Friend may be losing home

[wright27]

A buddy of mine is a contractor who is experiencing a serious slow right now with work. He owns two homes, one is his live in house and the other is a rental. I know years ago when the market crashed people were buying new homes and letting the other go into forclosure. He is not at that point yet, but keeping the roof over his family head is his priority. I know there was some laws passed when people were letting there houses go. Does anyone know the risks if were to let his rental property go. He has tried to sell, but has had no luck.

[cdog]

He's pretty much screwed unless he can sell the rental. The bank will go after him on his other home. If he has a second he most likely signed a release to allow the bank to go after a deficiency judgment. The BK laws made it a lot harder to walk without paying something back. If he did a stated income (liar loan) and embellished his income he now has a problem with committing mortgage fraud.

[wright27]

He's pretty much screwed unless he can sell the rental. The bank will go after him on his other home. If he has a second he most likely signed a release to allow the bank to go after a deficiency judgment. The BK laws made it a lot harder to walk without paying something back. If he did a stated income (liar loan) and embellished his income he now has a problem with committing mortgage fraud.
That is what I thought. Just wanted to make sure.
He better start getting rid of stuff. At least he owns a few items that will mabey float him long enough to get back on top.

[atomickitn]

ok soo what happens if you only own 1 home and you have to let it go to forecloser? and that at the time of the loan was taken out and you stated your income ,was in fact correct , but however the mortgage co that was working on your loan took several months to complete the process , and in that time you got laid off work for a few months, and you just cant recover and the home is now a rental ,and you are also trying to sell it , but just dont care if you lose it .... :idea:

[Moneypitt]

That is what I thought. Just wanted to make sure.
He better start getting rid of stuff. At least he owns a few items that will mabey float him long enough to get back on top.
T.O.P. There used to be a section in the classified section that was primarily TOP. Meaning someone step in here and take over my payments. I get nothing, you just assume the loan balance with zero down.....These ads were common in the non metro areas, where people were honest enough to want to live up to their obligations, but couldn't. Is he willing to just let it go to someone that can make the payments? Kinda like free equity, come and get it....Action in this direction MIGHT save his other house.........MP

[cdog]

If, If's and But's were candy and nut's everyday would be christmas.:D
The whole industry is preparing for a BIG influx of short sales, foreclosures and a big fat mess. I just went to a 3 hr. meeting on this subject on Tuesday. With the new BK laws and so many 2nd mortgages things will get rather sticky.

[ChumpChange]

I am not a lawyer, I just play one on TV so don't quote me on all this.
It pretty much depends on the loan documents. California is a one action state. Generally, that means that a bank can either foreclose on the property or sue personally. They can't do both and they generally just foreclose. When you sign a loan, you are not personally the guarantor. The Deed of Trust is the guarantor, unless there is wording giving up the one action right where you can be personally responsible for any collateral deficiency.
California does have laws protecting people from negative equity. Hopefully the mortgage company doesn't have a loophole in their favor.

[C-2]

California is a one-action state and effectively, there are no deficiency judgments/actions. That's why it's ripe for crashing - people can literally walk away from houses without deficiency judgments.
The lender will most likely use a non-judicial foreclosure (not having to sue in court), which results in simply a foreclosure, no deficiency judgment, no money due and owing. Or they can choose a judicial forecloure - which they won't since the cost is too great. Thus the term "one action" they can only choose one method, but not both.
Your frind can short sale it and needs to speak with Locogringo or HolyMoly(?).

[buzzaro]

What about "selling" his live in home to his parents or children? Could the bank still come after it if they forclose on the rental?

[C-2]

The bank will not come after him. A foreclosure is a foreclosure in Cali - it will tank his credit though.
Tell your friend whatever he does, he should do it quick. Number uno mistake is people wait too long. Once a Notice of Default is filed, it really doesn't matter if the porperty is actual;l;y taken back by the bank. Even if he was to work it out, after the NOD was filed, it really wouldn't matter from acredit risk/scoring position.
If he is out of work then he would probably meet the new Chap 7 BK guidelines - but the trustee would take the rentals anyways and sell them to satisfy other creditors.

[totenhosen]

T.O.P. There used to be a section in the classified section that was primarily TOP. Meaning someone step in here and take over my payments. I get nothing, you just assume the loan balance with zero down.....These ads were common in the non metro areas, where people were honest enough to want to live up to their obligations, but couldn't. Is he willing to just let it go to someone that can make the payments? Kinda like free equity, come and get it....Action in this direction MIGHT save his other house.........MP
I've never seen an assumable home loan.

