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How deed in lieu affects 2nd mortgage or junior liens

A deed in lieu of foreclosure is where you deed the property to the lender if you can't afford to pay the mortgage(s) any more and no alternative option has worked out between you and the lender.

However, if you have 2 mortgages on the same property, you may be concerned about "How a deed in lieu affects junior liens?". Most lenders do not agree to accept a deed in lieu of foreclosure when there are 2 loans on the same property, because the junior liens aren't released from the property. That is, if the first mortgage lender accepts a DIL, he'll take over the property with the junior lien or second mortgage still attached and won't have clear title.

What happens to the second mortgage after a DIL on the first?

When the first lender takes over the property due to a deed in lieu, it becomes their responsibility to sell the property and pay off the junior lien because no buyer will purchase the property with a lien on it.

In most cases, when the first lender accepts a deed in lieu, they include a non-merger clause into the DIL agreement. This clause prevents the second mortgage lender from taking any legal action against the first lender if they don't pay off the outstanding balance on the second mortgage. But this doesn't mean that the first lender doesn't need to pay down second loan balance. It's the first lender's responsibility to pay off the junior lien if he agrees to a DIL unless they get an agreement with the second lender.

Moreover, if the first lender knows that they won't be able to recover the entire loan balance on the first mortgage then they will not accept the deed in lieu and foreclose. This occurs even if both mortgages are held by the same lender. This is how a deed in lieu affects the second mortgage or junior liens on a property. Though lenders are reluctant to accept a deed in lieu if there is a junior lien on the property, a deed in lieu has certain advantages because it's quicker and less expensive.

Related Discussion

When you do a deed in Lieu with the primary mortgage what happens if there is a [url=http://www.mortgagefit.com/second-mortgage.html]second mortgage[/url] held against the property? Also, If the bank is not able to satisfy the amount owed against the property, will there be a judgement against me for the difference?

Thanks

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

My mortgage company was inititating a dil and came up with two junior liens on my property. How do i find out who initiated these as I know of no other people I owe, much less to a degree they would have filed a 2nd mortgage.

Like | Dislike | Share | Posted: Wed, 09/08/2010 - 14:36 | Post subject:

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

in the state of florida will a deed in lieu cancel out the first and [url=http://www.mortgagefit.com/second-mortgage.html]second mortgage[/url][/i]

Like | Dislike | Share | Posted: Thu, 04/12/2012 - 09:44 | Post subject:

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

My lender just started the foreclosure process and I asked them if they could accept a [url=http://www.mortgagefit.com/deed-lieu.html]Deed in Lieu of Foreclosure[/url] (the rep was not really nice), well he said "no because you have a 2nd lien" but, can it be possible to do a Deed in Lieu when the 2nd lien is being financed by the same lender?...this is my case...thanks

Like | Dislike | Share | Posted: Fri, 12/04/2009 - 14:13 | Post subject:

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

A deed in lieu (DIL) will help you in getting rid of the property. But as you've a deficiency clause, the lender will be able to come after you to recover the dues.

Like | Dislike | Share | Posted: Thu, 10/21/2010 - 03:35

sara's picture
sara | Joined: July 5, 2006 03:16 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi anonymous,

As you had two mortgages, the second mortgage lender will be able to come after you in order to recover the dues. The first mortgage lender will forgive the deficient balance resulting from the property sale but the second mortgage lender will have the rights to come after you in order to recover the balance amount.

Take care

Like | Dislike | Share | Posted: Thu, 01/27/2011 - 02:00

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

Hi mdgirlfriend!

Welcome to forums!

If you're facing hardship in paying off your mortgage payments, then you should contact your lender and apply for a [url=http://www.mortgagefit.com/deed-lieu.html]deed in lieu of foreclosure[/url]. It will be the lender's discretion as to whether or not he will consider your request for a deed in lieu of foreclosure.

Feel free to ask if you've further queries.

Sussane

Like | Dislike | Share | Posted: Mon, 06/13/2011 - 00:39

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

Thank you fror your response.
We are with BOA. All my research states that they will be more than unresponsive so I hesitate to call them at all. Di I have any 'rights' to a DIL or can they simply deny me?
I would love to hear from someone who has been through this.

Like | Dislike | Share | Posted: Mon, 06/13/2011 - 05:46 | Post subject:

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

Hi rabbitfood,

If that person has the required credit score and income, then he can buy a new property in the other state where that person has been transferred.

