Question: I am underwater on my mortgage. A friend stopped paying mortgage and rented his home. He said it was OK as long as I owned home for more than 1 year. Not really OK….just not illegal or criminal. Is this true?
Collections from Foreclosure
Question: We foreclosed on our home in California in 2010,it also had a equity line of credit that has a third party now calling trying to collect. What options do we have if any?
Answer:
Well the best option is to settle with them. Offer them a small payoff amount. I’d start at 10% of the loan amount. Your biggest challenge, as with all homeowners, is that banks automatically assume you don’t know what you are talking about. So in most cases it’s hard to negotiate a settlement with them. You are almost always better off having a 3rd party individual, like an attorney, talk to them. Be sure to let them know you are prepared to file bankruptcy because your attorney advised it. They get nothing if you go that route so many times they are inclined to accept any offer you throw at them that is reasonable.
home equity line default
Question: I work for the bank that holds my home equity line. I do not want to default on it. (It is only a 10k heloc) Can I just continue to pay on it if my mortgage loan is defaulted on?
Answer: You are free to continue to pay on it if you want. However, you have to realize that sooner or later, the bank in first position will foreclose on you. And if there is no equity in the home, more than likely your 2nd will be wiped out, regardless if you made your payments or not. To me, it doesn’t make sense to make payments on the 2nd if you are not making payments on the 1st mortgage. In the end, your bank will still want the $10k that you borrowed, which you can gladly workout some sort of settlement with them until it’s paid off. Offer them payments over 10 years like you agreed on or give them $2000 upfront as a full payoff. They’ll treat it just like any other defaulted loan even if you work there. What you do want to try to avoid is a deficiency judgement. You want to try and get a full satisfaction so they can’t file a judgment against you.
Used HELOC as down payment on house
Question: I bought a house in 2005. I got a mortgage on the house and put down 10%. The bank also gave me a heloc at the same time on the same home. I did not receive any of the $…the bank took as further down payment. Looking back it doesnt make sense that the bank did this. My mortgage broker was the one whom recommended. Was this legal?
Can you buy a house and then short sale your upside down house?
Question: can you get another loan buy a house and then short sale your upside down house. is it legal?
Answer:
This actually happens more often then you would think. Homeowners that are upside down and have negative equity, feel it would be better to just let their home go. Most refer to it as strategic defaulting. There have been ideas floating around to try and combat this action because it happens quite often. But before their credit is bad, they go find another home, sometimes smaller, more affordable, usually at or under market value and lock in the rates, then default on the other property. Their credit goes bad and in some cases may have to file bankruptcy, but it’s like they are starting fresh again and they still own a home that won’t take decades before they have equity again.
Filing for bankruptcy. My second mortgage, now my first?
Question: I am in the process of filing for bankruptcy. I am filing chapter 13 so I can have my second mortgage, which is a line of credit through Bank of America, dismissed. My attorney just called and said that because my first mortgage was obtained after my HELOC, only because we refinanced, that the court may deem the HELOC as my first mortgage. Is this possible?