topic Re: Forclosure effects in General Credit Topics

Forclosure effects

Anonymous — Sat, 25 Jul 2009 06:22:38 GMT

I'm laid off, and foreclosed upon, all my other debts are paid with no lates. I look forward to recovering my credit and again owning a home at some point. My worry is, are lenders going after people for collection of the lost home loan money? I personally haven't heard of any lenders going after people later. Will this trend change? How many years can they still go after a bad debt?

When all this financial turmoil in the country settles down, will whole new bussinesses start up that specialize in going after the millions of forclosed loans that didn't get cleared in bankrustcy?

Thanks

Re: Forclosure effects

Anonymous — Sat, 25 Jul 2009 16:46:17 GMT

Many states have "anti-deficiency" laws (i.e. California), which means that the lender can only recover their monies from the property itself. In other words, there is no personal liability.

Which state do you reside?

Re: Forclosure effects

Anonymous — Sun, 26 Jul 2009 00:36:11 GMT

Hello and Thank You Illtakecreditforthat

That's a relief.

I do live in California (as per your example). Their is one more unsettling glitch to my situation. I used a first and a second to qualify into that home. The second usually shows up as revolving credit in my credit reports. Does that change anything?

Thanks Again

Re: Forclosure effects

Anonymous — Sun, 26 Jul 2009 00:56:29 GMT

@Anonymous wrote:
Hello and Thank You Illtakecreditforthat

That's a relief.

I do live in California (as per your example). Their is one more unsettling glitch to my situation. I used a first and a second to qualify into that home. The second usually shows up as revolving credit in my credit reports. Does that change anything?

Thanks Again

Your welcome.

As to the second deed of trust, if the lender loaned money for the purchase of the home, it is covered by the anti-deficiency statute. The following is a California Supreme Court decision which supports that conclusion.

"Assuming for the moment there are two lenders who loaned money to purchase the home, each taking back a Deed of Trust or mortgage, in that case, even if the holder of the first deed of Trust wipes out all the equity on the property by their foreclosure, the second deed of trust holder is still barred from seeking relief directly against the borrower under Section 580b." (Brown v Jensen (1953) 41 C.2d, 193.)

However, if the second deed of trust is taken out after the purchase (i.e. HELOC), then it is not covered by the statute.

Re: Forclosure effects

Lel — Sun, 26 Jul 2009 01:08:22 GMT

As long as your second mortgage (a HELOC, I assume, since it's reporting as revolving) is purchase money, then it is non-recourse, and the lender cannot go after you for any deficiency. If, however, the HELOC was taken out after purchase, or if you took money out of the HELOC after the purchase of your home, then that debt is considered recourse and the lender can go after you for any deficiency.

ETA: illtakecreditforthat beat me to the answer!

Message Edited by Lel on 07-25-2009 06:08 PM

Re: Forclosure effects answered

Anonymous — Sun, 26 Jul 2009 01:23:37 GMT

Hello and Thank You Illtakecreditforthat and Lei

Again, I'm relieved. I feel like I have a future. Yes, the initial 1st and 2nd money was only used for purchase. I'm not happy about defaulting, but my problem was more than falling home prices. I purchased a new home on the site of a torn down home. Six months after moving in Sacramento County comes out and tells me the property is lead contaminated. Open case. The builder was told to inform the buyer but never did. At this time I could not afford Attorney retainers of $10,000 and other fees. So to protect my credit I continued to make my payments until everything around me was defaulted and their was no more point protecting my credit. I probably have one or two more months here and will be glad to put this behind me.

Thanks

Re: Forclosure effects answered

Anonymous — Sun, 26 Jul 2009 02:03:09 GMT

@Anonymous wrote:
Hello and Thank You Illtakecreditforthat and Lei

Again, I'm relieved. I feel like I have a future. Yes, the initial 1st and 2nd money was only used for purchase. I'm not happy about defaulting, but my problem was more than falling home prices. I purchased a new home on the site of a torn down home. Six months after moving in Sacramento County comes out and tells me the property is lead contaminated. Open case. The builder was told to inform the buyer but never did. At this time I could not afford Attorney retainers of $10,000 and other fees. So to protect my credit I continued to make my payments until everything around me was defaulted and their was no more point protecting my credit. I probably have one or two more months here and will be glad to put this behind me.

Thanks

Sorry about your situation. Have you contacted any lawyer referral agencies (i.e Sacramento County Bar Association) about referring an attorney who might handle your case on a contingency retainer against the builder?

Re: Forclosure effects

Anonymous — Sun, 26 Jul 2009 02:05:00 GMT

ETA: illtakecreditforthat beat me to the answer!
Message Edited by Lel on 07-25-2009 06:08 PM

Lei,

I beat you to the answer because you probably have a life. Good research and kudos!

Re: Forclosure effects answered

Anonymous — Sun, 26 Jul 2009 02:26:36 GMT

I did not look for those type referrels. Honestly, after an expensive consultation with a local Attorney, I sensed that this wasn't lucrative for a lawyer. I was kinda feeling against a wall and I had a demanding new job. And actually the whole first year after this arose, the Realty's in-house attorney strung me along saying he would deal with it. After the private consultation I found out time was running out. I purchased in 03/06. Do you think something is their? All I ever wanted was Recission.

Thanks

Re: Forclosure effects answered

Anonymous — Sun, 26 Jul 2009 02:28:45 GMT

I would call the Sacramento Couny Bar Association Lawyer Referral Servivce. Their phone number is (916) 564-6707. The cost is $30, but that includes an initial consultation with an attorney.

Good luck

Re: Forclosure effects answered

Anonymous — Sun, 26 Jul 2009 02:33:10 GMT

Can't hurt, I'll give them a call.

Either way, my most needy quetions were answered here and I feel better.

Thanks All