80/20 Loan, House foreclosed, now they want 35.000 from me

[willitevergetbetter]

Hello to all,
I am hoping to find some help here.
Here is my story, I try to keep it short..
moved here from germany 2 yrs ago.. to start a new life.. oh what a life that turned out to be
I bought my 1st home in Feb 06 with my ex bf.. the lender told me not to have him sign anything because he was still married at the time.. he moved out of the house the 2nd month we lived in it because he didnt like the fact, that now he had no money to play with anymore and moved back to his MOM!!! at age 30!!.. yea just great.. so there I was.. no way i could pay the mortgage by myself, so it was foreclosed on in nov 06
the loan was an 80/20 loan with OPTION ONE.. very high rates and it was a no document loan on top of that.. now i received these tax statements 1099-A and I have no clue if I have to pay taxes on this now or what to do? It says Balance outstanding 134,704.86 and fair market value 164.000
On top of that I get a letter from a collection agency saying, that I need to pay back roughly 34.000 for the 2nd mortgage..
My dad told me it was predatory lending from begin with, but I really dont know anything about it.. I am just afraid to get a lawyer that costs thousands of dollars that I cannot afford. I am a single mom and just afraid, that if I dont do anything it will come back and haunt me one way or the other...
any suggestions on what I should do???

Thank you sooo much

A key to resolving your issue is first to determine what State the property was located in. Can you provide that information......

Daniel

[willitevergetbetter]

the property was in KY, I now live in TN though

Kentucky Foreclosure laws see below they do allow for deficiency judgments and as such you need to contact and attorney for immediate review of your situation and guideance in the matter. We can not offer legal advice in these situations, however I have posted the information in public domain for you.

Quick Facts
- Judicial Foreclosure Available: Yes
- Non-Judicial Foreclosure Available: No
- Primary Security Instrument: Mortgage
- Timeline: Varies
- Right of Redemption: Yes
- Deficiency Judgments Allowed: Yes, but with restrictions
In Kentucky, lenders may foreclose on a mortgage in default by using the judicial foreclosure process.

Judicial Foreclosure
Generally, in judicial foreclosure, a court decrees the amount of the borrowers debt and gives him or her a short time to pay. If the borrower fails to pay within that time, the clerk of the court then advertises the property for sale.

At some point prior to the scheduled date of foreclosure, an appraisal of the property must be made. If the foreclosure sale price is less than two-thirds of the appraised value, the borrower has a period of one year (12 months) from the date of the sale to redeem the property by paying the amount for which the property was sold, plus interest.

It is possible to obtain a deficiency judgment against the borrower for the difference between the amount the borrower owed on the original loan and the foreclosure sale price, but only if the borrower was personally served with the lawsuit, or failed to answer.

One online source seems to suggest a lender can get a deficiency judgment after being foreclosed out. If that is correct the holder of the second loan could continue to chase you for repayment of the debt since they would be in the position of an unsecured creditor. I'd suggest you confirm this with an attorney that is familiar with Kentucky law.

Depending upon your current financial condition, you may even be able to negotiate for a lower settlement amount with the collection agency (again a good reason to talk to a lawyer). Oh and don't worry about the real property taxes on the home. The foreclosing lender will be facing that issue. I'm not aware of Kentucky having any laws relating to predatory lending practices, although they may. Again good reason to contact a Kentucky lawyer.

Take care,

Daniel


Summary:

Judicial Foreclosure Yes
Non-Judicial Foreclosure No
Security Instruments Mortgage
Right of Redemption Yes
Deficiency Judgments Yes, with restrictions
Time Frame Varies

Judicial foreclosure in Kentucky requires that a suit be filed by the lender, in the circuit court for the district in which the property is located, to obtain a judgment of foreclosure. A complaint must be served on the borrower who then has 21 days to respond. In the event there is no response, a default judgment is declared by the court, or if the borrower does appear and is found to be in default, a summary judgment and notice of sale are issued and the property advertised for sale.


The notice will include the balance due on the mortgage and be published weekly for three consecutive weeks. Prior to the sale date, the property must be appraised, and if the sale price is less than two thirds of the appraised value, the borrower has one year in which to redeem the property by paying the sale price plus interest.

Deficiency judgments are allowed, but only if the borrower was personally served with the complaint and failed to respond


Links:

341.815 Right of redemption.
Law which regulates the foreclosing owner to redeem real property.

381.883 Lien for unpaid assessments -- Foreclosure – Suit
Law which regulates lien’s against co-owners of the foreclosed property.

382.365 Release of lien
Law which regulates how a release of lien is handled in the court system.

426.720 Final judgment to act as lien on realty -- Judgment creditor's notice
Law which regulates a judgment be entered to recover money.

[willitevergetbetter]

first of all thank you for your answers.
i do have a question about the deficiency judgment since i did not answer to any of the letters.. does that mean, that I do have to pay the difference in tax? why else did i get the 1099-A?

thanks guys

Jessica

[willitevergetbetter]

Another thing I was wondering about.. what is a normale rate for an attorney in this kind of matter? I will start calling around on monday to get some quotes, but I have no clue what is acceptable and what is not?
thank you

Jessica

I am clueless as to the normal rate for an attorney in this matter, so contact NACA, they are non-profit and are very vigorous in attorney referral for the consumer and I believe fairly realistic in the costs that they refer you to as a non-profit.

Now as to the notice stuff, I have no idea, the issues are complex and only an attorney can address those issues we are not qualified to address them here. You are in an aftermath situation and as such the devil is in the details.

I will say that if you are being billed by the collection company and pay the debt for the deficiency, then I do believe that you can not be taxed for the forgiveness on the deficiency as you have paid it...that question is one for an attorney in these matters. We are just not able to answer these questions for you as we are limited in our scope regarding the purely legal questions. You could have additional exposure with the issue of value versus debt/deficiency....it is very complex and not one that we can deal with in our scope of advice.

But, please keep us posted and contact NACA, check them out on the Web and get a hold of them on Monday. They do have some great attorneys for these situations.