Foreclosure University Blog

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.

Question: Close to signing a short sale agreement between my first(Countrywide) and second(WAMU). this is a rental, Countrywide has settled, second will accept $7000 to release the lien, however they still want to come after me for the $93,ooo balance. Broker(advocate) was told that WAMU has already charge of the second as bad debt. Can WAMU sell the note to a collector that will still come after us for the full 93,000K. Been advise to try to settle with wamu at an agreed amount and make $100/MONTH PAYMENTS TO LIMIT LIABILITY. Any other questions to consider? If the house goes into foreclosure, Countrywide does a trustee sale are we finished with wamu too?

Answer: The best thing you can do is ask for a satisfaction of the loan.  Ask them how much they need to “satisfy” the loan.  Typically you’ll have to pay more for a satisfaction of loan, but they give up their right to come after you for the difference.   If they’ve agreed to “release the lien” then yes, they can and usually will come after you for the difference.  If the home goes to foreclosure, you can bet WAMU will file a deficiency judgment because it sounds like that is what they are planning to do anyway.  So, no, you are most likely not finished with WAMU.  The best thing you can do is try to get them to accept a satisfaction.  Good Luck.

Question: who do i pay rent to,when the apartment ,is in fourclosure

Answer: -You’ll have to work that out with your landlord. I personally knowing if the property was in foreclosure would have a difficult time making payments to anyone because they are causing me an inconvenience by moving. If I was renting and knew the property was in foreclosure I would approach the landlord and ask him to sell it to me (that is if I knew I could rent it out or wanted to live there). Then I would ask to take it over “subject to” the existing loan. The loan would stay in his name but he would have to deed the property over to me, that way I control it. Then I’d have to cure the loan and I’d have to be creative in doing so. I’d either use a credit card, family member or lease it to someone else and require a large enough down payment to cure the loan and put $5,000 in my pocket. So now I own a piece of property, I have $5,000 in my pocket and I have no risk. Worse case I walk away with 5K and I have to move which I was going to have to move anyway.

Question: What questions should I ask before making an offer on a short sale?

Answer: - I hope I understand your question… You want to ask as many questions as you can to help you identify what the property is worth and their motivation. I like to start out with some basic questions to get a feel for the property, then ask additional questions when I show up to the property. Here are some you can start with.

1. Are you the owner?
2. What’s the house worth?
3. How did you get to that price?
4. What do you owe on the home?
5. How many payments are you behind?
6. Have you received a NOD?
7. Has the lender set an auction date?
8. What do you want from your home?
9. What’s the address of the property?

Now go verify the information they gave you and see what it’s worth to you.

Question: Can you legally rent a home to someone knowing your home is in foreclosure

Answer: -That’s pretty much considered rent skimming, which is illegal. Where you are using the rent money from the rental for personal use and not applying it towards the loan. Maybe you can get away with it if you disclose to the renters that the property is in foreclosure, you’re not planning to make any payments, and they’ll have to move out when the bank forecloses on it. Do a search online for “rent skimming” and you can make your own decision on it. As for me, I’d stay away from it.

Question: What happens to an investment property foreclosure that’s under your personal name? Can they go after your personal assets, home, etc? Under Illinois law.

Answer: -As with all states, it depends on what’s in the agreement with you and the bank. Just look at the closing docs and it should specify what happens. For most lenders, the property is sufficient collateral for the loan or they wouldn’t be loaning you the money in the first place, so they don’t come after you for anything else. However, since I don’t invest in Illinois nor am I familiar with all their laws, you may want to get a 2nd opinion with a local attorney.

Question: If the total LTV between the 1st and 2nd liens add up to 100% or less, if the 1st lien is up to date and the 2nd lien is past due for more than 2 months, is there any way to add the 2nd to the first, even if they are with two different lien holders?

Answer: -NO. You’ll have to refinance. If the property is at 100% LTV already and the lending industry being what it is now plus having a few lates on your credit, chances are it will be very challenging to refinance this property into 1 loan.

Question: If the primary residence has two mortgages and the first one is up to date, but the second is not, can the 2nd lien holder start forclosure process?

Answer: -Yes, any lien holder can initiate the foreclosure process to get paid what’s owed them. However, many junior lien holders wait longer before they initiate foreclosure because they are responsible to payoff any senior lien holders. So at the auction if no one bids, the 2nd has to payoff the 1st. This is why if you are bidding at the auction, it’s critical to know who is foreclosing because sometimes they start the bid a what’s owed the 2nd and you think you’re getting a steal. Come to find out you have to pay off the 1st as well.

Question: In the state of Idaho can a lender obtain a deficiency judgement on a Trustee Sale or must they use a Judicial Foreclosure?

Answer: -Yes, lenders can file a deficiency judgment no matter if it was foreclosed judicially or non-judicially. Typically it’s more common to see deficiency judgments on properties foreclosed judicially but I live in a state where trust deeds are the primary security instrument and deficiency judgments are filed sometimes. In most cases they 1099 the homeowner.