never thought we'd be here

[Mortgage Woes]

Well.. here we are... 30yrs old lived the good life from being in the mortgage biz!!! Well took a dive and threw us upside down.

We had a dream home & vacation home!!!

Small story to have an idea of what is going on...

Basicly, we had this house in CA that was beautiful!!
Got laid off and payments got out of hand, so we foreclosed on it.

Moved to the vacation home in AZ. Jobs market here sucks, but we can get bye barely!

Cashed out the 401K's to get through everything, even paid off all our credit cards and late payments we were stacking up on the vacation home!!

Just rec'd a letter from a company that says that they are collecting on my 2nd mortgage from my foreclosed home!!! How is this possible? They said that it is now an "unsecured" debt, and that I am responsible for paying it.

Now this leaves me with what option besides BK??? My only debt left is my home & vehicles!!

The 2nd mortgage was for 177K!! There is no way I can afford to pay on that... after all I lost that home, why would I pay on it. Its like adding insult to injury!!

Any "before" advice I can get???

Thanks!

[One Half Full]

It'd probably the best then. Usually you can keep car/house. Best to talk to a local attorney. I agree that it is silly to pay on a piece of property that you no longer own.

[danaf]

Sounds like bk7 would be your best bet but I'm no expert. Have you taken the means test yet to see if you qualify for ch7?

[I want out]

Hate to say this, but this is a classic case of not doing it right.

But we can't change the past, so onward...

You have significant equity in your current home, a 7 may be difficult.

Am I correct in assuming that this mortgage is now being serviced by a different company than you were paying while in the old home?

If so, the debt was likely acquired at pennies on the dollar- and I mean PENNIES... which means that you may be able to cut a deal. However, I would suggest you consult a GOOD real estate attorney on this... and you're going to need to do some due diligence in screening your attorney to ensure that you've got someone who really knows how to handle this sort of thing.

The other thing I would insist on is having them PROVE that they actually own the debt. In today's climate of foreclosure scam artists, I wouldn't be the least bit surprised if you're being hustled. That said, even if they did acquire the debt, there are lots of games you can play in this arena. If you're willing to do some research, you can get familiar with the techniques for disputing the debt. My concern for you is in the course of your conversation, you may have disclosed information that can be used against you... that's what debt collectors do.

[danaf]

whoa - I don't see anywhere that the OP discloses what equity he & his wife have in their vacation home which is now their primary residence in AZ. They need to do the means test. And also, sounds like they recently moved to AZ which means they might be able to use California's exemptions (ie Federal) which could help them....don't quote me on that though because I haven't looked up the differences and without knowing their actuals - one can't say.

I do agree with I want out in that don't talk to any debt collectors.

What I would advise them to do is consult several different attorneys, read these boards, get educated, and do not panic! Soon enough, others more knowlegeable in the area of real estate will chime in on this post.

[Mortgage Woes]

Thanks everyone, this has been a hard and tough road we've traveled.

And so everyone knows, my husband is STILL out of work, and because I live in AZ I make peanuts.

Oh and for those concerned about equity in my vacation home... well I'm upside down! So... I don't have much to worry about there. I bought what I thought was a steal at the time, well with the market changes my house isn't worth what I bought it for.

I'm concerned on the fact of what did I disclose??? That would jeapordize me?

Also, where is this "means" test???

[keepmine]

The means test is basically, is your income above or below the median for your state then, what is your disposable income.
First things first-your husband needs to get some sort of job just to get some cash rolling in.
Secondly, bk is likely in the cards with large mortgage deficiences looming.
Many bk lawyers give free initial consulations. Talk with a few and get your options explained.

[chpxiii]

What everyone else said.

I also wanted to add, just because a home was foreclosed on, it doesn't mean you don't owe money, especially on a 2nd mortgage.

From my understanding, even if your house foreclosed, if it sells for less than what you owe, you would owe the remaining balance. You did borrow the money for both the 1st and 2nd mortgages with a promise to pay it back. If you have not paid it back then you still owe the money, regardless of whether the home was foreclosed.

