second property foreclosure help

[caseyj]

So here's my situation:

I own a rental house that has a first and second mortgage on it. The first mortgage was an arm and they are ready to modify the loan @ 5% for 30 years fixed. Great, right? Not so great - They said the property has $3625 in foreclosure fees that need to be paid before they will modify the loan. I don't have that much nor do I have any way to scrap that much up. They refuse to recycle that amount back into the loan with the modification, either. My question is, if I let them take the house, on the first mortgage.. what happens to the second mortgage? It's with a different servicer.. and its behind a couple payments due to trying to pay the first mortgage with the ARM payment.

Any suggestions would be helpful...

[justbroke]

Just let the whole thing go. If you're going to be filing Bankruptcy, I would file Bankruptcy first and then surrender the property in the Bankruptcy.

From one landlord/property owner to another... don't waste your money by trying to keep it.

[caseyj]

If I'm not going for filing a BK, still best to let it go? Can the second mortgage come back on me? Or Will I be in worse shape by letting it go i.e. collectors coming after me for that mortgage, etc.?

[justbroke]

If I'm not going for filing a BK, still best to let it go? Can the second mortgage come back on me? Or Will I be in worse shape by letting it go i.e. collectors coming after me for that mortgage, etc.?

If you surrender the property in Bankruptcy (give it up), then the only thing that they may have recourse is on a deficiency. If you are filing Chapter 7, they won't get a deficiency (unless it's an Asset case and there is money in the Estaet). Otherwise, in a Chapter 13, they may be able to file a unsecured deficiency claim as an unsecured creditor.

A lot of this has to do with State underlying non-bankruptcy law, as to whether a deficiency claim is even allowed.