The bank will foreclose the first home in order to recover the debts. In case he is unable to recover the debts in full, the lender may then think of placing a lien on your other property.

Like | Dislike | Share | Posted: Sun, 10/30/2011 - 23:21

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

Welcome Guest,

If you have included the mortgages in your bankruptcy filing, then you'll be able to get them discharged. In such a situation, you won't be responsible for the mortgage payments personally.

Like | Dislike | Share | Posted: Thu, 01/06/2011 - 20:25

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

If a person currently owns a home and needs to move to another state and rents that home, can they purchase another home in another state while their old home is being rented? Also if a person purchases a second home and defaults on the first home, can the bank repo both homes or just the first?

Like | Dislike | Share | Posted: Sat, 10/29/2011 - 20:53 | Post subject:

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

I was a jr. lien holder and took title to the property by a "Quitclaim in Lieu of Foreclosure." I wanted to assume the 1st on the property but was told by my loan officer that the lender said "No Interested," Not Assumeable, "she must pay us in full and get a new loan." Recently I found out I DID have the legal right to assume the 1st under Garn St. Germain 1982 and want to know if I have any recourse. I was forced to get a new loan at a much higher interest rate and now stand to lose the house myself. Please advise!

Like | Dislike | Share | Posted: Mon, 11/08/2010 - 05:29

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

I was a jr. lien holder and took title to the property by a "Quitclaim in Lieu of Foreclosure." I wanted to assume the 1st on the property but was told by my loan officer that the lender said "No Interested," Not Assumeable, "she must pay us in full and get a new loan." Recently I found out I DID have the legal right to assume the 1st under Garn St. Germain 1982 and want to know if I have any recourse. I was forced to get a new loan at a much higher interest rate and now stand to lose the house myself. Please advise!

Like | Dislike | Share | Posted: Mon, 11/08/2010 - 05:34

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

Hi sun city,

If you do the deed in lieu on your property, the first lender will take possession of the property and will sell it to satisfy their lien. But you will still be responsible for the second mortgage. The second lender will come after you if you do not pay off the second lien. They cam sue you, put liens on your other properties or can garnish your wages to recover their outstanding loan amount.

Hi puzzeled,

You signed the warranty deed and transferred the property to the lady. But did you remove your name from the loan? It seems like the mortgage on the property is still in your name. If this is what the case is, you will have to work with the lender to avoid the foreclosure. You will be required to sign the deed in lieu paperwork so the lender will not have to foreclose on the property to satisfy their lien.

Like | Dislike | Share | Posted: Thu, 10/15/2009 - 00:38

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

Thank you for getting back so quickly. The property was foreclosed on last week by the 1st mortgage. When all the debts excede the value of the home what happens to the IRS, State, 2nd loan and the other 2 leins. Do they settle for less on a payoff amount? What happens when the other leins do not settle for less and this property does not clear title, does the bank who originally foreclosed on the property have to come to an agreement with the owner of the house for a new loan modification? What happens at this point? Can the bank go ahead and get a deed in lieu?

Like | Dislike | Share | Posted: Tue, 06/01/2010 - 14:42 | Post subject:

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

Hi refirichard,

In my opinion, a [url=http://www.mortgagefit.com/deed-lieu.html]deed in lieu of foreclosure[/url] will be a better option to get rid of the property. Unlike short sale, you won't be liable for paying the deficient balance resulting from the property sale.

Hi Farmer John,

While you apply for a deed in lieu of foreclosure, the lender will list the property in the market for at least 90 days. If the property doesn't sell off, then he will go ahead with the deed in lieu of foreclosure.

Like | Dislike | Share | Posted: Thu, 05/13/2010 - 02:23

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

bank of america and citi mortgage both told me that I will be responsible for second mortgage if I do deed in lieu. I live in Washington st. is it dif. from state to state :(

Like | Dislike | Share | Posted: Fri, 12/10/2010 - 09:45 | Post subject:

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

Bought my home in Aug. 2009 from an investor who owned the second. The investor paid a sum of $$ to the first (US BANK) to stop US bank from foreclosing. As soon as US bank stopped the forclosure proceedings, the investor turned around and forclosed himself. This is when I bough the property. There was an extensive title search done and the title was clear and I do have a title policy. (this is a California property). There must have been some sort of back door deal as the prior owner went to jail while the wife continued to live in the house. Now, 5 months later I get a letter from the prior owners attourney claiming there is a lien in favor of US bank. My title company said they will only defend title if challenged. I guess they dont take the attourneys letter seriously or consider it a challenge. How can something this big be overlooked in the title search and chain of title. My title company doesnt seem to worried about it. I just want the lien released or else I will have a tough time when I try to sell. Are there special laws in CA. that gives the second this power ? Was there a possible DIL to the second ? I am trying to put this puzzle together. Any feedback or questions to my post is appreciated. Could the first somehow be forgiven and the bank just hasnt had time to straiten all the paperwork out ?

