Good Article On Post Forclosure

Moe Bedard

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I knew this would happen. This will be surprising a lot of people in the coming years...
 

finalchapter

LoanSafe Member
Dec 14, 2013
42
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Arizona, foreclosed home in MI
I lost a home to FC in Michigan and 2 weeks after the redemption period expired they started gunning for the mortgage deficiency. They later passed the debt on to a collections agency. They wanted $250k. I filed chap 7.

I have a place in Arizona which is under threat of FC, but in AZ there is no mortgage deficiency statute.

As this article suggests, many collectors have been waiting and watching for homeowners that have foreclosed to rebuild so they can go after them. yes, this is going to be big and unfortunate for so many people.
 

walstib

LoanSafe Member
Oct 13, 2011
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This is a bit scary. But if the banks, or in my case Fannie Mae, did not get a judgement within the State's time line, can I not worry about them coming after me in the future? My rental property was in Nevada, purchased in July of 2007, and was sold at auction on September 25, 2013. My understanding is that they had 6 months to come after me for the deficiency, which was about $35K. So, now that it has been 13+ months, can I stop worrying?
 

finalchapter

LoanSafe Member
Dec 14, 2013
42
3
8
Arizona, foreclosed home in MI
This is a bit scary. But if the banks, or in my case Fannie Mae, did not get a judgement within the State's time line, can I not worry about them coming after me in the future? My rental property was in Nevada, purchased in July of 2007, and was sold at auction on September 25, 2013. My understanding is that they had 6 months to come after me for the deficiency, which was about $35K. So, now that it has been 13+ months, can I stop worrying?
Hello Walstib,

I am no expert, but here is my understanding. The 6 months you are referring to is probably the redemption period and is a time the owner (you) can pay the debt and regain ownership of the home. This is rarely done for obvious reasons (i.e. how to come up with the amount owed on the mortgage or get a new loan with damaged credit from the foreclosure). So that 6 months is time for you to "buy back you house" if you wanted and were able.

Now regarding mortgage deficiency; not all states permit this, however, the concept applies to primary residences only. In fact, Nevada does not permit mortgage deficiencies on your primary residence after a foreclosure. Unfortunately, in your case, your home in Nevada was a rental and as such is eligible for mortgage deficiency judgment (this is the difference from the mortgage balance and what it was sold for after foreclosure); you note $35k.

The time they can take collections or legal action would be the statute of limitations which might be 6 or 7 years (I don't know). That is precisely why that article points out a scary inevitability that many home owners may end up facing. Many banks are waiting for people to get their financial legs back on solid ground and then they can pursue repayment. Usually, they go through court then end up with a legal document called the mortgage deficiency judgment. That judgment is often good for 10 years and could be renewed (extended) through the courts if needed. They use the judgment as the legal right to collect the deficit.

Now the other thing is your bank may have decided not to pursue the deficiency. There may be a way to find out, but I am not sure how. Some times they will issue a 1099 "something", but I understand that doesn't really eliminate your debt obligation it just makes you accountable for the tax implications of the debt being considered an income (since it was debt not paid).

You see it is tricky and there is a lot to it. You'll have to learn more than what I can provide. If they pursue you at some time you have only a few choices; 1. pay it. 2. settle. 3. file bankruptcy.

PLEASE, keep in mind, I am just a guy who had a similar experience in MI and I don't know your circumstances or Nevada law or a lot of other things that a person would have to know to give solid advice on this subject. You'll have to look into this much more closely. The law that governs your situation is the state where the home is located (Nevada). You may want to get a consultation with a real estate atty in Nevada (they would be well versed on the subject since Nevada was one of the highest foreclosure rate states).

Good luck.

FC
 

walstib

LoanSafe Member
Oct 13, 2011
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1
I found this underneath Nevada law on this site:

After foreclosure, Nevada does allow recourse against borrowers, but an additional wrinkle is involved.

For mortgages issued before October 1, 2009 for any property, the foreclosing entity had six months from the foreclosure date to apply to the district court where the property was located to set a deficiency hearing. At the hearing, the court would hear evidence and determine the amount of the deficiency. If the foreclosing entity did not apply for the hearing within six months, their right to the deficiency terminated by operation of law and expired. (NRS 40.455)

After October 1, 2009, owner occupied single family residences were exempted from the recourse requirement; no recourse for the loans is available. Again, this prohibition does not apply to rental or investment property. (NRS 40.458)

So, if my understanding of this is correct, Fannie Mae had 6 months to set a deficiency hearing at the district court in Nevada, which they did not do so I should be in the clear. It has now been 14 months since the sale of the home at auction. This site has been very helpful to me.....Randy
 

kindness

LoanSafe Member
Mar 26, 2014
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Can someone please tell me if I'm correct here whereas I filed chapter 7 during my FC, surrendering and not reaffirming here in NJ.
Can they try to come after me after final FC. Even for legal fees incurred during FC?
Thank you!
 

wanda robo

LoanSafe Member
Sep 29, 2012
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NJ
Can someone please tell me if I'm correct here whereas I filed chapter 7 during my FC, surrendering and not reaffirming here in NJ.
Can they try to come after me after final FC. Even for legal fees incurred during FC?
Thank you!

No worries. They can't come after us for a deficiency judgment. They may try, but it will be unlawful. Guard your Chapter 7 Discharge papers, you will need them if they come after you, my friend.
 

kindness

LoanSafe Member
Mar 26, 2014
63
2
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60
No worries. They can't come after us for a deficiency judgment. They may try, but it will be unlawful. Guard your Chapter 7 Discharge papers, you will need them if they come after you, my friend.
Thank you very much Wanda!!!!
 

nymess

LoanSafe Member
Nov 9, 2008
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Has anyone in New York had this happen??? Or does anyone know of anyone in New York that has had this happen??