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Law Educator, Esq.
Law Educator, Esq., Lawyer
Category: Real Estate Law
Satisfied Customers: 85844
Experience:  Licensed attorney practicing landlord-tenant, land use and other real estate law and litigation.
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My primary residence is a townhome in Millsboro, DE. I have

Resolved Question:

My primary residence is a townhome in Millsboro, DE. I have two original mortgage loans. My primary loan balance is 240,000. My secondary loan balance is $40,000. The current market value of my home is maximum $230,000. I am no longer able to pay these mortgages and I would like to leave my home, and the area. I am unable to pay the residual balance after the sale. My second loan is with a different bank, so a short sale becomes rather improbable.
I feel like my only alternative is to walk away and let the banks foreclose. I have 3 questions:
What are my legal concerns if I allow foreclosure, regarding both the primary bank, and the secondary?
How do I handle the condo association fees that cost in excess of $2,000. annually (I would no longer be able to continue paying)?
How long after I stop paying mortgages before bank forecloses?

Other than a home loan modification, what is your best advice?

Thank you.
Submitted: 5 months ago.
Category: Real Estate Law
Expert:  Law Educator, Esq. replied 5 months ago.
Thank you for your question. I look forward to working with you to provide you the information you are seeking for educational purposes only.

Because of the second mortgage, foreclosure may not still get you out from under I am afraid, since the second mortgage company can still continue to pursue you for the money. In foreclosure, both lenders can pursue you for deficiency if the home does not sell in their auction for enough to cover the balance of the loans due and in that case you would have to consider bankruptcy to get all of the remaining debts you have extinguished.

Condo fees would stop upon the foreclosure auction and would become the responsibility of the party who acquires the house in the foreclosure auction. However, until that occurs you would remain liable for those fees and again bankruptcy may be needed to extinguish this debt with the deficiency debt as well.

Generally, banks begin foreclosure about 6 months or so after you stop paying, but every bank is different and some can take 12 months and there is no guarantee when they would start.

Your two realistic options from what you said would be first hiring a local consumer protection attorney and use them to negotiate with both of your banks and your condo association to possibly give your primary lender a deed in lieu of foreclosure, which is where you give the primary lender the title to the property and they fully satisfy the loan without deficiency or 1099. This would require getting the second lender and possibly the HOA to agree to some type of pay off.

The second option is simply go to a bankruptcy attorney and file bankruptcy and get rid of everything at one time with one attorney's fee and the property would go back to the primary lender and all of your other debts would get extinguished.



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Customer: replied 5 months ago.

How soon after I cease to pay both my mortgages do I need to file for bankruptcy. Is there a particular type of bankruptcy I should file for? I suspect I will not be able to get all three parties to agree to the resolution you stated.


What legally rights for collecting will my creditors have if I do not file for bankruptcy.

Expert:  Law Educator, Esq. replied 5 months ago.
Thank you for your response.

You can do a total bankruptcy under chapter 7 and this would extinguish all of your debts. However, your bankruptcy attorney has to examine all of your assets and debts to determine your qualifications and which method is best for you for your personal financial situation based on all of your financial records.

Generally, you do not really need to file bankruptcy until they start the foreclosure process, which as I said would be 6 months or so.

If you do not file for bankruptcy, the creditors can sue you for any amounts you owe and can get judgments against you and then seek to seize any bank accounts or other assets you have or your other assets.

This situation sounds like you may do best sitting with your local bankruptcy attorney to get the best determination after examining your assets and debts.
Law Educator, Esq., Lawyer
Category: Real Estate Law
Satisfied Customers: 85844
Experience: Licensed attorney practicing landlord-tenant, land use and other real estate law and litigation.
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