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William B. Esq.
William B. Esq., Lawyer
Category: Real Estate Law
Satisfied Customers: 2940
Experience:  I am a civil litigation attorney with experience representing HOAs, homeowners, businesses and others in real estate matters.
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I filed bankruptcy in late 2008. I did not include my home,

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I filed bankruptcy in late 2008. I did not include my home, however, my first mortgage lender did not reaffirm my debt. I also have a small second mortgage with a different lender, and they DID reaffirm my debt. I attempted to do a mortgage modification and was denied. In retrospect, I should have just included my house. My payment is entirely too expensive, and my rate is very high. I am unable to qualify for a refinance, do to my employment history, which has been terrible due to the economy over the past several years. My question is - if I simply walk away from my home, can my first mortgage holder begin to report me as late on my credit bureau, as I have been diligently attempting to increase my score. And what would happen with my second mortgage holder? I owe way too much on the house than it is worth.
Submitted: 8 months ago.
Category: Real Estate Law
Expert:  William B. Esq. replied 8 months ago.

William B. Esq. :

Thank you for using our service. My name is XXXXX XXXXX X would like to assist you today.

William B. Esq. :

When you say that you "did not include your house" in your mortgage, does this mean that you did not list it on your schedule of assets?

Customer:

I'm sorry - no, I filed it in my assets, but I had less than 5% equity in it at the time. I meant that I did not include my home in my bankruptcy. I was attempting to keep it. But, my first mortgage lender did not reaffirm my debt, so it is still reporting that my home was taken in the bankruptcy on my credit report. My second mortgage lender DID reaffirm my debt. I am current on both loans and have never missed a payment.

Customer:

I have a friend in a similar situation, and she did a deed in lieu, which is not affecting her credit history. The difference is that both her first and second mortgage are with the same lender.

William B. Esq. :

Okay, I think I have a little bit better understanding. If you wish to terminate your ownership interest in the home, you will have to deal with both lenders, but it they have slightly different rights. (Your credit will be affected, but you will at least avoid having the ongoing missed payments).

William B. Esq. :

My apologies for the delay, I was reviewing the Ohio codes regarding deficiency judgments following foreclosure to try to give you some additional information. A deed in lieu is a negotiated settlement of your mortgage when it is actually being foreclosed on and usually works with a first and second, only in the case when it is held by the same bank. A first is seldom likely to leave any money for a second if there is no equity left in the home on a short sale or deed in lieu. You may be able to try for a "short sale" instead of a deed in lieu. A short sale actually happens as a negotiated settlement to resolve the mortgage for an amount that is less than the full amount due. You can attempt to contact your banks and see if they are able to see if they are willing to consider a short sale in which both lenders liens are satisfied (even if they are accepting less than the full amount). Short sales are a lot of work, but they can save you a significant amount of money in any future deficiency claim by the second, and will boost your credit score significantly over a deed in lieu or a foreclosure.

William B. Esq. :

Given the situation you have described, I would recommend you take your bankruptcy papers by a bankruptcy attorney for a quick analysis and specific advice/instruction to ensure that you are following a course of action that does not conflict with your bankruptcy judgment, plan, or orders.

Customer:

My concern regarding the short sale is that the second mortgage lender can come back on me for any deficiency... Is that true?

William B. Esq. :

A second lender can come back on you for non-payment under a foreclosure and or a deed in lieu. The best way to deal with this (in most situations) is to get a short sale or sale through that satisfies both through a negotiated amount (both banks negotiate for a percentage of the sale proceeds).

Customer:

Since my first mortgage holder is not reporting that I am current on my mortgage, or paying as agreed, due to them reporting that the home was included in the bankruptcy - if I made partial payments, can they then come back and report that I am delinquent to the credit reporting agencies?

William B. Esq. :

While I am not entirely clear as to how the bank is reporting these financial documents - They can report the debt as having been reported in bankruptcy (you are required to report the debt in bankruptcy, it was stayed), they should then change the reports to reflect any non-payments that you have made.


If your primary concern is the way in which they are reporting these issues, you can file a petition with each of the 3 credit reporting agencies, and if they fail to correct the issue promptly, you can then send a demand to the lender asking them to reflect the claims properly.


 

Customer:

OK, thank you - I appreciate your help. Hopefully things will improve financially over the next few months. If not, I will take your advice and try to speak to another bankruptcy attorney. Thank you for your time...

William B. Esq. :

You are welcome, I do wish you the best, XXXXX XXXXX hope things improve.

William B. Esq., Lawyer
Category: Real Estate Law
Satisfied Customers: 2940
Experience: I am a civil litigation attorney with experience representing HOAs, homeowners, businesses and others in real estate matters.
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