Posted on: 28th Dec, 2008 04:44 pm
If you buy a house with 80% financing from the bank and 20% seller carryback and you foreclose on the 80%, what about the 20%.
Hi carolyn!
Welcome to forums!
If the bank forecloses the property, then the bank will first recover their debts. After that the dues of the seller will be paid. In case, the foreclosure sale does not satisfy the seller's 20%, the seller may ask you to pay off the dues.
Feel free to ask if you have further queries.
Sussane
Welcome to forums!
If the bank forecloses the property, then the bank will first recover their debts. After that the dues of the seller will be paid. In case, the foreclosure sale does not satisfy the seller's 20%, the seller may ask you to pay off the dues.
Feel free to ask if you have further queries.
Sussane
Hi carolyn,
The seller carry back loan occupies a subordinate position as compared to the mortgage. So, in case the bank forecloses, it should get it's dues first. Any remaining amount should then be forwarded to the seller.
Another option is to ask the seller to buyout the first mortgage. But that's a huge amount compared to what the seller owes from you. So, possibly he won't agree to such an offer. Just check out what your seller carry back documents mention regarding any default. The fact remains that you'll owe the unpaid balance of carry back loan even if you lose your home in foreclosure. If possible, you can negotiate and reduce the unpaid balance provided the seller is willing to forgive a part of your debt. However, there can be tax consequences depending upon the state you are in.
Regards,
Jessica
The seller carry back loan occupies a subordinate position as compared to the mortgage. So, in case the bank forecloses, it should get it's dues first. Any remaining amount should then be forwarded to the seller.
Another option is to ask the seller to buyout the first mortgage. But that's a huge amount compared to what the seller owes from you. So, possibly he won't agree to such an offer. Just check out what your seller carry back documents mention regarding any default. The fact remains that you'll owe the unpaid balance of carry back loan even if you lose your home in foreclosure. If possible, you can negotiate and reduce the unpaid balance provided the seller is willing to forgive a part of your debt. However, there can be tax consequences depending upon the state you are in.
Regards,
Jessica
