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Foreclosure Evaluation

Posted on: 14th Jul, 2006 06:08 am
I filed Bankrupty in 2003 and have 2 mortgages. 1st a VA and second is not. The second is going to foreclouse whereas I am unable to make payments for very high energy cost today. Without going into great deal can you advise how a 2nd mortgage evaluates if both loans are more than the house is worth. I realize the 1st has to be paid off by the 2nd and the 2nd cannot come after me for the difference becaue of the bankrupty. But am wondering if I should start packing or relax. It probably would be a blessing if they did foreclose, House is in need of many repairs and I am 71 with bad heart. Thank you in advance for any comments.
hi jerry,

it seems that you wanted the house to foreclose. why did you go for a bankruptcy then? i mean you have to bear the filing costs for it. isn't it?

anyways, a bankruptcy may help you to avoid a foreclosure depending on the type that has been filed by you.

in a chapter 7 perhaps your house will get sold to pay off the mortgage. since you say that you owe on both the mortgages more than your house, so the first mortgage would be paid off as much as possible with the proceeds.

the second mortgage holder would have to sustain the loss. in most cases they charge off under such circumstances.

even if you lose your house, that is going to take some time. so, no need to hurry up. consult your bankruptcy attorney for details.

regards,
colin
Posted on: 14th Jul, 2006 10:37 am
Jerry,

What type of bankruptcy have you filed or are you planning to file still? See in a Chapter 13 a payment plan would be sorted out so that you can afford.

In a Chapter 7 your house would get sold and the proceeds would be utilized to pay off the debts. If your first mortgage is more than the value from the sale proceeds then it can be satisfied only and the second mortgage holder can't get anything.

Your bankruptcy attorney is the best person to guide you on all your doubts.
Posted on: 14th Jul, 2006 10:43 am
Maybe I didn't explain my question above. I filed bankrupty in 2003 and refirmedrtage and the 2nd wouldn't reafirm so I made payments anyway until February of this year. Now with the energy cost and my health it is almost impossible to maintain the 2 payments. Knowing the 2nd has to pay off the 1st which both equal almost $60,000 and the house is worth less than $40,000. The Real Estate market in my extreme rural area is slow and I expect the house would be on the market for at least 2 or more years. So inyour opinion would you think the 2nd mortgager would realize this and just write it off.
Posted on: 14th Jul, 2006 03:55 pm
Hi Jerry,

I can understand your difficulty. But I am sorry to say that your mortgage loan would still continue to show up as outstanding.

The lender can sue you and bring a judgment against you. If you have any other home then can manage to place a lien against that.

But you can always discuss the matter with your lender and explain him the whole situation. They may try to find an alternative solution to the problem considering your age and your health.

If you don't have anything left to pay them off they have to sustain that loss. Wish you good health.
Posted on: 14th Jul, 2006 04:26 pm
Hi Jerry,

I shall advise you not to worry too much about it. In any case you are unable to meet the payments. Let the second mortgage foreclose.

The second mortgage lender will have to buy out the first mortgage in order to foreclose. So, let them handle it.

Only thing, you might not be freed from the loan even after the foreclosure if the sale proceeds do not cover up the balance owed. Even then when it’s out of hand I suggest to stay relaxed and not to get tensed on it.

Regards,
Blue
Posted on: 14th Jul, 2006 04:48 pm
I can't believe my eyes. You say that if they foreclose I am liable for any balances. But the Bankrupty cleared any owed debts and according to my sources if they buy out the 1st and foreclose and sell the home for $1 dollar they have to write off the difference because the bankrupty removed me from any libilities. Chapter 13 year 2003 not 2006. Again I will state my question and put it differently.

I owe you approximately $20,000 which you take out a second mortgage on my home. after the 2nd mortgage is signed seal and delivered a couple of years later I file chapter 13 bankrupty (which then removes me from all obligations to you). I restated my 1st mortgage and make payments on time. you holding the 2nd mortgage refuse to let me restate my contract for whatever reason. Now I stop paying you for the 2nd mortgage for whatever reason.Would you now pay off a 1st mortgage being $40,000 and forclose on a home worth less than $40,000. By you paying off the 1st mortgage you will have an investment of $60,000. So why would you want to pay off the 1st mortgage rather than just writing off the 2nd. What is going to be gained from it all.
Posted on: 14th Jul, 2006 07:32 pm
Hi Jerry,

If your second mortgage debt is lower than the property value, then the lender will perhaps want to foreclose it as he will gain from the sale proceeds. Considering your health, it will be difficult for you to carry out any kind of repair work. So, I think it should be foreclosed.

Thanks,

Sara.
Posted on: 14th Jul, 2006 09:39 pm
Hi Jerry W,

I think the second mortgage lender will allow you to write off the second loan. But this is possible only if he sees that he can get a higher amount from selling the property through foreclosure rather than by getting the balance from you. Since the real estate market at your area is slow, so I believe your lender will gain by selling the property.

Thanks,

Caron.
Posted on: 14th Jul, 2006 09:54 pm
I understand your question Jerry W. even thought the others appartently don't. Not being in a decision making position I can't answer your question, but can say this I would not invest another $40,000 by paying off the 1st morgage with the uncertainity of time frame for it's return. Good Luck
Posted on: 15th Jul, 2006 04:23 am
Thank You Linda. Now I have one more question. I have been doing a little research and find that my state has a 240 day period. Can anyone tell me when the time period starts. examples like: when I was first in default of the 2nd mortgage or when the 1st mortgage is paid off or ??? I also wish to thank everyone for the information they provided. You have been very helpful.
Posted on: 15th Jul, 2006 04:30 pm
Hi Jerry,

I think the time starts from when you first default on the second mortgage. Let me do a little more research and if I find some more information, I shall surely let you know.

Thanks,

Sara.
Posted on: 15th Jul, 2006 08:03 pm
Hi Jerry,

Are you talking about the foreclosure period in your state? Can you tell me in which state you reside? Then perhaps I shall be able to help you in a better way.

Thanks,

Caron.
Posted on: 15th Jul, 2006 08:09 pm
I reside the Maine
Posted on: 15th Jul, 2006 08:27 pm
Hi Jerry,

Generally the lenders in Maine allow for a period of 6 to 7 months for the completion of the foreclosure.

Feel free to ask if you have any other query.

Thanks,

Caron.
Posted on: 16th Jul, 2006 08:00 am
Caron: When you say completion, do you mean they own the house then. Also how am I going to get contacted about it. Under the Bankrupty laws they are not allowed to contact me, however, I did receive a letter from an attorney saying something about I have 30 days to dispute the amount of the second mortgage. So far nothing has been said about trying to work out an arrangement. If this was a 1st mortgage I would understand the circle of events but it being a 2nd mortgage it can become hard to follow. Does anyone have any ideas how the process will take place. Like who notifies me of what is going on so I can make my plans on my end.
Posted on: 16th Jul, 2006 08:47 am
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