest

I have a question regarding the Deed-in-Lieu process with multiple parties on the mortgage. We have (had) an investment club with 6 names on the mortgage. We've had the property on the market for over 2 years with no real offers. We have 2 mortgages with the same lender and have submitted the Hardship letter for the DIL. We originally submitted the DIL paperwork back in September of 2008 and never heard a response on whether it was accepted or not.
We are now getting calls from a collection agency for the SECOND mortgage balance while we are working on the DIL. Obviously, if we cannot pay the first mortgage, we can't pay the second mortgage either. One of the six members of the investment group lost his job and 2 others are out of money. The value of the property has dropped from $600k to less than $250k. Our collective credit is now in the tank (each person shows the entire $600k on their credit report). Any chance of the mortgage company accepting the DIL for both mortgages and cancelling the debt for both mortgages? Is the mortgage even legal with 6 parties on the mortgage? The worst part is that I've been able to keep up with my own payments, and actually paid for others a couple of times, but I am getting hammered on the credit side and do not see how this could possibly end.
By the way, we've presented 3 short sale offers that the lender thought were too low for the property. Any advice or help would be appreciated.

gmakerley · Posted: Sat Jan 10, 2009 6:22 am Post subject:

Is the mortgage even legal with 6 parties on the mortgage?

i can't provide much assistance with the rest of your post, except to say you need to push against the lender.

but i had to comment on your question above. why wouldn't a mortgage be legal with 6 parties involved? that question pretty much renders another question - if it's not legal, then how is it legal for 6 people to purchase a property together?

you didn't say that in presenting your short sale offers that there was a realtor involved; maybe yes, maybe no. what will strengthen your case, of course, is a detailed listing of similar properties and their sales prices (in the area). but you need to keep pestering them, i think, to accept one sooner or later.

Guest

Thanks for the response. There is a realtor involved, and the mortgage appraisal has been done by the mortgage company. It;s frustrating that they are taking so long to respond, and we have been aggressively calling them trying to get this resolved.
Also, since both mortgages are with the same lender, can the DIL apply to both the first and second mortgages?
We've been served with the foreclosure papers and been told we have about 60 days before the foreclosure process moves forward. What should we do at this point? Also, all 6 parties involved are obviously in different financial positions, so can the mortgage company come after our personal property?
One last question, this was an investment property, so can we treat this as a "business foreclosure" instead of a personal foreclosure (if there is such a thing)?? Thanks again for the help.

gmakerley · Posted: Sat Jan 10, 2009 9:56 am Post subject:

like the old commercial used to say, "motor oil is motor oil" so i guess i'd say "foreclosure is foreclosure."

your personal property is generally not going to be at risk, though your second mortgagee is likely to be left out in the cold it appears. depending on the laws of your state, there may or may not be a possibility of them obtaining a defiency judgment for their loss. in that case, i suppose other assets could be jeopardized.

if you don't have legal representation yet, i suggest it.

Guest

Thanks for the response. We have just recently retained an attorney to help us with this process.
On the second mortgage, the mortgage company has turned it over (or sold) it to a collection agency. We've told them that we are working on a DIL for the first mortgage, but they are persistent in trying to work out a payment plan, which is not an option because all 6 people are finiancially strapped. What should we tell the collection agency on the second mortgage?

gmakerley · Posted: Sat Jan 10, 2009 10:09 am Post subject:

i'd tell them to chill out. they'll get their money when they get their money is about all you can tell them...do you agree?

what does your lawyer say?

Guest

Also, the mortgage company seems to keep referring to the names on the "note" and will only speak with those two names on the note (and not to me directly). So there are two names on the note and 6 on the mortgage, and the DIL paperwork only requested the two names on the note to respond. Are the other 4 people on the note still held responsible? I'm not sure of the difference when they keep referring to the names on the "note" versus the "mortgage". Thanks.

Guest

I like that answer, and that was actually the plan to tell them to chill out....but as you can imagine, they are pushing for ANY payment that they can get from us and it's just not going to happen.....

gmakerley · Posted: Sat Jan 10, 2009 10:14 am Post subject:

well, the two who are on the note are obligated to pay the mortgage payments. the other four are obligated to live up to all the covenants in t he mortgage deed, which includes protecting against foreclosure.

due to privacy concerns, the lender does not want to speak to anyone who isn't obligated on the loan. this is standard. the two on the note could provide them with permission to speak to you or to anyone else, but that's probably the only way you'll be able to open a dialogue.

Guest

Our attorney's initial comments (we just retained him this week) were to contest the foreclosure and get an extension, but he has to look into more of the details before he has a game plan for us.

Guest

On your comment
"well, the two who are on the note are obligated to pay the mortgage payments. the other four are obligated to live up to all the covenants in t he mortgage deed, which includes protecting against foreclosure"

does that mean that we are financially responsible for any payments that are missed (we're about 4 payments behind going on 5). This has obvioulsy affected all 6 of our credit, and the TOTAL amount of the 2 loans is showing up on ALL 6 of our credit reports.

jameshogg · Posted: Mon Jan 12, 2009 11:47 pm Post subject:

Hi BA,

As far as I know, yes you will be obligated to pay the missed mortgage payments. But if a foreclosure takes places, then the lender will try to recover the debts by selling off the property. Moreover, those who all are on the mortgage doc, will have have to pay the deficient amount, if any, resulting from the sale of the property. If the mortgage has 6 names, then the credit of all the 6 persons will be affected.

Thanks

kingno1 · Joined: 25 Apr 2008 Posts: 56 20.18 Dollars($)

I would say, work for DIL, the 2 onthe note can write and sign a letter with your names on it as authorized persons.

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