Roger : Hi - my name is XXXXX XXXXX I'm a Real Estate litigation attorney. Thanks for your question. I'll be glad to assist.
Roger : The short answer is no, you are not liable for the loan balance or deficiency (post foreclosure) amount. The only person responsible for that amount is the one who borrowed the money.
Roger : The only thing that you and your siblings stand to lose is your interest in the house.
Roger : Because the bank's lien precedes your interest in the property, your ownership is subject to the lien of the bank.
So none of us has to answer the summons. If someone does contest it, does that affect any of the others?
Roger : The reason that you're being sued is that the lender MUST obtain your interest in the house in order to foreclose and be able to transfer fee simple title.
Roger : Thus, the lender is suing each of you for your ownership interest in the property - - and not for you to pay the loan balance or deficiency.
Roger : However, it's best to respond to the complaint or make contact instead of allowing the lender to default you.
Roger : USUALLY, if you contact the lender and offer a quitclaim deed for your interest, they will release you from the lawsuit.
Why does it matter if we answer the summons? Does a judgment against us have an consequence?
Roger : All the lender wants is each of your ownership interests, so if you are willing to give that to the lender, then the lender should leave you alone.
Roger : You'd have to look at the complaint to be sure, but the relief requested against each of you is likely just to acquire each of your interests in the property. In that case, it likely would be no issue if you didn't respond. HOWEVER, if the complaint says anything about assessing you with fees, etc., then it's better to respond.
Roger : Your response could be as simple that you're not a borrower/debtor for the mortgage, that you're not liable for the debt and that you are willing to transfer your interest without objection.
The lender can have my interest in the property. Why would we be responsible for any fees?
Roger : Generally, you would not, BUT if you fail to respond and the lender defaults you, it can ask for fees, and IF you're not there to object, the judge may give it to the lender.
What about the siblings that don't get served because they can't be located?
Roger : The lender could publish a summons for them in the local paper IF they can't be personally served. The judgment would be effective against them just as if they were personally served.
So all we have to do is answer the summons stating we have no interest in the property and give up our interest in it and this should end this issue once and for all?
Roger : Should be.
Roger : In fact, if you contact the attorney for the lender, you should be able to get a quitclaim deed for each of you and return that to the lender's attorney, and in exchange, the lender should dismiss the claim against each of yoou.