[ChumpChange]

I've never seen an assumable home loan.
There are some with qualifiers.
Some will just refer to taking over payments as "I'll give you exactly what you owe with not a penny more". That's all it really means. It's not really assuming the loan and taking over that payment.

[RP2]

ok soo what happens if you only own 1 home and you have to let it go to forecloser? and that at the time of the loan was taken out and you stated your income ,was in fact correct , but however the mortgage co that was working on your loan took several months to complete the process , and in that time you got laid off work for a few months, and you just cant recover and the home is now a rental ,and you are also trying to sell it , but just dont care if you lose it .... :idea:
That right there, might be the longest sentence of the month.:D :)

[JetBoatRich]

What kind of contractor is he?
Maybe someone can send some work his way

[roostwear]

I must be missing something fundamental here. This is a rental right? I'm assuming he has tenants that lease it from him (hopefully long term)? The rent he takes in doesn't cover his mortgage, maintenance, etc? His name isn't Mouzer, is it?

[In2Deep]

Glad I'm not there.
Feel like I got out in the nick of time.
I2D

[Misogynist]

I'm hearing the snapping and popping sounds from the real estate industry that sound just the same before a structure collapses. I"m glad my r-e investments are in another state.

[bigq]

I must be missing something fundamental here. This is a rental right? I'm assuming he has tenants that lease it from him (hopefully long term)? The rent he takes in doesn't cover his mortgage, maintenance, etc? His name isn't Mouzer, is it?
That is part of the problem in the industry right now. You can't rent a place to cover even the mortgage. Look at the average income and the housing expense is way off.:idea:

[BADBLOWN572]

That is part of the problem in the industry right now. You can't rent a place to cover even the mortgage. Look at the average income and the housing expense is way off.:idea:
That is very true. I have been looking for some additional property, but at FMV, you would have to put down around 50% of FMV (with good credit) to offset your mortgage with rental income. Even with 50% down, and good credit, only your mortgage will be covered. You will still have to come out of pocket for taxes, insurance, and maintenance. :(
I am sure that there are other options, but personally I will never go with anything other than a 15 or 30 year fixed.
If someone else knows a way to make it work, I am all ears. :)

[YeLLowBoaT]

Depending on what the blance is on the rental it may be best just to sign it back over to the bank. Ppl walking away like that is happening more and more. If hes really slow he can go to the temp agencys and atleast make some money. I've done that in the past when I had very little work and need cash to pay rent/ ins/bond/ other shit. Work is work and any cash when your hurting is better then nothing. Or hell even just put a add in the paper for handy man shit...I've also done that. just the fact that hes lic ( unless there is a prob with that) he will get calls. I did that over the xmas break and got 36 phone calls in 1 day. I made about 1 k in 2 very long days, but I got all my bills paid and had a nice little boost for xmas.

[totenhosen]

Depending on what the blance is on the rental it may be best just to sign it back over to the bank. Ppl walking away like that is happening more and more. If hes really slow he can go to the temp agencys and atleast make some money. I've done that in the past when I had very little work and need cash to pay rent/ ins/bond/ other shit. Work is work and any cash when your hurting is better then nothing. Or hell even just put a add in the paper for handy man shit...I've also done that. just the fact that hes lic ( unless there is a prob with that) he will get calls. I did that over the xmas break and got 36 phone calls in 1 day. I made about 1 k in 2 very long days, but I got all my bills paid and had a nice little boost for xmas.
Great idea. To the OG poster, if your buddy needs some work I'm sure I can find plently of handyman type stuff for him to do.

[BadKachina]

I've never seen an assumable home loan.
We sold a house about ten years ago that had a va assumable loan. The guy who bought it ended up defaulting on it and I had to take it back over.
The good part about it was that he gave 30k down, and whe I resold it I got another 40k. The bad part is that the late payments and it going into forclosure were all on my credit. I don't think loans are assumable like they used to be.

[catman-do]

I'm hearing the snapping and popping sounds from the real estate industry that sound just the same before a structure collapses. I"m glad my r-e investments are in another state.
Depending on which state you are talking about. Most states are just like CA right now. Most states are in a declining market. Many lenders are scaling back their guidelines right now. We are changing many of ours on Monday. Including strong limitations of 80/20. Hardly anyone lends in Texas anymore, so if your house is in TX goodluck refying that, AZ has a huge market of homes sitting idle, because investor speculation. Many lenders are pulling out of Ohio, good luck getting anything by in New York. Oregon has been in a market depression for 18 months. FL has a horrible condo market, their sfr market is starting to take the same turn. Southern NV is slowing, however hasent seen the sharp increase in idle homes that we have in CA, and northen NV never had the same boom as the southern part of the state. Colorado was the highest foreclosure state for a year before CA took that over last mo. New Mexico and MASS have such hard net tangibles to pass that its getting harder and harder with all the high ltv refinances people have done.
So how come you are glad its in another state? The people that dont have to worry are the people that can easily make their payments and dont have jobs related to market waves, or the people that have a ton of equity and need be can sell before the house goes into foreclosure.