Brad

Like | Dislike | Share | Posted: Mon, 01/18/2010 - 15:28 | Post subject:

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

Hi Guest!

Welcome to forums!

Investors can pay the required sum by participating in the foreclosure auction and buy the property. Once they get the ownership of the property, they will be able to control it.

Sussane

Like | Dislike | Share | Posted: Mon, 07/04/2011 - 22:19

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

How do investors buy the junior lien at the auction and control the property?
Even walk away with title for a bargain?

Like | Dislike | Share | Posted: Mon, 07/04/2011 - 17:58

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

Hi caroll!

Welcome to forums!

If there is no clear title, then I don't think the buyer should go ahead and buy the property. As far as I know, the IRS and state taxes will be paid off first after the sale of the property. Then the first mortgage lender will be able to claim his dues.

Feel free to ask if you've further queries.

Sussane

Like | Dislike | Share | Posted: Tue, 06/01/2010 - 01:47

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

We have 1st & 2nd Mortgage with BOA (formerly CountryWide). We are two months behind notice of default passed. We keep in contact with BOA and make payment before end of third month to avoid falling 90 days late. We put house on market as short sale, but no offer. This month we received first calls from Fannie Mae. (1) Does the Fannie Mae contact imply an escalation towards foreclosure? (2) If we request DIL and BOA declines are we jeopardizing them escalating foreclosure?

Like | Dislike | Share | Posted: Thu, 08/25/2011 - 00:44 | Post subject:

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

Hi gavin,

If two borrowers have taken the mortgage, then they would be considered as co-borrowers of the loan. Thus, they would both be equally liable for the mortgage payments.

Hi anonymous,

If the [url=http://www.mortgagefit.com/second-mortgage.html]second mortgage[/url] lender does not receive his payments, then he has the rights to foreclose the property. If you want to save the property, then you should contact your lender and apply for a loan modification.

Like | Dislike | Share | Posted: Sun, 02/28/2010 - 20:59

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

Hi TX,

It is possible to do deed in lieu on your property even if there are 2 mortgages on it. In that case, you will have to take permission from both the first and the second lender. Both of them need to approve the deed in lieu. However, in this situation both of your mortgages are with the same lender. Thus, if your lender gives their approval, you can go forward with the deed in lieu. But it seems that since the foreclosure process has already been started, your lender is unwilling to accept the deed in lieu.

Like | Dislike | Share | Posted: Sat, 12/05/2009 - 05:14

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

Hello jessica, I have a rental property with two loans on it. I've been behind payments on my second but current on my first. the second has offered me a DIL but I'm not sure if I should be doing a shortsale instead.

Like | Dislike | Share | Posted: Fri, 04/16/2010 - 23:00 | Post subject:

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

Would a 1st lender accept a deed-in-lieu with a second mortgage on a property when the 1st lender denied the short sale and the second lender approved?

Thanks

Like | Dislike | Share | Posted: Thu, 01/27/2011 - 20:17 | Post subject:

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

Welcome mdgirlfriend,

I won't be able to let you know about "rights" to a deed in lieu of foreclosure. But it is true that if you have already defaulted on your mortgage payments, then there are chances that you may qualify for a deed in lieu of foreclosure. However, as Sussane states, it will remain the discretion of the lender whether or not he will consider your request.

Like | Dislike | Share | Posted: Mon, 06/13/2011 - 23:30

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

i have a mechanics lien against a property that Chase bank is forclosing on ...They (Chase) has named me as defendant along with home owner to get their monies.....do I have any recourse for my $850.00 and what do I do to be included in any payments thanks for your help......

Like | Dislike | Share | Posted: Thu, 02/18/2010 - 17:05 | Post subject:

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

If we have a primary mortgage and the 2nd mortgage from the same lendor, what is teh process?

