Surrender vs Foreclosure-TX

[BK2008]

I am in a CH7 BK, which is almost discharged.

I am about to lose my job (employer can no longer make payroll) Unemployment won't cover it.

What exactly is the difference between surrendering my house vs outright forclosure?? How does the process work?? Which would be most beneficial to me, i.e. length of stay, minimal credit damage, etc.

Would it be beneficial to pay on just the small 2nd (less than $100/mo) to shut them up and drag out this scenario?? I don't have all of the cash to just move yet.

When would a deed in lieu come into play??

I have been current in the past, did not reaffirm any mortgages (1st & 2nd).

Sorry the thoughts are so jumbled, I cannot seem to get a straight answer from my attorney, and I haven't talked to the lender yet. I will call them tomorrow, but I hear they don't talk until your 3 months behind.


Oh, and I have a RE broker wanting to do a short sale on this thing...
I can't figure out what the benefit is to me to do this, if somebody could please explain that to me....

[JRScott]

Did you sign a reaffirmation agreement?

[Flamingo]

Since you are not yet discharged from your Chapter 7, you need to talk to your attorney first before anyone else.

[BK2008]

No reaaffirmation agreements, and I don't want to deal with my attorney anymore.
useless!

[HHM]

Well, there really is no difference. Technically, there is no such thing as an outright surrender. There are really only 3 ways to dispose of real property.

1. Sell. In order to sell real estate, ALL lien holders must be paid, or otherwise satisfied. This is where a short sale may come into play. However, there is little benefit to the seller for doing short sale aside from the fact that a short sale is not a foreclosure. You will get a 1099 on the difference between the sale price and the amount owed and the IRS counts that forgiven debt as income (there are numerous posts that discuss forgiven debt and its tax implications.

2. Foreclosure. Even if you surrender the home in BK chapter 7, the bank still goes through the foreclosure process. Reason being, foreclosure is how banks acquire clear, marketable title to the real estate because a foreclosure quashes all other liens on the property.

3. Deed in Lieu of Foreclosure: First, the bank must accept the deed, you cannot force the bank to accept at DIL. These are very hard to do in today's mortgage market because the actual note holder is typically 2 steps removed from the loan servicer (i.e. the entity you send checks), and if you have 2 mortgages, it is virtually impossible.

Generally, second mortgage holders do not foreclose because they must pay the first note holder from the proceeds. If you are going to lose your job, and don't think you will be able to make the payments, you might as well stop paying now, no point in throwing good money after bad.

[AngelinaCatHub]

No reaaffirmation agreements, and I don't want to deal with my attorney anymore.
useless!

Seems I've heard this before. Seems to be a common problem. Maybe we are useing the same lawyer? 'Hub

[BK2008]

XXX's & OOO's to you !!!

That has been the most clear, concise explaination that I have gotten on all of this. I haven't been able to get my attorney to explain it, other than 'don't worry about it, BK will take care of it'.

So If I stop paying, then the 1st will start the foreclosure process, the 2nd will probably get nothing.

In TX, do you know what kind of time frame I have until I am 'evicted'?? I know the general rule here is 60 days or so, but with Countrywide for my 1st, I have been hearing 5 or 6 months.
And if there is no benefit to me to do a short sale, why is this RE agent so hot to do it?? Seems to me that he might have an investor in mind, and if that is the case, I could be forced out of the house well before I actually need to.
Does that make sense??

[BK2008]

HUB:

If I had seen this forum before I filed BK, I'd have gone Pro Se and not spent $2K on this jerk. I have a good mind that after this is all done, to file a complaint with the ABA. Quick to take the money, really horrible at explaining it all the way thru.
I also copied and pasted my original post here, send an e-mail to the attorney asking WHY am I having to get ALL of my legal information from a forum...wasn't that what THEY were supposd to be doing??

Probably will tick them off, but want to make sure I get $2K worth of ticked off.

[breezyday]

3. Deed in Lieu of Foreclosure: First, the bank must accept the deed, you cannot force the bank to accept at DIL. These are very hard to do in today's mortgage market because the actual note holder is typically 2 steps removed from the loan servicer (i.e. the entity you send checks), and if you have 2 mortgages, it is virtually impossible.

Generally, second mortgage holders do not foreclose because they must pay the first note holder from the proceeds.

Thanks for explaining the different I was wondering to.
My question is> would if help if the same bank held both my loans on my 80/20 loan?
I have two payment books but send one check into the bank each month.

[AngelinaCat]

My question is> would if help if the same bank held both my loans on my 80/20 loan?
I have two payment books but send one check into the bank each month.

According to the Consumer Advocate, Clark Howard, you are in a much better position to try to work something with your lender if both the first and second mortgage ARE held by the SAME lender. So you have that much going for you, at least.

Good luck.

[HHM]

Correct, if the same bank holds both mortgages, the chance of a DIL increases.

But, keep in mind, there still may be different note holders on the back-end. So, even if the mortgage "appears" to be with the same lender, there is a good chance that the bank sold the two notes (the two mortgages) to different investors.

If you really want to find out who actually holds the note, you will want to send a qualified RESPA request (do a google search). Note, the deed of trust or mortgage that is recorded at the county recorders office often times won't disclose the actual note holder.

To BK2008, although I sympathize with your concerns about your attorney, and he should at least have given you an overview, they are not real estate attorneys and you really did not hire him to advise you on real estate matters (technically speaking). Granted, he probably is just being lazy, but at the same time, he is probably CYA when it comes to questions concerning areas of law outside of his primary practice field.
As for how long you have, I can't really speak for Texas, but you have at least the entire foreclosure process, and a few month thereafter. Keep in mind, to evict you, someone has to resort to legal process, the bank is loathe to do so.

[BK2008]

No, they're not real estate attorneys, but my question was something that he should have been able to answer. And I called the lender just for their take on this, and they have comfirmed what you had posted earlier.

So why is the bank loath to evict me?? I'd think at some point they would want me out, no?? So if they 'foreclose', sooner or later I am going to get a notice to vacate, correct??

And after the foreclosure, how long does it take for title to transfer back to the bank or buyer if it is sold at an auction sale?? For the purposes of cancelling insurance, of course.