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Roger
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Category: Bankruptcy Law
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How do I handle a house foreclosure - Ive stopped making payments

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How do I handle a house foreclosure - I've stopped making payments since Jan - but the bank has not foreclosed or begun proceedings. I'm more concerned about legal ramifications after foreclosure -house is in Texas - a non-recourse state - but deficiency judgements can be made. Fortunately, judgement only issued if fair market value of house is less than mortgage owed (currently not the case - but close - that's why I think bank is waiting) - any suggestions? Have sent in keys to bank for deed-in-lieu - but received no response from them...
Submitted: 3 years ago.
Category: Bankruptcy Law
Expert:  Roger replied 3 years ago.

There's really nothing you can do to force the lender to act faster.

 

You are right that a deficiency judgment may be obtained when a property in foreclosure is sold at a public sale for less than the loan amount which the underlying mortgage secures. These judgments are limited to the difference between the fair market value of the property (regardless of what the property sold for at the foreclosure sale) and the defaulted loan amount at the time of sale. Fair market value is determined by appraisal.

 

It is possible that the lender is waiting on property values to increase, but it has that right. The flip side is that the higher the market value, the more the property will sell for, thereby decreasing your exposure for a deficiency.

Customer: replied 3 years ago.
Okay - understood that - but while waiting, non-payments to the mortgage are accruing - which, if I'm correct, gets added to the balance owed on the mortgage correct? So, the long I wait, the more my mortgage increases (in terms of what's owed - $4100/mo)... Is there something I can do to freeze the mortgage owed part - that's why I sent in the keys as part of a deed-in-lieu - which I understand they don't have to accept. Any suggestions?
Expert:  Roger replied 3 years ago.

Interest is growing on your unpaid balance, yes. Also, if you're in default, the lender has a right to these fees and interest under the mortgage documents, so there's really no way to stop them from accruing.

 

You're just going to have to take what you signed up for if you defaulted. There's no goo way out of this if the lender will not accept a deed in lieu.

Customer: replied 3 years ago.
okay - one other quick question - the main reason I came here to begin with - since the house technically isn't in foreclosure - and I can't make the payments - I was forced to take a job in another state (NYC) - now, there's no way I can afford here and there - there's no budget for it - that's why non-payment (was let go from job in Texas). Should I declare bankruptcy to head them off - though technically I'm paying all my bills - just not the mortgage - and no other outstanding debt - no car payments or onerous credit card bills - but used up all my 401K when I was out with a stroke which caused this whole disaster.

Don't worry- I know I'm asking a lot for the low price - I'll increase my offer since you've been nice enough to keep answering...
Expert:  Roger replied 3 years ago.

Filing bankruptcy will get rid of a deficiency judgment. However, my suggestion is to wait and see what they're going to do before taking that route, especially if you're current on all other debts.

 

It may be that the lender will take a deed in lieu of foreclosure at some point in the future, and if that occurs, you wouldn't need to file for bankruptcy.

Roger, Attorney
Category: Bankruptcy Law
Satisfied Customers: 25226
Experience: BV Rated by Martindale-Hubbell; SuperLawyer rating by West
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