The good thing with the 2nd mortgage being unsecured is that if you file bankruptcy, that debt can possibly be discharged. Depending on your case.

Good luck and let us know how it goes.

[I want out]

Oh and for those concerned about equity in my vacation home... well I'm upside down! So... I don't have much to worry about there.

With that bit of information, in addition to the means test, you need to look at whether or not you even want to keep THIS home.

Get your homework done- QUICKLY. The worst thing I see people do is wait too long, then things get better and they can no longer qualify for a 7. Things aren't really better, but they're good enough that the BK system says so. The system doesn't really reward anyone for busting their arse, trying to juggle everything, trying to get everyone paid, holding out hope that things will turn around. You get zero points for being a faithful warrior.

If you read any of Elizabeth Warren's writings, she says that most people don't file until well after they'd have received maximum benefit. Don't be one of those people. I suggest you get cold-blooded and calculating right away. Decide what you want, and then start gathering all the information you need to get this done right.

[luckyinlove]

go that right

that is right, given you can retain a lot of assets after chapter 7, it is natural to wait until they are all gone before filing BK, and people even take out loans on 401K, which is 100% except, and use that to pay their CC debt. Now that I know better, I'll be better prepared in the future to file BK.

[CindyLou]

First things first-your husband needs to get some sort of job just to get some cash rolling in.
Secondly, bk is likely in the cards with large mortgage deficiences looming.
Many bk lawyers give free initial consulations. Talk with a few and get your options explained.

Even before her husband get a job they should consult an attorney!! Earning more money may put them over the means and push themoever a 13! Happened to my brother! didn't file soon enough, got a new job and had to do a 13..... seek advice NOW WHILE THINGS ARE AT THEIR WORST!

[CindyLou]

First things first-your husband needs to get some sort of job just to get some cash rolling in.
Secondly, bk is likely in the cards with large mortgage deficiences looming.
Many bk lawyers give free initial consulations. Talk with a few and get your options explained.

Even before her husband get a job they should consult an attorney!! Earning more money may put them over the median and push them into a 13! Happened to my brother! didn't file soon enough, got a new job and had to do a 13..... seek advice NOW WHILE THINGS ARE AT THEIR WORST!

[Mortgage Woes]

well we have our 1st appt. on Saturday to "seek advice"...

I'm really worried about what to ask, what to say...

Will they want to clean out my garage? What if you have a paid off car? What if you have recreational vehicles?

I need to know how all this works....

[imaloser]

A couple of questions - was this a purchase money loan? Do you know what kind of sale took place? Here is a California rule (I'm assuming the foreclosed home is in California) regarding deficiency judgements:

The matter can be summarized as follows. A lender cannot get a deficiency judgment if it forecloses by private sale, nor can it do so if the underlying loan was a purchase-money loan. Therefore, a lender will choose to sell the property at a private sale if (1) the sales proceeds will pay the entire loan or (2) the loan was a purchase-money loan.

There are thus "pros" and "cons" to each kind of sale. The private sale is far quicker, and gives certain title to the new purchaser, therefore allowing the sales price to be higher, but the lender cannot recover the deficiency for any outstanding balance.

The judicial sale entitles the lender to a deficiency judgment, unless the loan was a purchase-money transaction. At the same time, it entitles the defaulting borrower to redeem his property if he can pay the necessary charges and cure his arrears.

[Mortgage Woes]

Ok, this was a refinanced loan that was foreclosed on. A 1st & 2nd. and yes, in CA

The home was sold to an investor, the details of the sale are still unknown to me. I don't know how much it sold for.

I have a company calling me regarding the funds due on the 2nd because the sale price did not cover the 2nd loan.

However I'm still getting letters from the company that held the loans, stating that they have put "issued" home owners insurance on the home... why am I getting these letters if they foreclosed on it?

I'm super confused, and when I call no one can seem to help me!