[catman-do]

What about "selling" his live in home to his parents or children? Could the bank still come after it if they forclose on the rental?
Lenders look at that as a foreclosure bailout. No major lenders will do that, because we know that it will still be the same borrower paying the payment. Most likely they will default again and the bank will be loosing money again. Possibly hard money, but then you are looking at even higher rates. If the guy cant make the payment now, he wont make it then either.

[Screemy1]

Have him contact his mortgage holder, explain the situation, see if they can negotiate a short sale with the invester. When in the short sale process.... if they tell you they need a such and such amount, do not dick them and turn in short offers less then that amount. They are going to give you the amount they can short the invester, they do not bargain... My wife negotiates short sales with investors she said if the invester will take a short amount to this much, that is what they will take.... she doesn't get anything if she gets them more money so they don't try too. Investors will take short sales, but they will not bend over backwards..... they know that a forclosure costs them money but they won't give it away for a short sale either.... be up front with your mortgage peeps, talk to them now whie you are not behind too much......

[Screemy1]

Depending on what the blance is on the rental it may be best just to sign it back over to the bank. Ppl walking away like that is happening more and more. If hes really slow he can go to the temp agencys and atleast make some money. I've done that in the past when I had very little work and need cash to pay rent/ ins/bond/ other shit. Work is work and any cash when your hurting is better then nothing. Or hell even just put a add in the paper for handy man shit...I've also done that. just the fact that hes lic ( unless there is a prob with that) he will get calls. I did that over the xmas break and got 36 phone calls in 1 day. I made about 1 k in 2 very long days, but I got all my bills paid and had a nice little boost for xmas.
this "deed in lieu" is about the same process as a short sale.... oh yeah, in a short sale realtors will never get more then 6% between the two of them, and you can not make a penny in the process... she said it amazes her when salers are shorting the investore on an approved sale and when the hud statement comes to her desk for the final.... she sees a couple hundred going to the seller... when she asks about it they title co goes, oh it came up left over so we put it to go to the seller.... then all has to be re written to make sure the seller does not get any money....

[bigq]

Depending on which state you are talking about. Most states are just like CA right now. Most states are in a declining market. Many lenders are scaling back their guidelines right now. We are changing many of ours on Monday. Including strong limitations of 80/20. Hardly anyone lends in Texas anymore, so if your house is in TX goodluck refying that, AZ has a huge market of homes sitting idle, because investor speculation. Many lenders are pulling out of Ohio, good luck getting anything by in New York. Oregon has been in a market depression for 18 months. FL has a horrible condo market, their sfr market is starting to take the same turn. Southern NV is slowing, however hasent seen the sharp increase in idle homes that we have in CA, and northen NV never had the same boom as the southern part of the state. Colorado was the highest foreclosure state for a year before CA took that over last mo. New Mexico and MASS have such hard net tangibles to pass that its getting harder and harder with all the high ltv refinances people have done.
So how come you are glad its in another state? The people that dont have to worry are the people that can easily make their payments and dont have jobs related to market waves, or the people that have a ton of equity and need be can sell before the house goes into foreclosure.
Nice summation there...:D

[totenhosen]

We sold a house about ten years ago that had a va assumable loan. The guy who bought it ended up defaulting on it and I had to take it back over.
The good part about it was that he gave 30k down, and whe I resold it I got another 40k. The bad part is that the late payments and it going into forclosure were all on my credit. I don't think loans are assumable like they used to be.
Cool, I think most boiler plate loan agreements no longer allow assumptions.

[totenhosen]

Have him contact his mortgage holder, explain the situation, see if they can negotiate a short sale with the invester. When in the short sale process.... if they tell you they need a such and such amount, do not dick them and turn in short offers less then that amount. They are going to give you the amount they can short the invester, they do not bargain... My wife negotiates short sales with investors she said if the invester will take a short amount to this much, that is what they will take.... she doesn't get anything if she gets them more money so they don't try too. Investors will take short sales, but they will not bend over backwards..... they know that a forclosure costs them money but they won't give it away for a short sale either.... be up front with your mortgage peeps, talk to them now whie you are not behind too much......
Maybe they'll give him a forebearance for several months. I'm sure if he explains the situation to the lender they are more likely to be of help.

