Forclosure question - Posted by Ray

Posted by Ray on January 28, 2003 at 05:46:39:

It is located in Covington PA

Forclosure question - Posted by Ray

Posted by Ray on January 27, 2003 at 20:13:34:

I purchased a second home about a year ago. I started rentivating the home last summer. It is not close to being finished yet. My wife is now unable to work due to health problems and I am now unable to make the paymenst on the second home. I tried to sell the property for less then I owe on it but failled. I was just wondering what will happen if the bank forcloses on the mortgage? I don’t care about loosing the house or my credit. I just want to be able to keep the house my wife and I live in. Our house is mortgaged through a different bank and we are not at all behind on those payments. My question is if they take the second home and cant sell it, or sell it for less then what I owe them, can they take my home or put a lien on my personal home? Thank you for your time,

Re: Forclosure question - Posted by JT-IN

Posted by JT-IN on January 28, 2003 at 09:12:29:


Unfortunately for you, the State of PA allows what is called a deficiency judgment, in the event that your lender loses money on the resale of this property. What you could try to negotiate is a “Deed in Lieu of Foreclosure” with your lender. This would be an arrangement where you would deed the vacation home to them, in exchange for not foreclosing, and what you will want to stipulate is, if the lender is initiatially interesting in doing so, that in the agreement the Lender will waive the rights to any deficiency judgment. They may or may not go for this, depending upon your personal financial situation and their corporate policy or Bank Charter.

It is certainly worth a try, but do not lead off with the subject of them waiving the Deficiency Judgment, as they may spot where you are going with this. Short of the Lender accepting this agreement, you may want to do a number of other asset protection manuevers. While it may not be a fool proof manuever, you might consider deeding your present house to another (trusted) party. As long as your equity position is not heavy, you may be able to get away with this move… again depending on timing. The longer the time span between deed transfer of your existing home, and any future action, (like a year or more) the better.

You will no doubt be able to survive this potential future liability if you do the right things NOW. Best of luck on nailing that down.


Re: Forclosure question - Posted by JHyre in Ohio

Posted by JHyre in Ohio on January 28, 2003 at 08:00:33:

The answer to your question turns on your state’s law, with which I am not familiar. In general, if the foreclosure sale does not net enough to pay all costs to the lender, the lender can use the judgment to put a lien on anything you own. Some states do limit the time that such a lien can last.

John Hyre

Re: Forclosure question - Posted by MICHEAL

Posted by MICHEAL on January 27, 2003 at 20:36:31:

Where is the house located?

Re: Forclosure question - Posted by Ray

Posted by Ray on January 28, 2003 at 16:28:41:

Thanks so much. I see where you are going with this. How would I go about deeding my home to someone else. Im not exactly sure what a heavy equity position is. I only purchased the home a few years ago and have very little equity in it. Also, what about my cars and other personal property?