Georgia - deficiency judgements?

[arghh]

Hi All,

Wow - I am sooo glad to find this forum! I haven't had anyone to talk to about this...

I bought my current house with my fiancee (house in my name) and when we broke up I was left with a HUGE mortgage that I cannot pay. And then taxes went up bringing my mortgage payment up.

I make a good income but it's not enough. I have tried to get a roomate with no luck. Every month I pay my mortgage first and then borrow/scrimp/starve through the rest of the month. I cannot take care of myself or my kids. I end every month with a zero balance. I already know won't have the money for my next payment.

I have called Chase 100s of times over the past 8 months - I won't even go into the nightmare run around they have given me...

Chase said I "pre qualified" for loan modification because my mortgage payment is way over 32% of my income but if I want to find out if I fully qualify I have to take my house off the market (which seems counter intuitive). I called to tell them I can't pay next month and they transfered me back and forth between homeowners assistance & collections - both telling me the other is who I need to talk to.

Now there is no more money to borrow and my second job is about to expire... I need to get out of my house. I'm hoping to go for a short sale but my realtor has explained how hard they are to come by.

details
I'm in Georgia and it's my first home.
I have only one loan - it's with Chase / owned by Jennie Mae... I believe it's a HUD mortgage?
My house cost under $200k and has lost some value - probably only $10-$15k.
I put $0 money down so I think I'm still paying PMI?
House has been on the market since January with only 2 people coming to look at it.
My job is secure and I have less than $1000 in CC debt.

My worry is that if my house goes into foreclosure that I will have a deficiency judgement placed against me that I can't afford to pay off... I have read everywhere that they can't touch any of my assets (which would only be my car and any money I have in a different bank)...

so my questions are:
How common are deficiency judgements?
Are there any other financial consequences?
Can they see what's in my bank account?
Can the PMI company come after me?
Should I get a lawyer to advise me?

[The Professor]

Arghh:

I'll deal with your series of questions below:

How common are deficiency judgements?
While there is a suggestion on the Internet that in Georgia, lenders seeking deficiency judgments are not all that common, I would suggest that it depends on a variety of factors including the borrower's post-foreclosure ability to pay the judgment if obtained. The good news, as indicated below, is the lender must react quickly relative to seeking a deficiency judgment so you will know early on after the foreclosure whether the lender is going to seek to take such action.

"The foreclosure sale may not produce enough cash to pay the loan balance in full, after deducting expenses and accrued unpaid interest. In this case, the lender may be entitled to a personal judgment against the borrower for the unpaid balance. The lender is not required to seek a deficiency judgment and most commercial and residential lenders in Georgia do not seek deficiencies; however, it is allowed. Deficiency may also be obtained against any endorsers or guarantors of the note and against any owners of the mortgaged property who assumed the debt by written agreement. If any money remains from the foreclosure sale after paying the debt and other liens, such as the second mortgage or any mechanic's liens, expenses and interest, these proceeds are paid to the borrower.

If the lender seeks a deficiency judgment in Georgia, the lender must file for a deficiency within thirty (30) days of the foreclosure sale and follow the procedures outlined in OCGA § 44-14-161, or the claim for a deficiency is barred. The foreclosure sale must be confirmed and the deficiency judgment must be approved by a judge of the Superior Court in the county in which the sale occurred."

Are there any other financial consequences?
Absolutely. With the drop in your credit rating associated with the failure to perform on the loan repayment, followed by the foreclosure, you can expect to find it difficult to obtain credit and you stand a likelihood of seeing interest rates rise on your credit cards due to the "universal default" provision (Google that term for a better understanding of its meaning).

Can they see what's in my bank account?
There are privacy protections that limit what your lender can uncover. Best under these situations to establish a new bank account with a lender that you have not utilized in the past.

Can the PMI company come after me?
Yes, but there rights are generally limited and are obtained through a process known as subrogation. They effectively have the same rights (and limitations) as your lender.

Should I get a lawyer to advise me?
Yes. Find one who is familiar with Georgia real estate law and debt collection practices.

Daniel

[arghh]

Thank you for your response. I took your advice and spoke with a lawyer - he is almost certain that they wouldn't bother with a deficiency judgement since I am small potatoes compared to some.

I think I'm ok with the credit score drop. It's going down anyway with me racking up other bills. I have decided to choose food over credit score!

[The Professor]

Food is the good choice. You can't eat your FICO score. Don't let the fact that it is going down eat away at you.......

Daniel