When you foreclose, what happens to the difference between what you owe and what the bank gets for your house? Does the mortgage company hold it as an unsecured loan? Do they garnish your wages for it? Do they want you to get an unsecured private loan (and where do you get those kind of loans)? If you can't get a loan or borrow from family or whatever, then what happens?
Another foreclosure question
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In general, nothing happens, except for the obvious hit to the credit rating. The bank does not come after you. There used to be tax implications of foreclosure, I think that went away in the past few years.
Ask your bank about short sale or deed-in-lieu.
Ask your bank about short sale or deed-in-lieu.
There is a possibility you could be hit with the difference, you need to call your mortgage holder and ask if there will be a -Judgement of Deficit- after the foreclosure. Make sure to write down the date/time/name of the person you are talking to.
Best wishes!
Best wishes!
Most of the answers will lie in what state you are in (recourse v. non-recourse), as well as if this is an original loan vs. a refinance or HELOC. Many of the current regulations for not paying on the difference depend on what is being written off by the bank... a loan for the original purchase or a line of credit to pay down other debt are treated in very different ways.
I would HIGHLY recommend checking out loansafe.org for lots of helpful information. Good luck to you.
I would HIGHLY recommend checking out loansafe.org for lots of helpful information. Good luck to you.
Thanks for the answers.
We're in an ARM that adjusts next summer. At dh's current income, we won't be able to afford our mortgage payment at that time. He makes much less than he did several years ago, due to being comission based selling building supplies.
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One option is for him to look for jobs in a new field. But, that will probably mean leaving the area. He's already had to turn down one job (last year) because we couldn't sell our house and move (and living in the area was a requirement for the job--he commuted for 11 months before it became obvious it wasn't going to work).
Our options seems to be me going back to work or dh finding a new, better paying job. Dh doesn't like his current job, and we really want a SAH parent, so it seems that a new job is the way to go. But, we feel like, a new job will probably mean a move. And, then, we're unsure of what to do with our house. We do not have the money saved to pay the difference. We do not have family to borrow it from. Our bank/credit union will not loan that large of an amount on an unsecured private loan. Our mortgage company will not turn the title to the house over to the new owner without being paid in full. They will not turn part of the mortgage into a new private loan.
We do not qualify for a short sale. With our company, you have to have disability or the like to qualify. We have been told that in a deed-in-lieu-of, the house must be worth more than the mortgage.
This is a house purchased in 2006. We owe about $65-$70,000 more than comps are currently selling for.
We just feel stuck. If I go back to work, we give up the dreams of a SAH parent/homeschooling, plus my dh stays in a job he hates, making less money each day, just to pay the mortgage on a house that is nice, but well, it's just stuff, you know? It's a hard place to be.
We're in an ARM that adjusts next summer. At dh's current income, we won't be able to afford our mortgage payment at that time. He makes much less than he did several years ago, due to being comission based selling building supplies.
One option is for him to look for jobs in a new field. But, that will probably mean leaving the area. He's already had to turn down one job (last year) because we couldn't sell our house and move (and living in the area was a requirement for the job--he commuted for 11 months before it became obvious it wasn't going to work).
Our options seems to be me going back to work or dh finding a new, better paying job. Dh doesn't like his current job, and we really want a SAH parent, so it seems that a new job is the way to go. But, we feel like, a new job will probably mean a move. And, then, we're unsure of what to do with our house. We do not have the money saved to pay the difference. We do not have family to borrow it from. Our bank/credit union will not loan that large of an amount on an unsecured private loan. Our mortgage company will not turn the title to the house over to the new owner without being paid in full. They will not turn part of the mortgage into a new private loan.
We do not qualify for a short sale. With our company, you have to have disability or the like to qualify. We have been told that in a deed-in-lieu-of, the house must be worth more than the mortgage.
This is a house purchased in 2006. We owe about $65-$70,000 more than comps are currently selling for.
We just feel stuck. If I go back to work, we give up the dreams of a SAH parent/homeschooling, plus my dh stays in a job he hates, making less money each day, just to pay the mortgage on a house that is nice, but well, it's just stuff, you know? It's a hard place to be.
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Betsy, first of all:
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If you've been following this forum at all, (or following the news, or talking to your neighbors!) you'll know that you aren't alone at all.
I'm in the process of foreclosure and still have a lot of unanswered questions myself. Like you, we didn't qualify for any restructuring and, in fact, have so far found our mortgage company totally unhelpful, which is quite contrary to what we expected; it seemed like so many people were sure that the mortgage company would be bending over backwards to work with us. So not the case.
As to the difference on the house, a pp was right: it depends on the laws in the state where you live. Here in Michigan, the mortgage company can indeed go after for the difference (which in our case, where the local housing market has been battered, will be huge) for up to six years! So the only thing to do is to declare bankruptcy along with the foreclosure and include your house in the declaration to avoid this ever happening.
