Foreclosure Question

[DannyH]

So my mother is now paying $1,852.00 a month on a $185,000 mortgage. Her payment is scheduled to soon go up again and will be over $2,000.00. When she purchased the home she got into an ARM and now she can't get refi'd.

Will the banks try to come after her and make crazy collection efforts if she walks away from the house? It is my understanding that since it is her original loan the banks can not gain judgements against her and can not make attempts at wage garnishments, etc. The loan consists of a first and a second (the second was only used to avoid mortgage insurance at the time she purchased the house).

 

[essexjet]

So my mother is now paying $1,852.00 a month on a $185,000 mortgage. Her payment is scheduled to soon go up again and will be over $2,000.00. When she purchased the home she got into an ARM and now she can't get refi'd.

Will the banks try to come after her and make crazy collection efforts if she walks away from the house? It is my understanding that since it is her original loan the banks can not gain judgements against her and can not make attempts at wage garnishments, etc. The loan consists of a first and a second (the second was only used to avoid mortgage insurance at the time she purchased the house).

WOW thats over 11% interest rate! Have to talk to the bank first and get the note renegotiated to a pay she can afford.

 

[C-2]

So my mother is now paying $1,852.00 a month on a $185,000 mortgage. Her payment is scheduled to soon go up again and will be over $2,000.00. When she purchased the home she got into an ARM and now she can't get refi'd.

Will the banks try to come after her and make crazy collection efforts if she walks away from the house? It is my understanding that since it is her original loan the banks can not gain judgements against her and can not make attempts at wage garnishments, etc. The loan consists of a first and a second (the second was only used to avoid mortgage insurance at the time she purchased the house).

Correct.
If the first/second was used to purchase the home, then both loans are covered by the "purchase money" exemption which prevents banks from pursuing deficiency balances.

FannieMae has a 5-year barfor walk aways, but BFD.

She takes a hit on the FICO but that's it, no collection stuff.

 

[Faceaz]

We just purchased a house & are paying 2,300 per mo. on $330k loan, impounded & everything. Seems like she should be able to get her payments donw quite a bit.

 

[DannyH]

We just purchased a house & are paying 2,300 per mo. on $330k loan, impounded & everything. Seems like she should be able to get her payments donw quite a bit.

She's been trying to get a refi for over 12 months now and has not had any luck. Mid 6 Fico, I think she's 90% LTV. Noone will touch it.

 

[Wmc]

If she can go full doc W-2 & paystubs have her rate & term into an FHA loan it goes up to 97% LTV. Or call the lender and modify her loan directly with them. Some of the bigger lenders are doing that now in order to avoid foreclosure and the owner walking away. Good Luck.

Wendi Cook
Provident Bank Mortgage

 

[SBjet]

The banks won't talk to you until you miss a few payments, then they get reasonable.

 

[ChumpChange]

Before too much advice is given. What state does she live in? Seeing as you are in CO and everybody responding is in CA. Where is her house at?

 

[Wmc]

Before too much advice is given. What state does she live in? Seeing as you are in CO and everybody responding is in CA. Where is her house at?

FHA is nationwide, so she can go into any local bank and try to get an FHA deal, of course if she can qualify full doc.

 

[Outnumbered]

As stated above, FHA would be my first choice. If she is not able to income-qualify for FHA (credit should not be an issue with mid-600's FICO) then she is a prime candidate for a lender re-negotiation. Most lenders are willing to do it if the need is legit.

Good luck

 

[ChumpChange]

FHA is nationwide, so she can go into any local bank and try to get an FHA deal, of course if she can qualify full doc.

True but since his question was in regards to forclosure procedures, state specifics would be needed for a correct answer.

 

[69 1/2]

As your mom she must be middle aged, can't she pay some more down and get below 80% LTV? The payment on that balance should be around $1,100.

 

[C-2]

Before too much advice is given. What state does she live in? Seeing as you are in CO and everybody responding is in CA. Where is her house at?

I assumed the Chino area where Boozer is from?

 

[DannyH]

My mother lives in Aurora, CO. (Denver suburb).

 

[C-2]

Correct.
If the first/second was used to purchase the home, then both loans are covered by the "purchase money" exemption which prevents banks from pursuing deficiency balances.

FannieMae has a 5-year barfor walk aways, but BFD.

She takes a hit on the FICO but that's it, no collection stuff.

Strike that then, not sure about CO laws.

Let me pose the question to some REO peeps in that area, maybe get you an answer.

 

[DannyH]

Strike that then, not sure about CO laws.

Let me pose the question to some REO peeps in that area, maybe get you an answer.

I appreciate that. I'm going to call the Citibank (her lender) tomorrow and try and find out about renegotiating her terms.

 

[Faceaz]

She's been trying to get a refi for over 12 months now and has not had any luck. Mid 6 Fico, I think she's 90% LTV. Noone will touch it.

I understand that. Even with a great income / debt ratio & credit, the lender asked for some pretty crazy shit from us. Maybe an FHA Loan?

 

[C-2]

I actually did an asset investigation on a borrower over a deficiency following a foreclosure sale in CO. In my case, it was a CO bank, but the borrower lived here in Cali (was trying his hand at flipping in CO). The bank filed and obtained a judgment for the deficient balance ($40k), so they can puruse it (they then naturalized the judgment here in Cali since judgments do not cross state lines).

Figuring out what they're doing on owner-occupied residences is the key, and whether or not they are pursuing deficiency balances. They use a public trustee, but can also use a non-judicial process (like California). A big REIT might not be pursuing deficiencies. My client was New Frontier, a smaller bank I think?

 

[essexjet]

If she can go full doc W-2 & paystubs have her rate & term into an FHA loan it goes up to 97% LTV. Or call the lender and modify her loan directly with them. Some of the bigger lenders are doing that now in order to avoid foreclosure and the owner walking away. Good Luck.

Wendi Cook
Provident Bank Mortgage

I think 97% might be a little difficult now a days with FHA underwriters cracking down on more then 1x30 even rate and term.
bottom line Boozer the bank doesnt want her house and a loan modification might be the route.