Q: 3 payments behind on my 1st and 2nd mort & received letter from 1st stating loan mod denied, now what do I do? on SSDI
Do i have any other options? I heard I could do a debt in lieu of foreclosure by handing in my keys. HOW long do I have to do this before I have to move out. These loans were bought during the write off days of the mortgage bust and now I am at risk of losing my house because the new companies will not work with me on a loan modification. HELP>?
A: A deed in lieu of foreclosure simply means you hand over the keys and deed and move out, but you must first get in writing that the mortgage company releases you from personal liability on the remaining balance of the mortgage. You'll have to cut that deal with the first mortgage holder, and make release of your liability on both the first and second mortgage a condition of doing so. Otherwise, you get little or nothing out of the deal. Absent a loan mod, can you afford just paying the first mortgage? And is the property worth less than what is owed on the first mortgage? In that scenario, you could potentially file bankruptcy, and keep paying the first mortgage but strip off the lien of the second mortgage and discharge it. There's a strategy for achieving that, and you'll need a bankruptcy lawyer.
Another option is a short sale, also coupled with an agreement to release your from personal liability on any shortfall in sale proceeds to cover the mortgage balances. Talk to a realtor about that option, and whether the mortgage lenders will agree.
Alternatively, if all you want to do is maximize the length of time you can stay in the property without paying another mortgage payment while doing so, that can also be accomplished, and the best way is through through bankruptcy so you come out of the process owing nothing. You might have a couple years in the home that way, paying nothing, but unable to be legally evicted until all the bankruptcy proceedings and lengthy foreclosure process takes its course. Most people do not understand that bankruptcy will stay the foreclosure proceedings until discharge, which can gain you at least 6 months on the foreclosure process. Wait until the foreclosure is filed and a sale date is scheduled, then file bankruptcy. The foreclosure process itself, once it can restart, takes a year or more in many counties. You don't need to get out as soon as they file, or even following the sale at foreclosure. The reason is you're still the titled owner until the court approves the audit following the sale, and then grants transfer of legal title to the new owner. That process takes months after the sale. Even after approval of the audit and title transfer, you can't be evicted except upon a proceeding in court for which you will receive 30 days advance notice by way of a motion, then 30 days to object, then a hearing in court is scheduled another 30 days out. Once a judgment of possession is granted, the Sheriff's Office can take many weeks after to schedule the eviction date. You cannot be put out except by the Sheriff. Self-help direct action by the new owner is illegal. You can use all those months and years to save your money and find a new place to live. Most people who emerge from bankruptcy do so with a credit score of about 650, since they have no debt--not too shabby given the circumstances. If you do not file bankruptcy, then you risk a deficiency judgment against you for the shortfall in the mortgage balance after the proceeds of the sale of your home is applied to both the two mortgage balances and all the legal and foreclosure fees. If you have no hope of keeping your home by paying your mortgage or refinancing, then stop throwing good money after bad and don't pay another cent on the mortgages.
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