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Foreclosure

In Arizona I have come across lenders who talk homeowners into short selling their home vs. signing a deed in lieu.

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Question: In Arizona I have come across lenders who talk homeowners into short selling their home vs. signing a deed in lieu. Why wouldn’t they want the deed in lieu? What’s in it for them if the homeowner does a short sale?

Answer: – With a short sale, the home gets sold even though they may take a larger loss upfront. With a deed in lieu, they take back the property, which looks bad on the books and now they have to find a buyer. In a market like this, they would much rather take a for sure sale and not have to worry about selling it some time in the future.

We own property in Idaho. If we “walk away” from the Idaho property, can they garnish our wages?

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Question: We own property in Idaho through an interest only loan. We had planned to sell our home in California this year and pay off the land in Idaho with the money from the sale. Now the California house is worth less than we owe on it and we are stuck with an interest only loan on property in Idaho. If we “walk away” from the Idaho property, can they garnish our wages for the amount of the loan?


Private investor holding a lien, how do we foreclose?

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Question:  We are the mortgagee of a property in Michigan though we live in another state. The mortgagor who in turn is renting the house to somebody has stop paying us. We are in the process of foreclosing the house. My questions are:

1) In the Mortgage contract, it states that “we, the mortgagee have the right to foreclose the property just by posting an advertisement on the newspaper”. I do see in your Michigan Foreclosure Law that, we need to include a Power of Sale which permits the property to be sold by public auction. Do we have a right to just foreclose the property but NOT sell it to the public via auction since it will be sold for so much less? We are planning to sell the property thru a real estate broker after the foreclosure. Or is the Public Auction Sale Mandatory if the foreclosure is only thru advertisement?

2) Can we as the mortgagee purchase insurance for this property? We’re worried what if something happens to the house then we’d totally be zeroed out. I’ve ask State Farm and was informed that since we do not live in Michigan, we cannot purchase insurance. Can you please suggest where we can purchase Mortgagee insurance. I know banks are able to do this but for us individual investors, what are our recourse? Can you name some company around Michigan state?

3) What happens if the mortgagor files for bankruptcy, can we still get our property back since we are the only mortgagor and since he is not using this property as his primary residence but is renting it out?

ANY HELP/ADVISE WILL BE GREATLY APPRECIATED. THANKS!

Answer:

  1. Yes you can foreclose on this property and if someone actually bids, they will pay full price for the home.  If no one bids, like you are assuming, then you take back the property in which you already own.  It might be easier if you can just get him to “deed” the property over to you so you can avoid the whole foreclosure process, which is very time consuming.  Then he can avoid “foreclosure” on his credit report as well.  It would be a win for him… and you I guess in way because now you can list the home faster.
  2. This is something you’ll have to research more in your local area.  Most banks require homeowners to have insurance in the event of a catastrophe so they can rebuild the home.  So it can be done.  This is your asset, you need to protect it just like anything else of value…
  3. If he files bankruptcy, then he will either keep the home and continue his payments to you or list the home in the bk and the home goes back to you.  Again, if you can get him to just deed it back to you “deed in lieu” it will save everyone a lot of time, headache and money.  Then everyone can get on with their lives.

The bank for the second mortgage is listed as the owner of the home. How is this possible?

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Question: I have an interesting situation, the house I want to invest in appears to have a first and second mortgage. It appears the owners have already left. The second mortgage has already foreclosed and the 1st mortgage doesn’t go to auction until later. The bank for the second mortgage is listed as the owner of the home. How is this possible?

Also, since the first mortgage hasn’t foreclosed yet and the second mortgage has is it possible to make an offer to the first mortgage and if accepted own the property even though the 2nd is shown as owning the house on the county assesor website?
Thank you

Arizonas (anti-deficiency state) law when foreclosed on

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Question: I have a home in Arizona [anti-deficiency state] that was purchased with an 80/20 loan. I have never refinanced the loans. We were in the process of negotiating a short sale, got approval from the first [with Country Wide] and they agreed to pay the 2nd [Citi] $3k, when we went back to Citi to get final approval we discovered that they charged off the 2nd and sold the loan to a subsidiary which has now turned it over to an attorney that claims they are going to file a deficiency judgement against me and collect the debt. They claim that since it was a second mortgage and it was charged off that they can do this. It was a second but it was a “purchase money” loan. Can they come after me for the deficiency?

If the second lienholder has foreclosed on a primary residence and has not paid the senior lien holder (which is in good standing), can the 2nd lien holder evict the primary residence from their property?

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Question: If a 2nd lien holder forcloses, but the first is current, can the 2nd force the resident to leave the property if the first has not been paid off or even notified by the 2nd that they have forclosed?

Answer: -Yes, technically they can, because they own it now.