[AvengerBabe]

Maybe they'll give him a forebearance for several months. I'm sure if he explains the situation to the lender they are more likely to be of help.
That's exactly right... He really just needs to talk to his lender and try to make arrangements. As it was said earlier, people tend to wait too long and by doing so, limit their options. Many lenders are willing to work with you and would much rather make arrangements than let the property go to FC sale and likely back to their REO books. Your buddy needs to try to negotiate a short sale and if they still cannot get an offer on the property after dropping the price he should consider a deed-in-lieu. Both of these options look much better on a credit report than a completed foreclosure. Many lenders will setup arrangements to place the foreclosure on hold while you try to pursue the short payoff or DIL if you have the funds to do so (usually a down payment covering the attorney's fees/costs and then monthly installments of the regular mortgage payment amount.) I work in the loss mitigation department for a large lender (for the time being, until i am effing laid off in May:mad: ), so trust me when I say that most lenders are eager to make arrangements to keep the property from going to foreclosure sale.

[sorry dog]

Anybody think that I can get a 150% LTV loan on a Prius?
With all that money I'll be saving on gas, I'll have no problem making the payments.

[cdog]

You guy's are missing a big problem here. Contractor= stated income loan. I'd bet he exaggerated his income to get into the place. Then it's a rental. He may have some serious legal problems. Fraud. I suggest he lawyer up.
The lender will not negotiate a short sale until the borrower is behind on payments.

[AvengerBabe]

The lender will not negotiate a short sale until the borrower is behind on payments.
That's not necessarily true, at least at my company. Even if the guy is current, but it's obvious that the situation will ultimately end in foreclosure and subsequent foreclosure sale, many companies are accepting short payoffs to help borrowers get out from under the debt whether they are behind at the start of negotiation or not. He'll just have to talk to his lender I guess to see how willing to work with him they are.

[cdog]

That's not necessarily true, at least at my company. Even if the guy is current, but it's obvious that the situation will ultimately end in foreclosure and subsequent foreclosure sale, many companies are accepting short payoffs to help borrowers get out from under the debt whether they are behind at the start of negotiation or not. He'll just have to talk to his lender I guess to see how willing to work with him they are.
I had a seller whose bank would not negotiate anything until he was behind on payments. Our legal dept. say's 90%+ operate the same way. Most banks don't have a Dept. to handle these yet.

[C-2]

No need to lawyer up, it’s only a foreclosure.
Few lenders will pursue a claim against a borrower for loan fraud, unless it’s completely egregious and obvious fraud. Notwithstanding the fact the property was foreclosed on, which is a strong indication the borrower doesn’t have any cash, and collecting a judgment would most likely be futile.
Normally when banks pursue loan fraud cases – they’re shooting for the deeper pockets like the title companies and loan brokers. They are also looking for straw buyers and bundles of bad loans at the wholesale level.
A lot of first holders won't negotiate on 80/20 loans - after all, they might be walking into 20% equity.

[talkinghead]

A headline commenting on Friday's stock market stated that the mortgage industry may be in serious trouble, and in particular the sub-prime market is in trouble.
"Wall Street was jolted by warnings from 2 very large mortgage funding companies citing a record number of defaults"

[YeLLowBoaT]

It won't be the 1st time lenders have been in trouble...they made the deals... now they have to live with them.

[talkinghead]

I agree - unless this all becomes another S & L bailout.

[Trailer Park Casanova]

I've never seen an assumable home loan.
My VA loans were assumable, are they still?
It was a great perk in a slow market.

[catman-do]

You guy's are missing a big problem here. Contractor= stated income loan. I'd bet he exaggerated his income to get into the place. Then it's a rental. He may have some serious legal problems. Fraud. I suggest he lawyer up.
The lender will not negotiate a short sale until the borrower is behind on payments.
Nahh, the lender wouldnt go after him for inflation of income unless it was something like 40k per mo being claimed. Most of the time it is a slight over exageration. The lenders are going for wage earners, because those are the easiest to catch for income fraud. A contractor will have to show a P&L then he can argue that he wrote everything off (may cause an audit, but not a lawsuit by the lender). He can gather reciepts that show the income comming in, hell he can make reciepts to show the income and snap some photo's need be. Most self employed/1099 people are so hard to catch with income fraud its useless to try, we would waste too much money, not worth it.

[NashvilleBound]

I am not a lawyer, I just play one on TV so don't quote me on all this.
For real? :jawdrop: :jawdrop: :jawdrop: What show?

