Home Mortgage issue question

[LdiJ]

If both mortgage loans were discharged in the bankruptcy, the lender cannot collect from your mother any deficiency if she were to sell the house now. She can also remain in the house if she continues to make payments.

She could also walk away from the house with little consequence, since the debt was already discharged in bankruptcy.

 

[zddoodah]

By mortgage not being reaffirmed, does that mean she not liable for any of remaining house balance if she was to sell less than what the house is worth?

It sounds to me like her personal liability on the two mortgages was extinguished by the BK, but she would not be able to sell for less than the combined value of the two mortgages unless the lenders agree to a short sale.

 

[quincy]

It sounds to me like her personal liability on the two mortgages was extinguished by the BK, but she would not be able to sell for less than the combined value of the two mortgages unless the lenders agree to a short sale.

If the mortgage loans were discharged in the bankruptcy, she can sell the house or she can stop paying and walk away from the house, or she can try to refinance the house with a different lender.

If the mortgage loans have not been reaffirmed, the lender can pursue its collateral only. The lender can foreclose if payments are not made or the lender could get a deed in lieu of foreclosure.

For credit reasons, an agreed upon short sale could be smart, this if the mom does not want to keep the house. If she wants to keep the house, she has options.

 

[gmane215]

If the mortgage loans were discharged in the bankruptcy, she can sell the house or she can stop paying and walk away from the house, or she can try to refinance the house with a different lender.

If the mortgage loans have not been reaffirmed, the lender can pursue its collateral only. The lender can foreclose if payments are not made or the lender could get a deed in lieu of foreclosure.

For credit reasons, an agreed upon short sale could be smart, this if the mom does not want to keep the house. If she wants to keep the house, she has options.

Thanks! So since both loans are not reaffirmed they can still try to sue her for collateral?

To agree upon a short sale, do she have to agree with the mortgage company in order to protect her credit? Or her credit will be fine if she just walk away? She doesn't want the house at all, and both mortgages are discharged

 

[quincy]

Thanks! So since both loans are not reaffirmed they can still try to sue her for collateral?

To agree upon a short sale, do she have to agree with the mortgage company in order to protect her credit? Or her credit will be fine if she just walk away? She doesn't want the house at all, and both mortgages are discharged

The house is the bank’s collateral already. The bank can foreclose if given reason to foreclose (e.g., nonpayment) but a foreclosure can affect your mother’s credit.

It is probably better for your mother to list the house for sale before she misses a payment and then get permission from the bank for a short sale rather than to abandon the property altogether.

However she decides to dispose of the property, she can expect to walk away with nothing.

I recommend she seek out legal assistance in her area to go over her options. She will want to do this soon before her options become more limited.

Good luck.

 

[adjusterjack]

By mortgage not being reaffirmed, does that mean she not liable for any of remaining house balance if she was to sell less than what the house is worth?

Understand the difference between selling for less than it's worth and selling for less that what is owed. The liens are still on record and would have to be released by the lenders for her to be able to sell the house. The lenders no longer have any contractual obligation to her because the loans have been discharged and she's no longer the customer. If she sells for less that what's owed the lenders can simply do nothing. No lien release, no sale.

 

[adjusterjack]

Or her credit will be fine if she just walk away?

The bankruptcy has already trashed her credit. If she abandons the house to foreclosure, it won't go from good to bad, it will go from bad to worse.

 

[quincy]

If deciding to sell the house, your mother will want to get the bank to agree to a short sale, if it is clear the house cannot be sold for an amount at or above what is owing on the house.

I mentioned in one of my first responses that the mortgage lender really does not want your mother’s house. They are in the money lending business not the house selling business.

While the bank certainly would prefer that your mother continue with her regular timely payments or have your mother sell the house for at least what is owed on the loans, they could agree to a short sale for that reason. They don’t want the house.

But please please please have your mother sit down with a professional in her area to discuss her current financial situation and see what of the available options makes the most sense for her.

 

[LdiJ]

The bankruptcy has already trashed her credit. If she abandons the house to foreclosure, it won't go from good to bad, it will go from bad to worse.

I disagree. The mortgage was discharged in bankruptcy. It is already noted as discharged in bankruptcy on her credit report and will remain so until it falls off. Therefore abandoning the house will have zero impact on her credit report.

 

[quincy]

I disagree. The mortgage was discharged in bankruptcy. It is already noted as discharged in bankruptcy on her credit report and will remain so until it falls off. Therefore abandoning the house will have zero impact on her credit report.

The bank needs to foreclose to enforce the lien and take possession of the property. A foreclosure affects credit. Adjusterjack is not wrong.

 

[LdiJ]

The bank needs to foreclose to enforce the lien and take possession of the property. A foreclosure affects credit. Adjusterjack is not wrong.

Again, I disagree. For the same reason as I stated previously. The house has been discharged in bankruptcy. The house is already a black mark on the OP's credit. The foreclosure will not do any additional damage. Had she reaffirmed the mortgage and then it went into foreclosure then yes, it would do additional damage. However, she did not.

 

[quincy]

Again, I disagree. For the same reason as I stated previously. The house has been discharged in bankruptcy. The house is already a black mark on the OP's credit. The foreclosure will not do any additional damage. Had she reaffirmed the mortgage and then it went into foreclosure then yes, it would do additional damage. However, she did not.

Not all bankruptcies result in home foreclosures. A foreclosure is another negative mark on a credit report.