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Has anyone actually been hit with a Deficiency Judgment on a HELOC or Mortgage after a short-sale or Foreclosure?

Date: Sun, 04/18/2010 - 19:04

Submitted by dantheman
on Sun, 04/18/2010 - 19:04

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Total Replies: 4


Very simple question to which there is almost no information on the web...


Has anyone actually been hit with a Deficiency Judgment on a HELOC or Mortgage after a short-sale or Foreclosure? Or do you know of anyone who has?


Some people do settle the seconds to avoid the possibility. But I cannot find any instance where a deficiency has been sought in court. My home had been my greatest asset and over 3 years has turned into my greatest liability. It was valued at $610k in 2006 and in 2010 Zillow had it at $250k, in suburban St. Louis.


I think you would need to confirm it through your state laws. In some states, deficiency judgement can't be pursued in case of non-judicial foreclosure. However, in some instances the lender can still go after the borrower, even in case of non-judicial foreclosure, if there is significant assets to go after. But, if the first lender agrees to a non-judicial foreclosure, where no deficiency judgement can be issued, the second lender would have no recourse.

Anyway, since I ain't an expert in mortgage, you must be talking to an atty about it.


lrhall41

Submitted by SC on Sun, 04/18/2010 - 23:38

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Quote:

Originally Posted by SC
I think you would need to confirm it through your state laws. In some states, deficiency judgement can't be pursued in case of non-judicial foreclosure. However, in some instances the lender can still go after the borrower, even in case of non-judicial foreclosure, if there is significant assets to go after. But, if the first lender agrees to a non-judicial foreclosure, where no deficiency judgement can be issued, the second lender would have no recourse.

Anyway, since I ain't an expert in mortgage, you must be talking to an atty about it.



In my State (Missouri) and many others, they have the right to seek a deficiency judgment on a second when the first forecloses and the second is not satisfied...regardless of how they foreclose.

But, my question is very pointed. I cannot find anybody who has had a deficiency judgment filed against them for a HELOC after a foreclosure on the first.

Anybody?????


lrhall41

Submitted by dantheman on Mon, 04/19/2010 - 12:30

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I'm in Virginia. I just found out that my Heloc wants $50K to settle $100K debt in a short sale. $10K from the 1st and $40K from me on a 15 yr note. The 1st isn't asking for anything from me. I said that I didn't want to pay it and may not go through with the sale - I was planning to declare bankruptcy. Because I have high income and a 401K (even though I've got extremely high debt) they basically guaranteed that they'd come after me with a deficiency if I don't sign and make good on the note or if I foreclose or declare bankruptcy. I just contacted a lawyer to get advice. It should be interesting....


lrhall41

Submitted by on Tue, 05/04/2010 - 19:22

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One very very important thing to remember. In a short sale you can negotiate that this is full and final payment. In a foreclosure you have absolutely no control. So make sure you are working with a short sale specialist and they will know how to get this negotiated out.

A client of mine had sent me an article around last November about banks going after people 2 years after they had short saled their homes. These people were shocked - they thought they were done with it, but the real estate short sale person did not negotiate this into their agreement and they still had the right to collect.

One other thing to do if you decide to stay in the home and negotiate the 2nd is to make sure you get a Reconveyance of their trust deed. Otherwise you may go to sell the house 10 years from now and find out you still have to pay that off to clear the title.

I would also recommend that you get in contact with a real estate attorney - not the guy or gal who did your will, but one that actually specializes in real estate. That will be your best bet to get answers specific for your state.


lrhall41

Submitted by Debt Free to Be on Thu, 05/06/2010 - 08:09

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