Mortgage lenders pursue homeowners
http://money.cnn.com/2010/02/03/real_estate/foreclosure_deficiency_judgement/index.htm?source=patrick.net
Homeowners may be on the hook for the difference of what the house sold for at auction and what they owed on the house according to this article.
“deficiency judgments” are ticking time bombs that can explode years after borrowers lose their homes.”
“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.”
“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.”
“The parties who bought those notes wouldn’t have paid money for them unless they had the intention of acting,” Zaretsky said.”
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“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.”
“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.”
As a homeseller you should realize that many agents may just try to get a release of lien on the 2nd mortgage. It’s recommended that you get a full satisfaction on the 2nd mortgage. This often takes a unique way of doing a short sale in order to have enough money leftover to be able to pay off the negotiated 2nd. Please call to find out how to do this.
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