Posted: 3/8/2010 8:50:16 AM EDT
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I own an investment property that has become a significant financial drain. Even though it is tenant occupied, I'm still losing significant money each month. If I don't do something soon, it's going to begin to wipe me out of a lot of money. I can't show sufficient financial hardship to the bank for them to consider renegotiaing the terms of my loan or even a short sale. It seems that my only option might be to walk away and foreclose. I have several questions though before I consider to move forward.
The home was purchased by me (alone) about 5 years ago and is in my name only. I've been married just over 2 years. Will foreclosing affect my wife’s credit? How long after stopping payments will bank begin to take action? What actions specifically will they take (and timeline)? What are the legal ramifications of stopping maintenance payments to the building (HOA)? Can they come after me with a judgement or place a lien? Can I continue to collect rent on the property? At what point may I not continue to enforce rent collection even though I’m not paying the mortgage? Once the property is foreclosed and the bank seizes possession of it, what actions may be taken against me: - By the bank? – Will they come after me for the money? How much money will they try to get from me? - By the condo association? – If I no longer own the property, at what point am I no longer responsible to the condo association for maintenance payments. Can they go after The furniture in the apartment belongs to me. If the bank forecloses prior to the end of the lease, will the bank then own all the furniture in the apartment? Will the consequences be worse if I try to remove any/all the appliances prior to foreclosing? |
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I own an investment property that has become a significant financial drain. Even though it is tenant occupied, I'm still losing significant money each month. If I don't do something soon, it's going to begin to wipe me out of a lot of money. I can't show sufficient financial hardship to the bank for them to consider renegotiaing the terms of my loan or even a short sale. It seems that my only option might be to walk away and foreclose. I have several questions though before I consider to move forward. The home was purchased by me (alone) about 5 years ago and is in my name only. I've been married just over 2 years. Will foreclosing affect my wife’s credit? How long after stopping payments will bank begin to take action? What actions specifically will they take (and timeline)? What are the legal ramifications of stopping maintenance payments to the building (HOA)? Can they come after me with a judgement or place a lien? Can I continue to collect rent on the property? At what point may I not continue to enforce rent collection even though I’m not paying the mortgage? Once the property is foreclosed and the bank seizes possession of it, what actions may be taken against me: - By the bank? – Will they come after me for the money? How much money will they try to get from me? - By the condo association? – If I no longer own the property, at what point am I no longer responsible to the condo association for maintenance payments. Can they go after The furniture in the apartment belongs to me. If the bank forecloses prior to the end of the lease, will the bank then own all the furniture in the apartment? Will the consequences be worse if I try to remove any/all the appliances prior to foreclosing? there's no set time on the bank's decision to foreclose. they will force a sale, and then sue you to collect the difference in what's owed versus what they sell it for, which is called a deficiency judgment. the HOA, if it has any teeth, will absolutely put a lien on the property which will also have to be satisfied (if its done before the sale). if the lien is affected by the foreclosure, they will likely take personal action against you. |
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there's no set time on the bank's decision to foreclose. they will force a sale, and then sue you to collect the difference in what's owed versus what they sell it for, which is called a deficiency judgment. the HOA, if it has any teeth, will absolutely put a lien on the property which will also have to be satisfied (if its done before the sale). if the lien is affected by the foreclosure, they will likely take personal action against you. What's the likelyhood that once I stop making payments that they may be willing to renegotiate the prinicipal balance to avoid going into foreclosure? (especially if I'd be willing to renegotiate a prinicipal balance higher than they would get from a foreclosure sale) Does interest accrue on the deficiency judgement? Can the government garnish my wages or take anything away from me? |
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You really need to talk to a lawyer in whatever mystery state you live in. It varies by state as to whether they can take a judgment against you after the foreclosure, which is the biggest issue. Even if they can a lawyer may be able to work something out so that doesn't happen. You should not make this decision based on what a bunch of guys on the internet tell you. |
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the time to negotiate is now, not after you've blown them off and quit making payments.