Like | Dislike | Share | Posted: Wed, 11/24/2010 - 14:09 | Post subject:

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

Welcome anony,

It is true that the lender won't come after you for the deficient balance of the first mortgage resulting from the property sale. However, if you've a second mortgage, then you will be liable for paying it off to the lender in full.

Like | Dislike | Share | Posted: Mon, 12/13/2010 - 00:35

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

We purchased our home for 360,00. It is now worth $113,00. We have had our house up for a short sale for a year now. We have had several potential buyers. Our 1st Lien holder has accepted offers, our second has demanded more and more money. Holding up the sales and causing us to loose several buyers. Now we are looking to do a DIL to the 1st. We were told because we had tried to sale the home that we would qualify to be able to request this action. I told them the reason the sales had fallen thru was due to the 2nd. What will happen to the 2nd if we do the DIL and the 1st accepts it. Can the 2nd still come after us?

Like | Dislike | Share | Posted: Tue, 10/13/2009 - 13:24 | Post subject:

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

I have a first mortgage who has convinced the 2nd mortgage bank to sign off on dil. the 2nd mortgage bank said they will still persue me for their delinquency< but it will be unsecured. Should I take this offer? Or is foreclosure my best option? The 2nd wants to work out a payment arrangement with me. what options do i have?

Like | Dislike | Share | Posted: Thu, 09/23/2010 - 10:25 | Post subject:

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

I've just received a Notice of Default on my mortgage. My husband and I have already moved in with my parents seeing the hand writing on the wall. We bought the townhouse 12 years ago for about $39,500 and took out a 2nd mortgage about 6 years ago for $18,000. We got behind in payments being young and foolish, never recovered, and now are totally overwhelmed. We also have a lien on hour home for a $2,700 in regime fees. Our credit is so bad due to credit cards and medical bills that I had to have my dad co-sign to get a car. My husband and I filed bankruptcy years ago and I vowed to never do that again. Then my mom got sick, and I had to help with her care. Also, I got a cut in pay at my job last year and I had some medical bill due to my surgery last year. So, I'm trying to determine if I should consider bankruptcy or do a deed in lieu of foreclosure. Maybe I should do both the DIL and bankruptcy?

Like | Dislike | Share | Posted: Mon, 08/23/2010 - 06:23 | Post subject:

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

Hi anonymous,

It will be solely the discretion of the first lender as to whether or not he will agree to it. However, both the lenders should agree to the deed in lieu of foreclosure or else the deal will fail.

Thanks

Like | Dislike | Share | Posted: Thu, 01/27/2011 - 23:02

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

Hi Caroll,

After the foreclosure, the ex-homeowner will be liable for the deficient balance resulting from the sale. He or she will be liable for the IRS and state tax dues. As far as the state and IRS are concerned, you should contact them and get a payment plan to pay off the dues. As far as the second mortgage dues and other liens are concerned, you should contact your lenders and negotiate with them. It will be their discretion whether or not they would consider your request.

Thanks

Like | Dislike | Share | Posted: Wed, 06/02/2010 - 00:08

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

We have a secondary home that we can no longer afford. We are two months behind in out payments. There are no jr liens and the house is valued at mor than what is owed on the 1st. We want to quit claim the mortgage co a deed in lieu. Do they have to accept it, or do we need their approval.

Like | Dislike | Share | Posted: Wed, 01/20/2010 - 16:00 | Post subject:

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

Hi ollie,

You should contact an attorney in this regard and take his opinion. As you already have a mechanics lien on the property, you would definitely be able to claim your dues. Your attorney will help you know what steps you need to take in this regard.

Thanks

Like | Dislike | Share | Posted: Thu, 02/18/2010 - 20:09

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

Welcome Guest,

A query similar to yours has been answered in the given page:
http://www.mortgagefit.com/problems/deedinlieu-jobloss.html

Take a look at it. Hope it helps you.

Like | Dislike | Share | Posted: Wed, 11/24/2010 - 22:28

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

if you sued on the note on a second mtg to as no equity
does the mortgage merge into judg & you priority on lien (which could be valuable in 10 yrs)

Like | Dislike | Share | Posted: Fri, 09/03/2010 - 20:14 | Post subject:

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

Hi Vicki,

You should contact an attorney and take his opinion in this regard. The attorney will go through your documents and let you know whether or not you can take any actions against the lender.

