Stripping a 2nd Mortgage

[pcn]

Who was the 2nd? BOA was the first, right?

[Mensa1]

When I took out the second mortgage, we still had $100,000 equity.

It's still hard to believe that the equity and all the second got wiped out.

Some of it was because of getting behind on the first, but most of it was the huge drop in value.

If only I had sold it then...

Yes, I am quite familiar with what happened in the equity/value crash in RE, especially in FL. We were involved heavily in the "land rush in FL in 2002-05" (akin to the 1849 gold rush in CA); made king sized $$$ doing, and eventually lost king sized $$$ in the end after staying too long. We had small waterfront parcels that sold for as much as 500K+ in 05 that today you couldn't get 50K for. Take that times a handful and it would put the hurt on most anyone.

The second was a horrible loan. I don't know what I was thinking, but I was desperate.

There were huge fees upfront. It wa a 14% interest only loan, with a balloon repayment payment in three years.

The HML got what they deserved. Well not completely, b/c they should be arrested for loan sharking, IMO. Unfortunately you went down with them... but you gained valueable knowledge in process and won't repeat the same mistakes next time around.

[brokenomore]

When they saw I was having problems, instead of working with me, they put the screws to me.

If they had backed off the interest and maybe some of the principle, and realized the reality of the situation earlier, they would have gotten less than the orginal agreement, but a lot more than they're getting now, which is zip. They lost over 50k.

If they had worked with me, they could have taken the pressure off me. I was paying two mortgages, and at that time was in chapter 13 with a trustee payment at over $800 (which got dismissed because I fell behind), and couldn't do it all. We might have saved it and we all might have been better off.

The overall fault, of course, is mine. It wasn't the "hard times" that killed us. It was lack of wisdom, and possibly just plain laziness during good times. Had I been more like an ant than a grasshopper, we could have ridden out some hard times.

But it really really hurt to lose that house. It's just a couple miles away, and I go back occassionally to get things, though that will soon come to an end as we must vacate entirely by early April.

Since the second dropped out, and though we did move out, but left some things behind, we were offered the "cash for keys" option, so we'll get a couple thousand for cleaning everything out, which will be big help, but I don't think I've shed my last tear over that situation.

[brokenomore]

Just curious--not that it matters now since the house is now in the hands of a realtor--but I don't understand where I stood legally during the time from when the second had their sale and when the first had their sale.

The second foreclosed and had a sale, and I though that meant they now owned our house. We discussed a possible short tearm lease, and they floated ideas and the liklihood of making some kind of deal with us, but nothing ever materialized, and we left, not knowing what they would do but fairly certain they would soon be paying off the first and taking ownership. The county records showed them as owning the house.

But they never paid the first, and the first morgage company had their sale three months later, and we were the ones who were forclosed on, and not the first, so I don't get what legal right they had since they didn't pay off the first.

What if we would have entered into a one year lease with them?

[Mensa1]

What if we would have entered into a one year lease with them?

Well you would have ended up living there less than a yr, for sure.

Here's how it works. When 2nd foreclosed they became the owner, but subject to the 1st mtg, meaning that mtg survived that sale and lien was still there, in default, and likely to foreclose too. But 2nd did take title to the home due to fact that they bid on the property, or "they bid their note in", as it is referred to. So 2nd foreclosed on you but not on the 1st mtg.

Then 2nd, now owner, didn't either pay-up or off the defaulted 1st mtg, so 1st mtg foreclosed. When 1st foreclosed they did so on you AND the 2nd mtg holder, so title and ownership transferred from 2nd to the 1st mtg holder.

So as it now stands 1st owns the property and you and 2nd mtg holder have lost your rights to the property, or have been foreclosed. It is entirely likely that the 2nd mtg holder, since they were private lender, or HML, may not have understood things much better than you did, otherwise they wouldn't have spent good money after bad to foreclose and not cure the default on the 1st mtg. Kinda stupid really, but lots of folks in the real estate end of things have gotten some lessons of late. Hopefully it makes more sense now.

[brokenomore]

It does make more sense now. Thanks.

After the second took the house, could I have made a deal with the first in the event the second did not pay up, or was it totally out of my hands?

