Foreclosure University Foreclosure

Question: Looking at short-sale, foreclosure, or bankruptcy… only is Social Security Disability, VA Disability (100%), and disability insurance monthly payment… what should I do? can they come after any of my income in a deficiency judgement? will they even come after me? how will bankruptcy affect me… I currently have NO assets at all except for about 15,000 dollars in savings. thanks Tom from FLORIDA

Answer: -Tom, I have to make the assumption that you’re planning on or you’ve already stopped making payments on your home or you wouldn’t be asking these questions.  A short sale in my opinion is by far the best option if you can’t sell your home for what’s owed, rent it out or can’t work out something with the bank like a forbearance or loan modification.  A short sale will affect your credit but will eliminate a foreclosure on it.  If done properly will also eliminate the possibility of a  deficiency judgment.  If a short sale is not accepted an ultimately your home ends up at the foreclosure auction, then you will either receive a 1099 or they will file a deficiency judgment against you.  If they file a deficiency judgment and you can’t pay, they can garnish wages.  Depending on the amount of the judgment, this forces most people to file bankruptcy to eliminate the judgment.

Question: My husband and I are in the process of buying our first home and we are very confused as to what is going on and no one can help us. Here’s the situation…We put in an offer on a house and the offer was accepted after negotiations. Within 2 months the house went into a short sale because the owners did not have the money. Since then (it’s been 6 months) Bank of America has reappraised the home and put it into foreclosure (or so I’m told). Our real estate agent said that they can get the foreclosure postponed…What does this mean? Can they foreclose on a house that has an offer on it? Would this mean that the contract is no longer valid? I would appreciate any help you can give us. Thanks!

Answer: -  It sounds like you made an offer to the bank for less than what is owed on the property, which is a short sale.  And from what you say, the bank accepted the offer but there may have been some other requirements from the initial seller in order to get everything approved.  As a buyer, it’s not uncommon to wait for MONTHS and if you are patient enough it could even be a year or more before you are able to buy a property in foreclosure.  This is all because of bankruptcies, settling with 2nd and 3rd lien holders, uncooperative sellers, etc.  To answer your question, yes, the bank can foreclose on a property even if there is an offer because they are waiting for certain requirements to be met.  Yes, they can postpone the foreclosure auction as long as the bank sees a legitimate reason to postpone.  Don’t give up.  Keep working close with your agent, I’m sure they are on top of the situation…Just don’t be surprised in you have to wait awhile.  Most home buyers get frustrated waiting and move on to another home.  Good Luck

Question: My son is paying on his house that was foreclosed a couple/few years ago: why does this happen after someone has bought that house?

Answer: – Well it’s probably because he agreed to pay a certain amount over time to satisfy the debt.  It’s was either that or they probably told him they would file a judgment against him.  That’s my guess.

Question: MY PRIMARY HOME AND RESIDENCE IS IN CALIFORNIA BUT I OWN A APARTMENT COMPLEX IN ARIZONA. IF I LET IT GO TO FORECLOSURE, CAN THEY TRY TO TAKE MY HOME IN CALIFORNIA?

Answer: – No, unless you pledged it as collateral in order to qualify for your apartment complex.

Question: A bank that is foreclosing on a home holds a first and a second mortgage. The first alone is more than the home is worth. What will the bank typically bid at the sheriff’s sale? Would it bid market price minus second mortgage lien, because the buyer would still have to be paid off?

Answer: – Typically the opening bid is the amount you owe plus foreclosure fees, back payments, etc.  If someone bids at the foreclosure auction, then the highest bidder gets the property.  If no one bids, the bank takes back the property and sells it through a real estate broker.  If the bank does not get paid the full amount they are owed, they can 1099 you for the difference and count the loss as income to you so you have to pay taxes on it.

Question: How long after foreclosure do I have until I have to be out of my house?

Answer: -Well it depends on your states laws as to how much time you have until you have to vacate your home.  If you live in a trust deed state where the redemption period is before the auction, then you’ll have a few weeks to a month to leave your home.  If you live in a state where foreclosure is filed judicially, typically the redemption period is after the auction so again depending on your states laws and redemption period after foreclosure, it could be a few months up to six months.

The best way to find out how long after foreclosure until you have to be out of your home is to call up a title company and ask them or you can visit your State Laws page and see when you redemption period is.

Question: I had an investment property go into foreclosure 9/1/09 in Arizona, Maricopa county. The home has a first mortgage for 160k and purchase money HELOC for 20K. Neither loan was ever touched after the purchase. On Aug 17, 2009 Countrywide sent me a letter informing me the HELOC will have a new servicer Real Time Resolutions, INC.
On 9/5/09, I received what seems to be an attempt to collect from Real Time Resolutions, INC. it states I have, “30 days to dispute the validity of this debt or any portion thereof, this office will assume this debt is valid.” The payoff they are requesting is $ 21,193.74 which I am assuming is the HELOC plus fees.

Is this allowed or legal, can a new servicer attempt to collect on the Heloc since the home has already gone into foreclosure? Should I meet with a lawyer or am I okay ignoring these letters?

Please advise and thanks for your time,

Aaliyah, Gilroy CA

Answer: -This is normal protical and yes since your loan was “sold” to a new servicer, they can try to collect the debt.  So they will send you certified letters in the mail every month telling you how much you owe and that it’s an attemt to collect the debt.  You don’t need to respond unless you are disputing the action and I’m sure they will try to call you every week and threaten you to pay…or else.  By sending these letters, it gives them the right to proceed with foreclosure if they want.  However, we all know they won’t unless there is substancial equity in the property.  More than likely they will just write it off as a loss and 1099 you for the difference.

Question: I am in California. I missed my first payment Sept 1. I got a letter telling me to bring things current by Dec 16th. What happens now? I am not sure when the period of redemption begins? Was I already in it? Or does it begin Dec 16 and go three months? People tell me different things and I am a single mom of four kids and need to plan. Thank-you. Nomi

Answer: -Nomi, the California redemption period is approximately 3 months and begins after you receive the notice of default.  Typically you won’t receive a notice of default until you are at least 3 months behind on your mortgage, especially now, banks are slower issuing the notices of default because they don’t need any more inventory.  So you’re about 6 to 8 months out from foreclosure, if it goes that far, so you do have several options as a homeowner.  Unfortunately Obama’s HAMP program hasn’t turned out the way we had all hoped, however there are alternatives.  Assuming you want to stay in your home, one option is a loan modification. This is something you can do yourself or you can hire an attorney to do it for you…just be careful in choosing the right attorney that really does care about your situation and will guarantee their work. Another option is to sell your home, if it has equity, and move into something smaller or less expensive until things pick up again. If your home does not have equity and a loan modification doesn’t work, you could try to do a short sale where a buyer offers the bank less than what is owed on the property. Whatever you do, don’t give up.

Question: As part of an estate I have a 2nd interest in a mortgage and the 1st mortgagee has now opted to foreclose. Will my interest be paid or do I only get paid if the property sells for more than the first mortgagee is owed?

Answer: -When the property goes to foreclosure, everyone is paid based on lien priority.  If you are in 2nd position and the 1st is foreclosing, the opening bid will be the loan amount on the 1st plus a bunch of fees.  The only way you’ll get paid is if someone bids more at the auction than the opening bid.  Anything above the opening bid will go to whoever is next in priority.

Question: After the bank forecloses and sells my house, can i get it back?

Answer: -It depends on your states foreclosure procedures.  Some states have a redemption period before the auction.  Other states have their redemption period after the auction.  If you live in a state where the redemption period is after the auction, then yes, you can get your home back.