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1st upside down what happens to 2nd Mortgage

7 posts by 4 users

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Maureen Smith

Homeowner from San Dimas, California

May 19 '09, 05:50 AM


Hi, My property in California, is appraised approx at $320,000 and my 1st balance is approx $360,000. My second is for approx $73,000. I've stopped paying the 2nd and I'm trying for a loan mod on the 1st. Would the 2nd go forward w/ foreclosure even though they will not get anything at all? Should I write to them asking to forgive the loan and get it off their books? Any help/advice will be appreciated. Thanks.


Edited Jun 26 2010, 08:16


Richard Warren

Real Estate Investor from Las Vegas, Nevada

May 19 '09, 06:12 AM


Whether or not they foreclose is really a matter of what they want to do. They can if they want to. They probably wouldn’t forgive the loan. If they get nothing because they are wiped out in a foreclosure they still have the ability to pursue a deficiency judgement against you in an effort to collect.

:cool:


Edited Jun 26 2010, 08:16


Jon Holdman Moderator

SFR Investor from Wheat Ridge, Colorado

May 19 '09, 06:40 AM


Is this your personal residence or an investment property? Has something happened in your life to make the loan impossible to pay?


Edited Jun 26 2010, 08:16


Jon Holdman, Flying Phoenix LLC


Maureen Smith

Homeowner from San Dimas, California

May 19 '09, 06:50 AM


Jon, I've rented the property out for 2+1/2 yrs now, but barely make anything on it. Owned it for 15 yrs but re-fied and took out equity few times. Plan is to keep it long term until market gets back on track (10 yrs+) may work out in the long run. Recently gone through a major break-up and lack of income due to the fact we ran a business together. His General Contracting biz... I get nothing from it! I'm working with the 1st and keep getting different "advice" from nay-sayers... you know how that goes! Well, Savings have all but gone and I'm looking for work meanwhile, I will be contacting both lenders and see what I can arrange by way of a loan mod for first and second. I'm holding on for the moment but may just let it go into foreclosure.


Edited Jun 26 2010, 08:16


Jon Holdman Moderator

SFR Investor from Wheat Ridge, Colorado

May 19 '09, 07:09 AM


Since its an investment property, the odds are much higher the lenders will come after you for a deficiency judgment. Its certainly worthy trying to work something out with both lenders. But they're usually not that sympathetic to us investors.

As one data point, I had a short sale I made an offer on go to auction last week. It went for less than my offer. Why? For one, that avoids the lender having to pay off several small liens, and for another they slapped a big deficiency judgment onto the borrowers. It was a rental.

Sorry.


Edited Jun 26 2010, 08:16


Jon Holdman, Flying Phoenix LLC


Maureen Smith

Homeowner from San Dimas, California

May 21 '09, 04:43 AM


I note your answer as one experienced in such matters, but for the record ... as far as both lenders are aware, the property is owner-occupied. This may make a difference in any outcome. Regardless, I am contacting both lenders today in order to try for loan modification arrangements. I have been in communication with them over the last 6 months and now it is time to actually get something finalized with them both.
Thanks for your time and valuable input.
Mo

Originally posted by Jon Holdman:
Since its an investment property, the odds are much higher the lenders will come after you for a deficiency judgment. Its certainly worthy trying to work something out with both lenders. But they're usually not that sympathetic to us investors.

As one data point, I had a short sale I made an offer on go to auction last week. It went for less than my offer. Why? For one, that avoids the lender having to pay off several small liens, and for another they slapped a big deficiency judgment onto the borrowers. It was a rental.

Sorry.



Edited Jun 26 2010, 08:18


Mark H.

SFR Investor from Phoenix, Arizona

May 22 '09, 01:06 PM


Originally posted by Maureen Smith:
Hi, My property in California, is appraised approx at $320,000 and my 1st balance is approx $360,000. My second is for approx $73,000. I've stopped paying the 2nd and I'm trying for a loan mod on the 1st. Would the 2nd go forward w/ foreclosure even though they will not get anything at all? Should I write to them asking to forgive the loan and get it off their books? Any help/advice will be appreciated. Thanks.

For this kind of money, an hours consultation with an attorney is certainly worthwhile.

FWIW, my understanding of ca law is that a purchase money mortgage (not a refi) is generally non-recourse. Dig out that paperwork and find an attorney to look it over for you.


Edited Jun 26 2010, 08:18


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