Foreclosure University Questions

Question: i just received a letter asking me to submit my tax info. Should i do that and still make the payment to get caught up?

Answer: - I guess it all depends on what you are trying to do. Are you trying to work out a loan modification or forbearance agreement? Why are they asking for tax info? Depending on the lender and how far you are behind, they may not accept your payment to catch up. I would call your lender to find out why they need your taxes.

Question: I just purchased a short sale home in AZ. GMAC had the 1st position and Indy Mac had the 2nd position. We signed and the short seller signed. The HUD was sent to title and it was registered and released. However, the short seller and broker says we still owe Indy Mac 15K and won’t get the home. Can this be possible?

Answer: -Sure, if that’s what you negotiated with them.  On the HUD it should show the amount each lender will be receiving.  The 2nd always wants something in order for them to release the lien or else it makes no sense for them to it.  They’d be better off letting it go to auction and hope someone bids past the opening bid.   The 1st typically wants to know how much the 2nd is receiving because they don’t want them to get anything, which is why sometimes it has to be handled outside of closing.

Question: My primary residence is in Arizona, my secondary ( a rental ) is in Florida. I’m stuck in an interest only loan that has me paying on more than what the home is worth. If I should have to go with foreclosure on the 2nd home as a last resort can they take away my primary residence?

Answer: -It depends on what it says in your closing docs. Most lenders only worry about the property on hand and make sure it’s sufficient collateral to support the loan being made. So most people don’t have to worry. I would only worry if a judgment is filed against you after the foreclosure and you have several properties in your name.

Question: state of hawaii
if my house forecloses, can anyone garnish my wages or take money from my bank account/401k?

Answer: - I suppose they could if that’s what it said in the contract.  Typically they don’t.  Your lender made the loan based on the property being sufficient collateral for the loan.

Question: I live in California; if my home goes to forclosure and I have a an equity line of credit, will the line of credit, $150,000 also be wiped out? The line of credit is secured by the property.

Answer: -  Yes, as long as the line of credit is attached to the property.  Most homeowners have a home equity line of credit that takes a 2nd lien position on their home.

Question: If a judgment has been passed and your sell date is February of 2009 can you still try to sell the property before the sell date? Or does the bank now officially own the property?

Answer: -  Absolutely you can sell your home.  You should have a statement from the lender showing you the full payoff amount.  This will include all late fee, attorney fees, foreclosure fees, etc.  As long as you payoff everything, you can sell.  The only time you can sell is if you’re in bankruptcy.

Question: I know that Idaho allows Deficiency Judgments. I’ve heard that Idaho also has Anti-Deficiency laws and that they apply only to 1st mortgages on a primary residence. Is this true? What criteria needs to be met to be protected by the anti-deficiency law in Idaho?

Answer: - It’s so hard to say because every state is different.  Typically states with anti-deficiency laws apply only to 1st mortgages, and it must be your primary residence.  It may also depend on what type of loan you have.  In Arizona, despite the anti-deficiency law, if it’s a VA loan, they can file a deficiency judgment.  In most cases throughout the U.S., lenders very rarely file deficiency judgments on 1st mortgages, they just take back the collateral.  Lenders in 2nd position are more likely to file deficiency judgments because they are the ones taking the biggest losses.  And even still, most of them will 1099 the homeowner.  One of the best things you can do is have someone negotiate a short payoff or a short sale on your home and have the lender agree to a “satisfaction” which means the lender is giving up their right to go after the homeowner for the deficient amount.   If they only agree to “release the lien” then they still have their right to file a deficiency judgment.

Question: I have someone who is willing to give my husband and me a hard money loan but wants a $7500.00 deposit. Is this typical for this type of loan? We are just learning about this type of loan and we have no up front money to put out. That is why we were looking at this type of loan. We were very disappointed to hear this. Are there other hard money lenders that will not require any up front money? Billie

Answer: - Yes and No. Because of what’s happening in the economy today, more and more hard money lenders require “skin in the game”. Especially if you are new to the investing game and don’t have a relationship with the company yet. It’s getting harder and harder for individuals to qualify for loans. So yes, many hard money lenders require something. However, there are some still out there that will lend based on the property along with financial’s and credit. The challenge is finding them. One of the best things you can do is visit every title company in your area. Find the best escrow officer from each title company and see if they have referrals. Investors always find the good title companies with creative escrow officers because it makes our jobs easier. Many investors have money and are always looking for good deals. Talking with the right escrow officer will help you find the perfect hard money lender to help you. And a lot of the time, it’s all word of mouth or referral so you can’t find them in the yellow pages.

Question: If I hold the first and the second is foreclosing
what can I do to ensure that I will still be paid?

Answer: -Lien holders get paid based upon lien priority and there are a few “rules”.  Lien priority is based upon when things are recorded.  So if you are in 1st position, you will get paid before someone in 2nd, 3rd, etc.  So if they 2nd forecloses and no one bids, they have to pay off all senior lien holders.  Property taxes are the only exception, they always get seniority over everything no matter when they are recorded.

Question: Idaho laws? Balance at time of foreclosure 465K, opening and closing bid 247,500 sold back to lender. How many days to file deficiency judgment and 1099? Can the lender do both, send a 1099 and file deficiency judgment?

Answer: - Typically they will choose one or the other. Not both.