what would the "government" have an interest in garnishing your wages? if the bank gets a judgment against you, they may attempt to seize property to satisfy the judgment if they are willing to spend that $$ in effort to collect the judgment. |
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You really need to talk to a lawyer in whatever mystery state you live in. It varies by state as to whether they can take a judgment against you after the foreclosure, which is the biggest issue. Even if they can a lawyer may be able to work something out so that doesn't happen. You should not make this decision based on what a bunch of guys on the internet tell you. Florida. And yes, I absolutely plan to retain a lawyer - I actually already have one but I'm trying to research AS MUCH AS POSSIBLE so that I'm as informed as I can be when dealing with him. And also, I'm well aware that I should take anything I learn from a bunch of ARFCOMmers with a grain of salt. I was simply hoping to get a better understanding of the process and what things I may expect along the way - knowing well that what occurs states may not occur in others. But thanks for your advice nonetheless. |
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the time to negotiate is now, not after you've blown them off and quit making payments. what would the "government" have an interest in garnishing your wages? if the bank gets a judgment against you, they may attempt to seize property to satisfy the judgment if they are willing to spend that $$ in effort to collect the judgment. Wrong - as long as they are being paid they have no incentive to negotiate. I had a friend's written down from 2600 to 1500. |
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Quoted: Quoted: You really need to talk to a lawyer in whatever mystery state you live in. It varies by state as to whether they can take a judgment against you after the foreclosure, which is the biggest issue. Even if they can a lawyer may be able to work something out so that doesn't happen. You should not make this decision based on what a bunch of guys on the internet tell you. Florida. And yes, I absolutely plan to retain a lawyer - I actually already have one but I'm trying to research AS MUCH AS POSSIBLE so that I'm as informed as I can be when dealing with him. And also, I'm well aware that I should take anything I learn from a bunch of ARFCOMmers with a grain of salt. I was simply hoping to get a better understanding of the process and what things I may expect along the way - knowing well that what occurs states may not occur in others. But thanks for your advice nonetheless. You can probably find out through google if you are looking at a potential judgment, you are in most states but there are 8 or 10 where all they can do is take the house back. I looked a second ago and could not find a list. If you are looking at a potential judgment that's bad news, usually means wage garnishment, seized bank accounts, liens against your home and other bad stuff. My state now requires a mandatory conference to try to resolve a mortgage that is in default before the foreclosure can go too far. I just worked out a deal on one this morning-course that's for residences really, not rentals. Sometimes you can still work out a deed in lieu of foreclosure to avoid all that. |
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the time to negotiate is now, not after you've blown them off and quit making payments. what would the "government" have an interest in garnishing your wages? if the bank gets a judgment against you, they may attempt to seize property to satisfy the judgment if they are willing to spend that $$ in effort to collect the judgment. Wrong - as long as they are being paid they have no incentive to negotiate. I had a friend's written down from 2600 to 1500. uh, wrong yourself. you negotiate when the bank isn't out any cash, but has been advised they are about to be out of cash. You're still holding the cards at that point. and yes, Florida allows deficiency judgments. |
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the time to negotiate is now, not after you've blown them off and quit making payments. what would the "government" have an interest in garnishing your wages? if the bank gets a judgment against you, they may attempt to seize property to satisfy the judgment if they are willing to spend that $$ in effort to collect the judgment. I've tried to negotiate and they wont even begin to discuss with me as I've never been late or missed a payment. The way they see it is that I'm not sufficiently 'hardshipped' enough for them to cut me a better deal. Can they seize a homesteaded property? 401Ks? Bank accounts? |
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I am thinking that if you are incorporated, you will probably be OK. Are you? Not incorporated. Would becoming incorporated shield me personally? Most likely not at this point since your name is on the mortgage. I've also had to sign a personal guarantee for every line of credit that my business has. Also, some bad news for you: Mortgage lenders pursue homeowners even after foreclosure Les Christie, staff writer, On Wednesday February 3, 2010, 3:21 pm EST As terrible as it is to lose your house to foreclosure, at least it's a relief to put your biggest financial headache behind you, right? Wrong. Former homeowners may still be on the hook if there's a difference between what they owed on their mortgage and what the bank could sell it for at auction. And these "deficiency judgments" are ticking time bombs that can explode years after borrowers lose their homes. It can even happen to people who got their bank to approve them selling their home for less than it is worth. Vanessa Corey, for example, short sold her Fredericksburg, Va., home in April 2008. She and her husband built the house in 2004, but setbacks, both personal (divorce) and professional (housing bust), made it impossible for the real estate agent to keep her home. So she negotiated the short sale and thought that was the end of it. "My understanding was that the deficiency was negotiated away," she said. "Then, last November, I got a letter from a lawyer telling me I owed my lender $65,000. I had to declare bankruptcy. There was no way I could pay it." Many homeowners are now in the same boat. And not just those who took out bigger loans than they could afford or who did so called "liar loans" where they didn't have to verify their income. Because of falling home prices, borrowers who always paid their mortgage but who have run into unforeseen circumstances –– like unemployment or a job transfer –– can no longer sell their homes for what they owe. As a result, they are being forced