Hi forum, I've been searching for the last few evenings trying to find my scenario, wondering if anyone has experience with our plight. I'm looking for advice on a specific situation we're in.
I built a home on a vacant lot with cash and money from the extension of a second mortgage on our primary home. Upon completion, we were able to create a single 80% loan on the home with a local bank rolling the 2nd Mortgage on our primary home and other debt (credit cards etc. mostly built up to build the home) into the loan. We also received ~$8000 cash out of the "refinance".
So we had two "80%" loans on two homes. We lived in the home I built for less than ~1 year then moved out - no renters. Based on changes to our financial situation, we have been trying to sell the home we don't live in for almost a year at less than the amount of the 80% loan (we have a little cash). We need to start considering defaulting on the loan and I want advice as to what recourse the bank has as the property value has diminished in 2 years to put us under water probably $40k.
We have a deed of trust against a home we built (WA single family Fannie Mae/Freddie Mac Uniform Instrument)
The loan closing instructions state - Loan Purpose: Refinance (there is not a sales price since it was a new home), Loan type: Conventional, Amortization: Fixed Rate, The deed of trust is form 3048 (is that meaningful?). We are ignorant as to what to do. Our loan is with a local (NW) bank - not a credit union.
What is the bank recourse? In Washington State I've been told they can only go after the home but that may not be the case on a loan termed "refinance"? What key things should I be looking for in our loan docs? Will collectors call and harass my kids? Can they take our primary residence or other things we own (i.e. a car loan was rolled into the original)? Anyone else I can talk with 1:1 who is doing this (or similar) in WA?
I have found a local attorney to look at docs but - if I can save the money because there are some obvious things I can find - I would like to avoid the cost of a consultation (i.e. we're screwed because of the type of loan we have - prepare to have wages garnished if you do this).
Thank you in advance.