Notices

2nd mortgage and a short sale?

Old 05-05-2011, 05:38 AM
  #1  
Senior Member
Thread Starter
 
Join Date: Jan 2011
Location: Jax, fl
Posts: 448
Received 18 Likes on 10 Posts
Default 2nd mortgage and a short sale?

I know this is a strange place to bring this up but we seem to have quite the eclectic group here. I am hoping either someone has had this experience or knows about it?

We recently had to do a short sale of our home in Seattle. economy, job, all the usual reasons. ended up having to relocate to fl for work so a loan mod wasnt even an option.

Anyway after a year and a half and 3 rounds of buyers we finally got the banks to agree and got it sold. I guess under law the first has to take the payment as payment in full or at least cant come after you, but the second isn’t bound by that, at least in Washington state. So I am now getting calls from them about the balance on the second.

any idea what my options are? the only ones I know is sign a note for the balance, which would wipe me out, Bankruptcy, or try and negotiate them down but still end up with a sizeable portion to pay off.

we took out the second to spruce up the house when the market was so good so it’s not like I pocketed the money, it went with the house.

in addition, we lost over $50K in purchase price because they kept playing games and loosing buyers so there is some shared responsibility there as well.
Old 05-05-2011, 06:15 AM
  #2  
Senior Member
 
Join Date: Aug 2008
Location: Savannah Ga
Posts: 374
Likes: 0
Received 1 Like on 1 Post
Default

i am looking at buying a short sale right now and was told that the first mortgagee had approved the price but were negotiating the percentage that would go to the 2nd. I don't know if that is normal but they may have already gotten a settlement frome the sale and agreed to a percentage. I would do some digging to see if they have already gotten some sort of setlement and are not just trying to chase you down for the rest
Old 05-05-2011, 06:21 AM
  #3  
Senior Member
Thread Starter
 
Join Date: Jan 2011
Location: Jax, fl
Posts: 448
Received 18 Likes on 10 Posts
Default

Originally Posted by dcox View Post
i am looking at buying a short sale right now and was told that the first mortgagee had approved the price but were negotiating the percentage that would go to the 2nd. I don't know if that is normal but they may have already gotten a settlement frome the sale and agreed to a percentage. I would do some digging to see if they have already gotten some sort of setlement and are not just trying to chase you down for the rest
Oh I know exactly what they got, their balance was $160K and they received $20K at closing. however there was a doc in the closing papers that stated they were releasing the lein to allow the sale but not forgiving the balance due.

there is actually 3 questions I have, one is did they get any mortgage insurance payment, two, are the feds paying anything with those mortgage programs and last since the house was the colateral and I gave that up, why do I owe more?
Old 05-05-2011, 06:24 AM
  #4  
Senior Member
 
Join Date: Oct 2009
Posts: 7,893
Likes: 0
Received 0 Likes on 0 Posts
Default

When the house was sold, wasn't the holder of the second involved? I would assume they had a recorded lien on the property and that lien would have had to been released before clear title could pass to the buyer. In addition, the buyer's mortgage holder (assuming they didn't pay cash) would require that the second you had be released at the time of sale as they would actually be in second position if not released.
Old 05-05-2011, 06:27 AM
  #5  
Senior Member
Thread Starter
 
Join Date: Jan 2011
Location: Jax, fl
Posts: 448
Received 18 Likes on 10 Posts
Default

Originally Posted by bel air fishman View Post
When the house was sold, wasn't the holder of the second involved? I would assume they had a recorded lien on the property and that lien would have had to been released before clear title could pass to the buyer. In addition, the buyer's mortgage holder (assuming they didn't pay cash) would require that the second you had be released at the time of sale as they would actually be in second position if not released.

oh ya, thats what soured the earlier deals, they first was easy to satisfy, the second, Chase, kept delaying until the buyers dropped out. like I said, they accepted 20K to release but noted in the docs they didnt considered the debt satisfied. frankly I have no idea if thats even legal?
Old 05-05-2011, 06:28 AM
  #6  
Senior MemberCaptains Club Member
 
Join Date: Oct 2007
Location: Fort Lauderdale
Posts: 12,908
Received 1,454 Likes on 662 Posts
Default

Old 05-05-2011, 06:29 AM
  #7  
Senior Member
 
Join Date: Oct 2009
Posts: 7,893
Likes: 0
Received 0 Likes on 0 Posts
Default

Your other post must have been put up while I was typing.

The second mortgage holder would not have received any MI payment. It only covers first mortgages.

I don't know of any federal programs to help you with the deficiency.

