by ThomasCovenant 12 Replies latest jw friends
Hi
I'm not sure if I heard correctly on a BBC Radio program this week but someone may have said that in the U.S. if you go behind on your mortgage payments and you simply hand in the keys and give up the home that's it. In the U.K. if you do, I believe you are still liable for the shortfall owing.
e.g. Mortgage owing = 100,000. House repossessed and sold by bank for 60,000. The bank still pursue you for the 40,000 shortfall.
Is this the same in the U.S.?
Thanks
Thomas Covenant
Sometimes......but right now there are so many foreclosures and people walking away that it takes more money for the mortgage companies to go after people then it does to just write it off.
The market here is saturated with foreclosures. Mortgage companies just don't have the time or money to go after everyone.
M
hey thomas,
i can`t believe this. you`re from my birthtown!!!! i used to live in maindee for a while.
best regards from germany, adriano
In the US you can walk away from any debt. The property will be repossessed and your credit rating will be trashed for seven years.
Future debts will come will outrageous interest rates.
In the US, your Promissory Note and State's laws will likely determine the outcome. You have to read the fine print of your loans and look at the state's deficiency judgement laws.
If you have a "recourse" note, the bank can come after you for the difference.
For example, most mortgages in Florida are "recourse". First, the bank has to file a foreclosure lawsuit. That can take as little as 4 months to get through the system, but can sometimes take over a year (depends on how fast the courts are moving in your area). The property either goes back to the bank or is sold to a third party at the courthouse. If the bank is shorted funds (whether the first or second mortgage), the bank then files a "deficiency judgement" lawsuit against you personally. In Florida, the banks have five years from the date of the foreclosure sale in which to get a deficiency judgement. Then, the bank has 20 years to go against you personally. They can garnish your paycheck, levy on bank accounts, get personal assets, bank accounts, and other property you own. Even if you do a short sale, the bank can do the deficiency judgment route. One of the greatest ways to get out of the deficiency judgement route is to make the bank sign a release.
Banks are generally not pursuing this route at the moment, but I think as soon as they (or their attorneys) dig out of the foreclosure mess, they will get the deficiency judgments. Then, they will be able to sell the deficiency judgement to collection companies for pennies on the dollar.
It is my understanding that California mortgages are generaly "nonrecourse". Meaning, that the bank can only come after the mortgaged property.
In short, anyone on this board who is facing foreclosure NEEDS to get an attorney. There are many ways to fight this, and a good attorney can do it for you.
You can also hand your keys in...it's a deed in liue of foreclosure. But, most people aren't doing that. Why not? With foreclosure, you can at least live in the house another 6 months to a year without paying a dime.
Oh, I forgot to add even more bad news...
Don't think that you can claim bankruptcy and automatically get out of the deficiency judgement. Depends on federal, state laws, and the bankruptcy court.
http://www.bankruptcylawnetwork.com/2007/08/16/bankruptcy-discharge-of-deficiency-judgments/
How can you lose your home?
It's not exactly wallet sized.
"to lose one's home is Carelessness" to paraphrase Lady Bracknall
HB
Take a look at my private post.
r.
My dad lost his home last summer. Then his truck. He declared bankruptcy and is living in a rental. This was the house I grew up in. Good news is in a few years he may be able to buy another house. The old house was a white elephant with so much wrong with it I can't even begin to tell you. He would have never been able to sell that house. Believe me it was really bad.
