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Posted by yawni on October 06, 2004 at 04:07:30:
In Reply to: After effects of a foreclosure - WI posted by Lori on September 29, 2004 at 09:02:16:
: I live in Wisconsin and my sister's home is going into the foreclosure process. We are living in the house now but can't afford the up keep anymore. We are behind in the taxes, and waiting for something else major to happen to the house. The house needs work, and I don't think we can sell the house and make enough to pay off the loan. I know that credit ratings are affected. Is there any other reprecussions like there is with a car repossession? If we don't fight the foreclosure and we can't find someone to buy the house, once the foreclosure happens it that the end of it?
Hi!
You need to find out if the lender can get a deficiency judgment against your sister in your state. This would be a judgment for the difference between the foreclosure sale price and the amount of the mortgage loan, if the proceeds did not pay off the entire loan. Such a judgment could be used to attach any non-exempt personal property (property not protected against a sale to pay off the judgment debt),any after acquired property, or to garnish wages from work, etc.
In California, a borrower of the money to purchase the home is protected against the lender foreclosing on the property and, then, suing the borrower when the sale proceeds are not enough to pay off the loan debt, or "purchase money mortgage".
Talk to some realators about the likelihood of selling and, then, have your sister call up the lender and ask to talk to someone about the delinquent loan and what options, or suggestions, they might have.
If the property has not appreciated, or the market is depressed, the lender doesn't want to have REO "real estate owned" on its books and may be willing to "renegotiate" the loan. ie take six months of back payments and tack that amount on to the loan balance and stretch payments out (amortize) the loan over 40 years instead of the standard 30 years. This would lower monthly payment amounts.
This may not work if the mortgage has been sold to a real estate investment trust or other investor who might be willing to take his losses and just move on.
Another option might be "a deed in lieu of foreclosure" whereby the bank just agrees to accept the deed to the property from your sister, which conveys the property directly to the lender, in exchange for canceling the loan: an even trade and no damage to credit.
I would need more facts to advise you properly. For example, whose name is the loan in? Is preserving her credit a priority? What are the alternative living situations available? Is real estate a good investment in Tenn. long term?
Anyway, it all depends on what you and your sister want to do, or would like to do. You never know until you investigate the possibilities. Keep on asking questions. Try to avoid foreclosure, if you can.
Good luck! -yawni-
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