Posted on: 10th Mar, 2008 06:30 pm
We're in CA and our current value is $400-$420 and we owe $630 (that includes a 2nd). We have 2 offers from $340-$370 and are in pre-foreclosure. The 2nd won't agree to the sale so we need to foreclose or get a deed in lieu...what happens with the 2nd? Do we have to go to bankrupcy? We can no longer afford the payment on the house due to reduction in income. We want to hand the house to the bank and rent but not sure about the 2nd and what they can do to us?
you don't have to lose your house - consider a chapter 13 bankruptcy - it will stop a foreclosure in it's tracks. you can still sell your home but it may give you the time you need to get top dollar. if you don't pay the 2nd mortgage - you will get slammed with the unpaid note. so, another option may be to sell or dil (if you can't afford to keep the house) wait for the assessments of unpaid balances to hit and file a chapter 7 -
good luck
good luck
hi stacylp, welcome to the forum
i do have to agree with larry that foreclosure should always be the last resort when attempting to get out of a home you can no longer afford. unfortunately it appears that the lender of the second mortgage is the one not agreeing to your work-outs. even if the lender on your first mortgage agrees to a dil, you still can not proceed without the agreement from the second lender as they hold interest in the property.
in regards to your question as to the repercussions of the 2nd should the home foreclose, we would need more information. was the second mortgage used to purchase the home or did you remove equity at some point? that can make a difference in how any deficiency will be treated. california is a non-recourse state - meaning that if the money was used to purchase the home, any deficiency would not cause further legal action. also, the mortgage debt relief act that was recently passed may provide tax relief to you for any debt forgiven.
carrie also throws the bankruptcy solution into the mix, which might also be a good option for you as well.
i believe it would be in your best interest to consult an attorney on this entire matter. these situations can be quite complex and you really should understand the possible consequences in order to make the decision right for you.
i do have to agree with larry that foreclosure should always be the last resort when attempting to get out of a home you can no longer afford. unfortunately it appears that the lender of the second mortgage is the one not agreeing to your work-outs. even if the lender on your first mortgage agrees to a dil, you still can not proceed without the agreement from the second lender as they hold interest in the property.
in regards to your question as to the repercussions of the 2nd should the home foreclose, we would need more information. was the second mortgage used to purchase the home or did you remove equity at some point? that can make a difference in how any deficiency will be treated. california is a non-recourse state - meaning that if the money was used to purchase the home, any deficiency would not cause further legal action. also, the mortgage debt relief act that was recently passed may provide tax relief to you for any debt forgiven.
carrie also throws the bankruptcy solution into the mix, which might also be a good option for you as well.
i believe it would be in your best interest to consult an attorney on this entire matter. these situations can be quite complex and you really should understand the possible consequences in order to make the decision right for you.