[cdog]

Nahh, the lender wouldnt go after him for inflation of income unless it was something like 40k per mo being claimed. Most of the time it is a slight over exageration. The lenders are going for wage earners, because those are the easiest to catch for income fraud. A contractor will have to show a P&L then he can argue that he wrote everything off (may cause an audit, but not a lawsuit by the lender). He can gather reciepts that show the income comming in, hell he can make reciepts to show the income and snap some photo's need be. Most self employed/1099 people are so hard to catch with income fraud its useless to try, we would waste too much money, not worth it.
I was at an in house remax meeting last Tuesday with some folks from wells Fargo. They were going over the current market conditions and what to expect with some of these loans defaulting. More or less they are in the process of looking at all their options and planning on going after many of the defaulted homeowners if mortgage fraud is a player. I'm just repeating what I was told by the nations #2 lender. I agree they have done things differently in the past but there was a lot less money on the table before. Expect things to be different this time around. They even gave me a wells Fargo website with 1000's of REO properties. Expect a change.

[C-2]

The A paper guys will return to a regular number of foreclosures.
It's Ameriquest, HSBC, Option One, New Century.....the subprime lenders who's heads are spinning right now.
For some of us, subprime is sublime. Hmmmm, that has a nice jingle:sqeyes: :sqeyes: :sqeyes:

[catman-do]

I was at an in house remax meeting last Tuesday with some folks from wells Fargo. They were going over the current market conditions and what to expect with some of these loans defaulting. More or less they are in the process of looking at all their options and planning on going after many of the defaulted homeowners if mortgage fraud is a player. I'm just repeating what I was told by the nations #2 lender. I agree they have done things differently in the past but there was a lot less money on the table before. Expect things to be different this time around. They even gave me a wells Fargo website with 1000's of REO properties. Expect a change.
Im not argueing that there wont be a change. We have already made many changes and have looked into various options as to what can be held accountable. Wage earners are the easiest to go after as far as income fraud, because they did, do, and most likely still are making the same wages in reality. A self employed person such as we are talking about is much harder to proove against which is why the lenders (us included) look more to the stated wage earners, and occupancy fraud. Occ Fraud is the easiest and is what will come first for the banks since its a simple as LexisNexis and knock on the door.

[C-2]

Occ Fraud is the easiest and is what will come first for the banks since its a simple as LexisNexis and knock on the door.
Yeah, but what's the remedy? Foreclosure. Besides, proving fraud is no easy task since there are many people, not just the consumer, involved. It starts with the consumer, broker, appraiser and trickles all the way back up to underwriting.
I work mortgage fraud cases for IMPAC and am a member of ACFE, the cases I see involve blatant fraud, fraud rings and straw buyers. I could be wrong but histroically I have never seen banks pursue individual consumers.

[Mtg Pro]

I worked in the mortgage insurance industry in the 80's and 90's in Arizona and California. Many of the comments are accurate. In California the lender can only go back after the property, as long as it is primary residence. The other lilttle know fact is that you will receive a 1099 for the forgiveness of the debt, after the lender sells the property and adds in all their costs.
I strongly suggest that they give their lender a call, most won't do anything until they fall a month behind.

[lawbreaker2]

Depending on which state you are talking about. Most states are just like CA right now. Most states are in a declining market. Many lenders are scaling back their guidelines right now. We are changing many of ours on Monday. Including strong limitations of 80/20. Hardly anyone lends in Texas anymore, so if your house is in TX goodluck refying that, AZ has a huge market of homes sitting idle, because investor speculation. Many lenders are pulling out of Ohio, good luck getting anything by in New York. Oregon has been in a market depression for 18 months. FL has a horrible condo market, their sfr market is starting to take the same turn. Southern NV is slowing, however hasent seen the sharp increase in idle homes that we have in CA, and northen NV never had the same boom as the southern part of the state. Colorado was the highest foreclosure state for a year before CA took that over last mo. New Mexico and MASS have such hard net tangibles to pass that its getting harder and harder with all the high ltv refinances people have done.
So how come you are glad its in another state? The people that dont have to worry are the people that can easily make their payments and dont have jobs related to market waves, or the people that have a ton of equity and need be can sell before the house goes into foreclosure.
Why are the lender's pulling out of OHIO for, can you tell me, I live here and I just would like to know what's going on in this state.

[C-2]

Catman-do,
You work for a large mortgage banker? If so, what are you seeing right now, they starting to tumble?
Time to brush up on Usted Habla Ingles?