But let me back up. I suggest the very first thing you do be to get in touch with an independent, non-profit (free) financial consultant like Greenpath: http://www.greenpath.com/ready-to-begin.htm
They have offices all over. Something like this will be an excellent resources because they will offer you clear, thoughtful, thorough advice based on your unique financial situation. They are also totally non-judgemental--they are their to assess your financial situation and tell you what choices you have that best align with your family's needs and desires. They can suggest some different avenues and tell you how to go about pursuing them. In other words, it's a great jumping-off point toward whatever direction you decide to go.
I can tell you that foreclosure is not easy and I expect the hardship it has brought to continue for my family but when it is the truly the best/only option for you and your family, you will get through it and you will survive.
I wish you the very best of luck and hope that your family weathers these rough times smoothly.
I'm in the process of foreclosure and still have a lot of unanswered questions myself. Like you, we didn't qualify for any restructuring and, in fact, have so far found our mortgage company totally unhelpful, which is quite contrary to what we expected; it seemed like so many people were sure that the mortgage company would be bending over backwards to work with us. So not the case.
As to the difference on the house, a pp was right: it depends on the laws in the state where you live. Here in Michigan, the mortgage company can indeed go after for the difference (which in our case, where the local housing market has been battered, will be huge) for up to six years! So the only thing to do is to declare bankruptcy along with the foreclosure and include your house in the declaration to avoid this ever happening.
But let me back up. I suggest the very first thing you do be to get in touch with an independent, non-profit (free) financial consultant like Greenpath: http://www.greenpath.com/ready-to-begin.htm
They have offices all over. Something like this will be an excellent resources because they will offer you clear, thoughtful, thorough advice based on your unique financial situation. They are also totally non-judgemental--they are their to assess your financial situation and tell you what choices you have that best align with your family's needs and desires. They can suggest some different avenues and tell you how to go about pursuing them. In other words, it's a great jumping-off point toward whatever direction you decide to go.
I can tell you that foreclosure is not easy and I expect the hardship it has brought to continue for my family but when it is the truly the best/only option for you and your family, you will get through it and you will survive.
I wish you the very best of luck and hope that your family weathers these rough times smoothly.
Thanks.
I guess I was hoping that if you foreclose, the mortgage company "has" to give you a loan for the remainder. We want to pay off the debt, but we just can't afford to do it living where we do (because of dh's job).
If we could move for a job, we'd rent something tiny for cheap, then pay off the loan. It's the getting that loan that's the problem. We're big fans of Dave Ramsey, and he makes lots of good points, but he's forever telling people to sell cars/houses they are upside down on, then just pay off the difference. I'm not sure where he wants people to get the magic money from to "just pay off the difference." In our experience, banks aren't all about just handing out money. Maybe it's different for other people. I don't know.
I'm starting to feel hopeless.
I guess I was hoping that if you foreclose, the mortgage company "has" to give you a loan for the remainder. We want to pay off the debt, but we just can't afford to do it living where we do (because of dh's job).
If we could move for a job, we'd rent something tiny for cheap, then pay off the loan. It's the getting that loan that's the problem. We're big fans of Dave Ramsey, and he makes lots of good points, but he's forever telling people to sell cars/houses they are upside down on, then just pay off the difference. I'm not sure where he wants people to get the magic money from to "just pay off the difference." In our experience, banks aren't all about just handing out money. Maybe it's different for other people. I don't know.
I'm starting to feel hopeless.
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Oh, Betsy, ohmigod, no...the bank will NOT loan the difference and, in fact, as I mentioned in my earlier post, in many cases they can actually go after YOU for the difference! That's why you might well have to declare bankruptcy. I don't know how upsided-down you are on your house, but our very modest 989-sq foot bungalow that we purchased for $127,900 (and owe $119,000 on) has probably lost at LEAST 60% of its value, if not more.
I know how stressful all this is but let me just say again that you are not alone. I would also suggest you just take things one small step at a time instead of getting overwhelmed with the big picture. First step: consult with a financial planner. Go from there. Nothing is going to happen if you don't figure everything out all at once. Take your time, do your research, tick things off a to-do list one by one. You will get through this!
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Originally Posted by BetsyS  Thanks. I guess I was hoping that if you foreclose, the mortgage company "has" to give you a loan for the remainder. We want to pay off the debt, but we just can't afford to do it living where we do (because of dh's job). If we could move for a job, we'd rent something tiny for cheap, then pay off the loan. It's the getting that loan that's the problem. We're big fans of Dave Ramsey, and he makes lots of good points, but he's forever telling people to sell cars/houses they are upside down on, then just pay off the difference. I'm not sure where he wants people to get the magic money from to "just pay off the difference." In our experience, banks aren't all about just handing out money. Maybe it's different for other people. I don't know. I'm starting to feel hopeless. |
I know how stressful all this is but let me just say again that you are not alone. I would also suggest you just take things one small step at a time instead of getting overwhelmed with the big picture. First step: consult with a financial planner. Go from there. Nothing is going to happen if you don't figure everything out all at once. Take your time, do your research, tick things off a to-do list one by one. You will get through this!
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