Foreclosure University Blog

Question:  I have a house that is currently going through the short-sell process. I have an approval letter for the first and the second. The second is stating “BAC Home Loans Servicing, LP and/or its investors may pursue a deficiency judgment for the difference in the payment received and the total balance due, unless agreed otherwise or prohibited by law, if the short sale closes on the loan referenced above.” I live in CA and the second was an home equity line of credit (HELOC). We have already agreed to pay $2500 to the second and they have agreed, but they are still including this language in the short sale approval letter. What rights do they have to sue us later on?

Answer:  - It depends on what you agree to as part of the payoff. This is where you need to make sure you ADD to the payoff letter that the $2500 is for “full satisfaction” of the loan. See there are 2 types of payoffs. 1 is a “release of lien” which means you pay the mortgage company $2500 and they retain the right to still come after you for the deficient amount. The other payoff is a “satisfaction” which means “paid in full” – they give up their right to come after you for the deficient amount (which is called a deficiency judgment). All they can do is 1099 you for the amount lost of which you can file form 982 and in most cases claim insolvency and negate the 1099. If it was your personal residence, with Obama’s new laws in place, you may not have to pay anyway. So whatever you do, please please please get the satisfaction. Sometimes if they don’t agree to a satisfaction of loan, you’ll just have to pay a little extra more to get that piece of mind.

Question:  I have a home equity line of credit and am delinquent 1200. The credit union has a copy of the mobile home title, but is not listed as security interest holder. I have made arrangements to catch up the past due balance. We have not signed any mortgage papers. Can they foreclose based on a copy of the title. They want us to add them as security interest holders and said that also included our tax lots.

Answer:  - Anyone can foreclose if they have a lien on your property. If you borrowed money from a HELOC that is attached to another property to buy this mobile home, then the credit union will foreclose on the property attached to the lien that was pledged as collateral for the loan.

Question:  Is your company associated with the Better Business Bureau? I am seriously considering getting your program and getting into real estate. I know now is the best time and I am very new to this so I want to make sure I get the very best help and training so I can be sucessful at it.

Answer:  -

No we are not listed with the Better Business Bureau… We have mixed feelings about the better business bureau. It’s good in the aspect that it helps consumers determine if a company is good or not, however, the ratings can be bought off. If I have several complaints against my company, all I have to do is pay them large sum of money to get rid of it, therefore manipulating the system. We have a C rating only because we haven’t taken the time to apply for a rating and probably never will. Do we lose sleep over it? No. Does it hurt our business at all? Not that we can tell. Anymore, the Internet is full of complaint boards, ripoff reports and such that you would know if a company is good or not. Just make sure there is a money back guarantee on anything you purchase online and if you don’t like it… get your money back.

Question: We have a mortgage with 20% of the amount in a HELOC with both parts of mortgage through Wells Fargo (May 2007). The house value is continuing to decline below the value of the first mortgage. If we walk away, short sale or foreclose…can the bank try to collect on the HELOC? We live in Oregon.

Answer: -Absolutely… you should always try to work something out with the bank. They may not make you pay the full amount but will require you to pay something in most cases.

Question:  My mortgage company, PNC, has accepted a short sale offer on my house. I owe approximately $149,000 and the accepted offer is for $115,000. Coinciding with my application for short sale, PNC moved forward with foreclosure. The court, in Pennsylvania, granted judgement in foreclosure for the owed mortgage balance plus legal fees. Based on what I have read, because I do not have a second mortgage, HELOC and have not refinanced I am at low risk of being sued for the deficient balance after short sale. My concern is that PNC will, however, pursue me for legal fees involved with the foreclosure even though the short sale was accepted post hoc. Can you provide any insight or advice?

Answer:  - Most of the time banks won’t come after you for just legal fees, if they come after you, they will file a judgment for the amount they lost because it costs them a great deal more to pursue someone for a deficiency. So unless they are confident you can pay, they typically will 1099 the homeowner instead. And if you’re like most homeowners, the debt relief act will counteract the 1099 or you could claim insolvency. Best to talk to you accountant if you have specific questions.