Unfortunately, in answer to the third question, the note is a promise to pay and the house is security on the note, so it's really 2 different issues. Even if they no longer have access to the security, they can still collect on the contract to pay what they lent.
Old 05-05-2011, 06:29 AM
  #8  
Senior Member
Thread Starter
 
Join Date: Jan 2011
Location: Jax, fl
Posts: 448
Received 18 Likes on 10 Posts
Default

Originally Posted by triplenet View Post
LOL ya I am afraid thats where is headed.
Old 05-05-2011, 06:34 AM
  #9  
Senior Member
 
Join Date: Jan 2008
Location: Garden City, SC
Posts: 1,940
Likes: 0
Received 1 Like on 1 Post
Default

did they get any mortgage insurance payment- no you did not default so they did not get a MI claim
two, are the feds paying anything with those mortgage programs-not sure what you are asking.
last since the house was the colateral and I gave that up, why do I owe more?- Washington generally operates as a Title state. Basically the title to the property is held in a trust until the note is paid off . In this case the title was realeased so you could sell the house(Washington law also permits mortgages to serve as liens upon real property). However you still signed a note that is supposed to be repaid. In most states there is a specific amount of time the creditor can hurt your credit or file judgements (normally 7-10 years).
Old 05-05-2011, 06:37 AM
  #10  
Senior Member
 
Join Date: Oct 2009
Posts: 7,893
Likes: 0
Received 0 Likes on 0 Posts
Default

Originally Posted by racer99 View Post
oh ya, thats what soured the earlier deals, they first was easy to satisfy, the second, Chase, kept delaying until the buyers dropped out. like I said, they accepted 20K to release but noted in the docs they didnt considered the debt satisfied. frankly I have no idea if thats even legal?
I know of a lot of problems with Chase and the time frame that they take to make a decision.
The regulations about the collection of deficiency balances, especially regarding real estate, vary from state to state. I would not assume that the lender (Chase in your case) is following the regulations for Washington state. I am not saying that they would knowingly do what they are not allowed, but through experience with them I can tell you that they are so big and cumbersome that sometimes the right hand doesn't know what the left is doing.

I would definitely consult an attorney in Seattle that is versed on the real estate lending regulations in the state.
Old 05-05-2011, 06:41 AM
  #11  
Senior Member
 
Join Date: Jul 2009
Location: Houston, TX / Point Clear, AL
Posts: 3,063
Likes: 0
Received 6 Likes on 4 Posts
Default

Originally Posted by racer99 View Post
oh ya, thats what soured the earlier deals, they first was easy to satisfy, the second, Chase, kept delaying until the buyers dropped out. like I said, they accepted 20K to release but noted in the docs they didnt considered the debt satisfied. frankly I have no idea if thats even legal?
You had leverage before the house was sold. Should have had bank #1 force bank#2 take the partial payment as full settlement. If you signed papers accepting the fact that Chase's debt was not satisfied then you might have opened to door for them to go after you.

You need guidance from someone who knows this stuff.
Old 05-05-2011, 06:51 AM
  #12  
Senior MemberCaptains Club Member
 
Join Date: Oct 2007
Location: Fort Lauderdale
Posts: 12,908
Received 1,454 Likes on 662 Posts
Default

I am amazed by how many people dont hire an attorney to handle these matters..... My best friend just went thru this on his short sale - I told him 100 times to call my attorney and he didnt... He trusted his RE Broker and got screwed....

If the 2nd position didnt take partial payment and release u then it may be problematic....

Good luck and please hire an attorney
Old 05-05-2011, 06:57 AM
  #13  
Senior MemberCaptains Club Member
 
Join Date: Aug 2007
Location: Pinellas, Fla
Posts: 815
Likes: 0
Received 34 Likes on 24 Posts
Default

Racer - You may also have income tax issues related to any forgiveness of debt on the 2nd mortgage, time to call in the professionals.
Old 05-05-2011, 06:57 AM
  #14  
Senior Member
 
Captain Willie's Avatar
 
Join Date: Feb 2010
Location: HAAF
Posts: 25,434
Likes: 0
Received 1 Like on 1 Post
Default

Originally Posted by triplenet View Post
I am amazed by how many people dont hire an attorney to handle these matters..... My best friend just went thru this on his short sale - I told him 100 times to call my attorney and he didnt... He trusted his RE Broker and got screwed....

If the 2nd position didnt take partial payment and release u then it may be problematic....

Good luck and please hire an attorney
I am told here on THT that lawyers are the problem....