Kind of funny that I still qualified for the $2,000 "cash for keys" from the first mortage.

The second did come back to me after the sale and said something about possibly buying it, and then doing a lease-to-own with me, but I doubt that will materialize.

I don't understand why they did this the way they did, but now they don't have anything and we don't have anything, and there was a good possibility we could have worked something out, but I think the idea of compromising on interest or principle was unthinkable to them.

[Mensa1]

It does make more sense now. Thanks.

After the second took the house, could I have made a deal with the first in the event the second did not pay up, or was it totally out of my hands?

Kind of funny that I still qualified for the $2,000 "cash for keys" from the first mortage.

The second did come back to me after the sale and said something about possibly buying it, and then doing a lease-to-own with me, but I doubt that will materialize.

I don't understand why they did this the way they did, but now they don't have anything and we don't have anything, and there was a good possibility we could have worked something out, but I think the idea of compromising on interest or principle was unthinkable to them.

It was out of your hands as long as the 2nd was in the ownership position. Now that the 1st has foreclosed, you could buy the property from them and the 2nd would be history. Of coruse this would take cash or a new mtg; one or the other. You wouldn't be reinstating the old mtg since it has been foreclosed.

Best thing to say at this point is: NEXT

[brokenomore]

Fannie Mae owns the house now and I am forbidden from buying it back, as are any of my relatives.

[pcn]

Fannie Mae owns the house now and I am forbidden from buying it back, as are any of my relatives.

I think I had heard that before. So the law makes it impossible for you to buy it back? Is it a part of the law regarding foreclosure that stops you or family from buying it? Immediate family only? How is it worded? Thanks!

[Mensa1]

Kind of funny that I still qualified for the $2,000 "cash for keys" from the first mortage.

Fannie Mae owns the house now and I am forbidden from buying it back, as are any of my relatives.

Maybe you should be barred from a purchase, if for no other reason you accepted the 2K payolla. Not that I blame you for doing so, but be realisitic here, how could you expect that you could then make a purchase of the same property? (In part by using their 2K...?)

But speaking hypothetically, if you had the funds there are lots of ways for you to purchase this property; called a work-around, and doing so legally too.

[pcn]

Maybe you should be barred from a purchase, if for no other reason you accepted the 2K payolla. Not that I blame you for doing so, but be realisitic here, how could you expect that you could then make a purchase of the same property? (In part by using their 2K...?)

But speaking hypothetically, if you had the funds there are lots of ways for you to purchase this property; called a work-around, and doing so legally too.

If it's legal, can you talk more about how one could do this? If not, you could continue to talk hypothetically...

[brokenomore]

I asked the realtore BEFORE I accepted their "payola" whether I would be allowed to purchase the house and he said "absolutely not."

I would rather have my house back than that $2k, any day.

Even if I COULD buy it back, I still have to move out first, and that's what their payment is all about. It hardly would make a dent in a $200k house and I would refund it gladly, if that would be part of the deal if I were a purchaser.

[Mensa1]

If it's legal, can you talk more about how one could do this? If not, you could continue to talk hypothetically...

If it is legal... that is funny. Believe me, I wouldn't suggest anything illegal, here or elsewhere.

I'm not sure that the subject is worth going into much. It isn't all that relevant to the thread and it is a little complex to explain in a forum post. One could use a Trust, and LLC or a couple of other ideas that come to mind. Of course the key is to keep the former owner out of an ownership and position of control in the vehicle used, at least until the 90 day restriction to transfer the property elapses, then the entity could be easily transferred at that time w/o transferring the property. Legal advice would be recommened before attempting any of this at home.

[brokenomore]

I'm not really in a position finacially to buy. Naive as i am, I asked them because I thought perhaps with they would WANT to work with me first to help me stay in my home.

[Mensa1]

I'm not really in a position finacially to buy. Naive as i am, I asked them because I thought perhaps with they would WANT to work with me first to help me stay in my home.

Yes, that is naive. The good news is Br-n-No is that you can now get on with the next phase of your life because you know that the former home is no longer a possibility. As I said earlier: NEXT