Posted on: 04th Feb, 2010 07:50 am
what happens when you have a rental property and the first mortgage is for $33,632.00 and we have a personal bank loan against the property for $200,000 for a business loan. My husbands company is an L.L.C. and the people owing us money have filed bankrupcy and the business loan bank wants their money now. They have said they would accept a deed in lieu for the property. What happens to the first mortgage amount. Are we still liable for this amount or will the business loan bank assume this? We are currently 2 months behind on payment for 1st mortage. We have the money but if we are loosing the property we did not want to pay that. What would you suggest? We would rather not file for personal banckrupcy which we think would be more of a hit on our credit.
the lender in second position, if they accept a deed in lieu of foreclosure, would be responsible for taking out the first mortgagee's interest. that mortgage comes first, of course, though after real estate taxes. it appears that the business loan lender is willing to pay off that first mortgage in this situation.
have another discussion with them to see if that's the case; because if it isn't then they're just blowing smoke.
have another discussion with them to see if that's the case; because if it isn't then they're just blowing smoke.
Thanks for your help George! One other question for you: How will this affect our credit?
i can't give you a precise answer, frankly, about how many points, for example, you'd lose from your score(s). i've seen mentions made in these forums of 150 points, etc. but i can't say for certain that it's absolutely accurate. you might be able to acquire more of that sort of information on some of the credit reporting sites, such as myfico.com, for example.