Thanks,

Jerry

Like | Dislike | Share | Posted: Tue, 11/09/2010 - 02:47

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

I recently completed a DIL where there was both a 1st and 2nd mortgage on the property. There was a single lender of both mortgages. There was never any mention of what would become of the 2nd mortgage I assumed, hopefully not wrongly, that the DIL would resolve both when the lender took over the property. Can you clarify what are the normal legal parameters of a situation such as this.

Like | Dislike | Share | Posted: Thu, 11/26/2009 - 07:02 | Post subject:

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

Hi DISH,

If you want to save the property, then you should apply for a loan modification with your lender. If your request is accepted, then you would get a modified payment plan to pay off the loan. If you do not intend to save the property and want to get rid of it, then you should go for a deed in lieu.

Hi xprider,

You will have to first check out if there's a lien on the property. If there is a lien on it, then it needs to be paid off or else you won't be able to sell off the property. Moreover, as you are the owner of the property, the lien holder may ask you to pay it off.

If there is really a lien on the property, then you should contact the previous owner of the property and negotiate with him so that he pays it off.

Thanks

Like | Dislike | Share | Posted: Mon, 01/18/2010 - 22:13

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

I bought investments property and could not sell it. After 2 years I let it go. I live in another home now but I am being relocated, thus I need to get another loan when I sell my current home. How long do I have to wait until they give me a loan. Its been about a year.

Like | Dislike | Share | Posted: Wed, 11/04/2009 - 12:40 | Post subject:

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

I guess I didn't make myself clear. I hold the second mortgage in the above fact pattern, and the borrower has defaulted. He gave DILOF to the first mortgage holder, who ignored my second mortgage, and filed sworn statements that there were no other liens on the property and that its value did not exceed the value of the first mortgage, essentially boxing me out. I am wondering if, at some level of both physical and notice possession of the property, the non-merger language of the DILOF is extinguished and my my second mortgage becomes a first mortgage, and I thus should send a letter of demand for payment from the first mortgage holder, now the owner of the property.

Like | Dislike | Share | Posted: Thu, 05/13/2010 - 21:58 | Post subject:

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

What happens to a home equity line of credit that is now leined against the property, and just recently the IRS put a lein on the property...If I as the mortgage holder accept the DIL...what happens to these debts?

Like | Dislike | Share | Posted: Tue, 01/25/2011 - 16:10 | Post subject:

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

What if both 1st and 2nd mortgages ARE with the same lender. Will they still do a deed in lieu? I owe 101,000 on the 1st with a second at $24,000. The property has been appraised by the lender for 103,000.00.

Like | Dislike | Share | Posted: Thu, 02/04/2010 - 16:52 | Post subject:

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

Hi ali!

Welcome to forums!

It would be the lender's discretion completely whether or not he would consider your request. You need to write a hardship letter to your lender and apply for a deed in lieu. Depending upon your financial situation, he may or may not consider your request.

Feel free to ask if you've further queries.

Sussane

Like | Dislike | Share | Posted: Thu, 02/04/2010 - 21:07

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

Welcome cookie,

You will have to apply for a deed in lieu of foreclosure with your lender. If your lender accepts it, then you will have to surrender the property to the lender. Once the property is surrendered, the lender will sell it off at an auction and try to recover his dues. However, you should note that it's the discretion of the lender whether or not he would accept your request for a deed in lieu of foreclosure. Apart from this, once the sale is over, your credit score would get reduced by 250 points.

Like | Dislike | Share | Posted: Wed, 01/20/2010 - 22:57

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

As far as I can understand, the lien will get first preference when the property is sold off and then the first mortgage lender will receive his dues.

Like | Dislike | Share | Posted: Sat, 09/04/2010 - 00:25

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

Hi ms,

Did the sale of the house satisfy both the mortgage liens? If it didn't, you will remain responsible for the deficiency from the sale of the house. If the deficiency was forgiven by your lender, you should get it in writing. Unless the lender informs you in writing that the debt has been forgiven, he may come after you to recover the outstanding loan amount in future.

Like | Dislike | Share | Posted: Fri, 11/27/2009 - 02:04

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

Hi Guest!

Welcome to forums!

It does not necessarily mean that when you receive a call from Fannie Mae, it will mean an escalation toward foreclosure. If you want to avoid a foreclosure, you should negotiate with your lender for a deed in lieu of foreclosure. In case the lender does not agree to your request, then they will start the foreclosure procedure.

Feel free to ask if you've further queries.

Sussane

Like | Dislike | Share | Posted: Thu, 08/25/2011 - 23:47

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