to short sell or foreclose and are getting caught up in deficiency judgments. "After the banks foreclose, it's very common now to have large deficiencies with houses not worth the balances owed," said Don Lampe, a North Carolina real estate attorney. Lenders mostly declined comment. Although Corey's lender, BB&T did indicate it was pursuing more deficiency judgments. "They follow the rise and fall of foreclosures," said the spokeswoman, who would not discuss Corey's account. Can they come after you? Whether banks can and will pursue deficiency judgments depends on many factors, including what state the borrower lives in and whether there's a second mortgage or other liens. But if borrowers ignore the possibility of deficiencies, it could haunt them. "Once they have a judgment, they can pursue you anywhere," said Richard Zaretsky, a board-certified real estate attorney in West Palm Beach, Fla. "They can ask for financial records, have your wages garnished and, if you fail to respond, a judge can put you in jail." In the case of foreclosure, lenders can pursue deficiencies in more than 30 states, including Florida, New York and Texas, according to the U.S. Foreclosure Network, an organization of mortgage law firms. Some states, such as California, are "non-recourse" and don't allow deficiency judgments. But, even there, if the original loan was refinanced, some or all of it may be subject to claims. Deficiency judgments on short sales and deeds-in-lieu can happen in many more places. In these cases, extinguishing the debt is often a matter of negotiating with the bank. But even when lenders are willing, many borrowers may not be aware that they have to ask for release. So, if you are pursuing a short sale, be sure your attorney asks the bank to release you from any further obligation. "People shouldn't have a false sense of security that a deficiency judgment may not be later sought," Zaretsky said. He expects many will be filed over the next few years, based on the fact that banks have sold many of these accounts to collection agencies and other third parties, at discount. "The parties who bought those notes wouldn't have paid money for them unless they had the intention of acting," Zaretsky said. Ticking time bomb What can be scary is that the judgments don't have to be obtained immediately. Lenders or collection agencies may wait until debtors have recovered financially before they swoop in. In Florida, the bank can wait up to five years to file. Once the court grants a judgment, the lender has 20 years there to collect, with interest. It doesn't have to be a large amount of debt for a lender or collection agency to come after borrowers. Richard Varno and his wife short sold their Nashville home back in 2004 after he lost his job. It wasn't until 2008, when the second lien holder asked him for $25,000, that he realized he still was liable. "I told them, 'Hey, you guys released the title,'" he said. "As far as I know, I'm off the hook." He wasn't. Releasing title does not necessarily end the debt. It's complicated because of variations in state law, but, generally, a mortgage has two parts: a pledge of collateral, represented by the home, and a promise to pay off the loan. Lenders may release property liens in order to facilitate short sales without releasing borrowers from their obligations to pay under the promissory notes. The secured debt can convert to an unsecured one after the sale. Zaretsky had one client who was so relieved to have arranged a short sale that he signed every paper his real estate agent shoved at him, even a confession that clearly stated he still owed the debt. "He had no idea what he was doing," said Zaretsky. "All the lender had to do was go to court to convert the confession into a deficiency judgment." Lenders are also very inconsistent. One of Zaretsky's short-sale clients was ready, willing and able to pay, but the bank did not even ask; another lender always reserves the right to pursue the deficiency. Strategic defaults Sometimes lenders go after borrowers walking away from their homes if they have other assets, according to Florida real estate attorney Larry Tolchinsky. "Banks are pulling credit reports to see if it's a strategic default," he said. "If you're behind on all your other payments, you're okay. But if you're not, they'll come after you." If borrowers have any doubts about their risks, they should seek legal advice. Or, at least, call non-profit organizations such as NeighborWorks for advice. According to Doug Robinson, a NeighborWorks spokesman, its counselors always try to negotiate away deficiencies when they facilitate short sales or deeds-in-lieu. "We don't favor any short-sale contracts that leave any deficiency that can be pursued," he said. Robinson himself knows what can happen. He paid off a deficiency after his own New Jersey house went through foreclosure 11 years ago. |
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The bank is unlikely to negotiate on an investment property, and many laws are different since the house is NOT owner occupied. They are very likely to come after you. Many states that do not allow deficiency judgments waive that law for investment properties. +1 |
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Yes. Joint property once your married. Sorry.
Up to the bank and courts to decide when to take action. Here in AZ can be over 1.5 years. Hoa's can put a lien on your house for 5 dollar missed payment. Yes, they don't even have to come after you, because you signed an agreement letting them when you signed for the house and hoa rules and regs. Do you really want to be a jerk and fuck those people? Is it their fault your not making money? When you stop paying, you should tell them to stockpile their money, and maybe they can do a short sale down payment. Would be way better for your credit. If your that much of an ass and you want to steal money( cause legally thats what your doing) then you can collect up until they receive an eviction notice. (Karma on that one would be a motherfucker) Bank has a right to come after you for the difference between what is owed on the mortgage and what is sells for at auction, or short sale. Association has a right to come after you too for back payment. They'll probly eat it though. The furniture is still yours, when they do a foreclosure clean out, you will have 24 hours to pick it up, (they leave it in the driveway, and your neighbors goes through it too) Same thing with the appliances, but they are technically part of the house. My advice is to try a short sale. Good luck. All this is not legal advice, and this is how it is in AZ. Fl and AZ are very similar, but there could be differences. SEEK LEGAL ADVICE. |