Deficiency Judgments!

[needhelp-GA]

kent302 and Enough Already: Thank you for your comments and inviting more feedback on my attempt to settle the debt.

Prof. Shays: Can you help me with my debt-settlement request paragraph. I posted it earlier in this thread. The paragraph below is included in my hardship letter I plan to send to the HELOC lender before foreclosure. I'll wait until Monday to send it since I can't seem to get the fax # for the Wachovia Loss Mitigation Dept. anyway.

I definitely will keep everyone posted on the outcome. I fear that the lender may just possibly sell the loan as a reaction to my letter, but we'll see. After seeing the recent posts, I think it is a risk not to keep paying until we get it figured out. Right now, we are 30 days late.

Thanks again.

Paragraph Quoted from my earlier post:

We would like to negotiate a debt-settlement figure that we can could borrow from family. If you sell the loan to a debt-collection agency, you will not get that much money for it. The foreclosure will release the lien and probably won’t have enough money to pay much of your loan due to the high number of foreclosures and our rural area. We hope you are willing to allow us to negotiate with you to settle the debt. We offer $5,100 at this time and must have in writing that the debt would be considered paid with no further liability, recourse, or collection attempts. There would have to be no 1099-C since it is a “debt settlement” instead of “forgiven.”

Please correct any erroneous information or possibly make suggestions on how to improve it. Thanks so much.

[trappedincali]

Originally Posted by kent302

"Some Second Mortgages Suing Homeowners To Collect Notes Instead of Foreclosure or Deficiency Judgment"

This brings up a question that's been on my mind. I don't mean to add to the worries of people in this situation, but every path involve carefully evaluating consequences and to making the best decision.
Bear in mind, I am not making any moral judgement here, the decade long excesses of the FI-RE industry had largely brought this mess upon all of us and themselves.
But why would a business entity that will be looking $100's K of losses due to a mortgage default/foreclosure not sue the homeowner for compensation if there is legal grounds to win enough to cover the legal expenses to do so?
In an hypothetical example, if I have refi loans cashed out, now I'm 250K upside down. And if I have $250K in stocks or home eq in a rental house. Furthermore if I have an income stream of 100K/yr. The bank can spend 50K to hire lawyers to sue me to get 100K or more in recourse.
Seems like also a straigth-fwd business decision, what is keeping them from doing it?

-kent

Most banks and mortgage companies are not equipped to handle this type of action on a large scale, nor is it a big part of their business model. With cutbacks and the downturn in the economy, many do not even have the manpower to initiate such actions. They sell these unrecoverable loans in bulk to collection agencies, who's sole purpose in life is to assess and collect, and they most certainly will. I believe we have not seen a tremendous effort towards this yet, as the lenders are simply overwhelmed with the amount of work associated with the current situation (e.g. mass foreclosures, new government plans, etc). This is an unprecedented time in real estate history, and changes are happening at an alarming rate. The surge of deficiency cases and personal bankruptcies is only just beginning.

[needhelp-GA]

Just reporting back as promised. When I contacted the HELOC lender for a debt-settlement, they said we are to pre-mature since we weren't late at that time. It has to be in Collections Dept. first. It actually was late, but not late enough, I guess. They said to call back in a month.

In the meantime, we received an offer from a family this week for a short-sale. Most likely, the lender will kick it back since it is way too low. However, the Buyer is hoping for a counteroffer and is willing to pay more. That will start the ball rolling for negotiating with the HELOC lender (they still won't get much from the sale even if the Buyer pays more).

Also, it will cause 1st Lender to order a BPO (Broker Price Opinion) on the home at their expense instead of my having to order one. A copy of that will help me later for proving no assets if we have to prove insolvency.

So, that's where we are. Thanks a lot for this great forum.

[avwill]

For all of you who are wondering about the time frame of foreclosure and deficiency judgments....let me tell you about my experience. I had an 80/20 loan in Florida. Stopped making payments on both in July of 08. Now, May of 09, Chase has still not foreclosed. They did, however, sell my 20 (HELOC) to a collection agency and I started receiving phone calls/letters in February 09. March 1 I sent the collection agency a certified letter stating that they needed to stop calling me and verify my debt. It is now May and I am not getting any phone calls and they have not verified my debt. I am hoping they are unable to find my loan documents which will help in them not being able to come after me. Because of predatory lending, many documents have been lost. Do NOT agree to pay anything until it is verified! Hope this helps.

[ORNV3]

Thanks for the info Avwill and everyone else who keeps updating this thread. I'll be interested to see how things progress for you with the collection agency. Hopefully they can't prove the debt. Keep us posted and good luck

[Enough Already]

Avwill,
Yes. Thanks so much for posting this info. I'm in FL too, and my loans are also with Chase. Those of us with recourse loans are quite worried about how this will all play out. The info you've provided will come in handy when the collections calls start.

Please do keep us posted as you go.

Please do keep us posted.

[Enough Already]

Woops - I typed that twice...must be my nerves.

[dudeobides]

Enough... I'm keeping a close watch on your situation as I'm also in Fl. with an 80/20. Still on the fence over which path to take. I'm thinking of a 13 w/ lien strip. $515 monthly.Please don't stop posting! Also I wish you luck. Your real brave!