2 words: Promissory Note= Personally Liable
Old 05-05-2011, 07:09 AM
  #15  
Senior Member
 
Join Date: Oct 2009
Location: Naples/Ft Myers
Posts: 1,415
Likes: 0
Received 7 Likes on 7 Posts
Default

Originally Posted by Pierless View Post
You had leverage before the house was sold. Should have had bank #1 force bank#2 take the partial payment as full settlement. If you signed papers accepting the fact that Chase's debt was not satisfied then you might have opened to door for them to go after you.

You need guidance from someone who knows this stuff.
x2. And realizing that your situation is specific to the State of Washington, you should only be soliciting specific advice regarding what to do in the State of Washington. Don't be misled by somebody's similiar experience in a different state, as it won't apply to you and could cause you more trouble and money. Look, there is likely a legal remedy, perhaps bankruptcy, perhaps not. But regardless- you need legal counsel in the State of Washington.

Good luck and keep pressin' on!
Old 05-05-2011, 07:14 AM
  #16  
Senior Member
 
Join Date: Mar 2009
Location: Cape Coral... and NOLA!
Posts: 1,419
Likes: 0
Received 0 Likes on 0 Posts
Default

Originally Posted by bel air fishman View Post
Your other post must have been put up while I was typing.

The second mortgage holder would not have received any MI payment. It only covers first mortgages.

I don't know of any federal programs to help you with the deficiency.

Unfortunately, in answer to the third question, the note is a promise to pay and the house is security on the note, so it's really 2 different issues. Even if they no longer have access to the security, they can still collect on the contract to pay what they lent.
Since the first was satisfied, why wouldn't the second move to first position and just have a balance?

Or did they release lien rights to the property just to you?
Old 05-05-2011, 07:14 AM
  #17  
Senior Member
 
Join Date: Jan 2010
Posts: 4,064
Received 87 Likes on 52 Posts
Default

i dont know anything about this stuff, but im sorry for your troubles. look on the bright side though, you're moving to FLORIDA!! boaters and fishermens paradise. again sorry for your troubles
Old 05-05-2011, 07:20 AM
  #18  
Senior Member
Thread Starter
 
Join Date: Jan 2011
Location: Jax, fl
Posts: 448
Received 18 Likes on 10 Posts
Default

Originally Posted by Ft Myers Ken View Post
x2. And realizing that your situation is specific to the State of Washington, you should only be soliciting specific advice regarding what to do in the State of Washington. Don't be misled by somebody's similiar experience in a different state, as it won't apply to you and could cause you more trouble and money. Look, there is likely a legal remedy, perhaps bankruptcy, perhaps not. But regardless- you need legal counsel in the State of Washington.

Good luck and keep pressin' on!

thanks for all the well wishes and yes in the end I know I will need a wa state legal rep.

I did in fact have a lawyer involved at the time of sale and they did indicate that Chase may chose to come after the unpaid balance of the second, which was a HELOC, not a promisary note. at that point in time they were not aware of them doing so but that was also at the time all the major mortgage companies halted activities beacuse they all feared investigations over improper forclosures.

the advice at the time was proceed with the short sale rather than forclosure as it shows fiscal responsibilty should this go to court. Also the first did push for the 2nd to go payment in full the first time and thats why they refused to deal.
Old 05-05-2011, 07:21 AM
  #19  
Senior Member
Thread Starter
 
Join Date: Jan 2011
Location: Jax, fl
Posts: 448
Received 18 Likes on 10 Posts
Default

Originally Posted by wannabefishin View Post
i dont know anything about this stuff, but im sorry for your troubles. look on the bright side though, you're moving to FLORIDA!! boaters and fishermens paradise. again sorry for your troubles
that is absolutely the best of this situation! and thanks.
Old 05-05-2011, 07:23 AM
  #20  
Senior Member
 
Captain Willie's Avatar
 
Join Date: Feb 2010
Location: HAAF
Posts: 25,434
Likes: 0
Received 1 Like on 1 Post
Default

Even with or should I especially with a HELOC--you most likely signed some type of promissory note. VERY few loans are sans promissory. I hope for you there was none.
Most states have statutes that give banks 2-5 years to get a judgment--then 10-25 years to collect. Seek sound advice. Florida ain't far enough.

Thread Tools
Search this Thread

Contact Us - Archive - Advertising - Cookie Policy - Privacy Statement - Terms of Service - Do Not Sell My Personal Information -

Copyright © 2021 MH Sub I, LLC dba Internet Brands. All rights reserved. Use of this site indicates your consent to the Terms of Use.