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What happens to 2nd loan after the first lender accepts DIL?

Posted on: 29th Aug, 2008 10:01 am
I own a duplex in palm beach county. It has two mortgages, one for 199,000 and one for 50,000. The 1st mortgage holder has agreed to a short sale, if I can get an offer (highly doubtful). The 2nd mortgage company wants me to send them a complete financial disclosure.
I'm retiring in 9 months and my income is cut to 1/3 of my present salary.

If I can't get an offer, I would prefer to have a deed in lieu performed with the 1st mortgage holder.

Two critical questions:

1. What happens to the 2nd mortage holder (Homecoming financial) if the first goes with the dil.

2. I read that deficiency judgements are not being sought after as much as the public is led to believe. Is that so? Also, can they go after my retirement, soc sec or TSAs?

This is not my home, it was originally bought for income property which has cost me a fortune to remodel, then another fortune trying to pbay mortgage payments on a house once purchased for 259,000 and is now worth, maybe $160,000.

ANY advice or help would be greatly appreciated. Thanks, Linda
welcome linda.

if the first mortgage company accepts the deed in lieu then they will not seek deficiency judgment to you. but i feel the second mortgage company has not accepted the deed in lieu. so they can come after you for the deficiency judgment. you should try to pay of the out standing balance of the loan amount.
Posted on: 30th Aug, 2008 01:16 am
Hi Linda Troy,

When the first lender accepts a deed-in-lieu or dil (chances are less as you already have a second loan), he uses a non-merger clause in the agreement. This is done in order to prevent the second lender from taking any legal action against the first.

To know what happens to second loan after dil on first, refer to a previous forum discussion.

Take care
Posted on: 30th Aug, 2008 04:19 am
Thanks for the help, I guess no matter how you look at it all options are nightmares. I really appreciated the straight answer. Linda
Posted on: 02nd Sep, 2008 04:44 am
Hi Linda,

Welcome back to the forum.

Are home prices going too low in your area? I'm asking this because you don't seem confident that you'd be able to complete the short sale. Whether you go for a short sale or deed in lieu (dil), the second mortgage lender may either sell off your debt to a collection agency just as any unsecured debt. This is because once the property is sold off, the second loan doesn't have a collateral and hence it can be considered as an unsecured loan.

Alternatively, the second lender may also issue a second mortgage charge off implying that he no longer wishes to collect the payments. But you still owe the debt. So, if you still keep paying as much as you can afford on a monthly basis and pay off the entire debt in agreement with the lender, it will help you minimize negative impact on your credit score.

The lender may even forgive the second mortgage debt in case you're not able to repay at least a part of it. But you may have to pay taxes on forgiven debt provided you don't satisfy the criteria for mortgage tax relief .

Hope this helps...

God bless you.

Samantha
Posted on: 02nd Sep, 2008 05:50 am
I owe over $78,000 (and a 15,000 second loan) on my home in Detroit where property has dropped to record lows and home around me are selling for 5,000 or less. Is it smart to start banking my house notes and try to cash it out later for less?
Posted on: 14th Dec, 2008 05:47 am
Hi Keena

Your query has been answered in the given link:
http://www.mortgagefit.com/michigan/upside-down.html#69558

Check it out. I hope it will help you.

Thanks.
Posted on: 15th Dec, 2008 01:58 am
Both of my mortgage loans are with the same lender (Countrywide). $245,000.00 (first) and $45,000.00 (second). Do I offer a dil for each loan or will one dil do with a "without recourse" provision? How do I initiate a dil? Are there forms on-line that I may use. I am withing 15 days of foreclosure. Is it too late to stop the process?
Posted on: 22nd Dec, 2008 12:44 pm
Welcome Clyde,

I would suggest you to immediately speak to the lender about deed in lieu foreclosure and apply for it. You will have to write a hardship letter to the lender for that.

If the lender accepts it, he will tell about the documents that you will need to fill out. I don't think you can find online forms for deed in lieu.
Posted on: 22nd Dec, 2008 10:57 pm
I have $176,000 on my first mortgage and $35,000 on my second mortgage. I had a market value appraisal done by a realtor and the home will only go for about $200,000. I will be unemployed after May 20th and my husband will not be able to bear the burden of the loans alone. We filed for bankruptcy a year ago, and decided to keep the house. We now cannot. What should we do? What are our best options? We have tried to do the modification, and we filled out the paperwork but our lender has not contacted us. We contact them and they cannot answer any questions. We simply cannot wait around on them anymore. We don't know if we should just live here until they force us to move, or should we do a short sale, or should we do the DIL? Anything is appreciated!
Posted on: 25th Apr, 2009 12:50 pm
Hi LauraJ,

I would suggest you to check out with your lender whether he would be able to modify the loan or not. If not, then you should apply for a short sale or a deed in lieu.
Posted on: 27th Apr, 2009 12:33 am
Doesn't a short sale require realtor fees? How can you afford them if you are already out of cash?
Posted on: 28th May, 2009 07:54 am
Hi Guest!

Welcome to forums!

Generally the "seller" has to cover the Realtor fees. However, if the seller cannot pay it alone, he/she can negotiate with the buyer to pay it.

Sussane
Posted on: 28th May, 2009 10:30 pm
Its best to approach the 2nd lien holder for a deed in lieu rather than the 1st.
Posted on: 19th Feb, 2010 09:51 am
Hi DONCARLO,

In my opinion, you should approach the first lien holder if you want to go for a deed in lieu. You can approach the second lien holder, but he will have to satisfy the first lender. After the first loan is satisfied, then only the second lender will be able to take the rest of the sale proceeds (if any). If there is no left over sale proceeds, then the second lender can come after you for the dues.

Take care.
Posted on: 22nd Feb, 2010 01:05 am
i hold a large 2nd and the owner is not able to pay me. he is willing to do a deed in lieu and i would take over the first trust deed to protect my 2nd. i have ability to take over good credit and can make payments. i do not have down payment to buy the property outright and it is upside down.dont you thnk the1st trust deed holder would welcome me to just take over the loan and the seller give me a deed in lieu is the owner signs off on all paperwork with the first then later on i can refinance the first and get a better loan when i have monies down. thanks
Posted on: 25th Feb, 2010 10:31 pm
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