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We live in the state of NH and our house is currently on the…

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We live in the state...
We live in the state of NH and our house is currently on the market for fair market value. It is in 'deferred maintenance condition'. We were advised by our real estate agent to list it for 189,000 and we currently owe 200,000. We also have a home equity line of credit for 24,000.

We have a one bedroom apartment in the house, that we had rented for 650 a month and the renter has vacated in January. We do not have another tenant at this time.

Our monthly mortgage payment is 1800 for the house, after a loan remodification (3 years ago) and the home equity line payment is 200 per month.

We have one source of income, as I stay home and home school.

Our current finances do not allow us to continue to live in this home.

What would be your recommendation, given the current financial status.

Short sale?
Deed in Lieu?
Bankruptcy?
Submitted: 6 years ago.Category: Landlord-Tenant
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Answered in 2 minutes by:
2/22/2012
Lawyer: insearchoftheanswer, Lawyer replied 6 years ago
insearchoftheanswer
Category: Landlord-Tenant
Satisfied Customers: 57,203
Experience: Lawyer; developer/owner of RE developments.
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Good afternoon. New Hampshire, unfortunately, is a deficiency state...which means the lender can pursue you for the deficiency...the amount owed over the amount of the foreclosure sale. Whether or not they will depends upon their assessment of the collectibility of a deficiency judgment. So, if you can convince them you have nothing for them to get, and that if they were to pursue a judgment, you would simply file for bankruptcy protection and get the judgment discharged-and even if you have no intention of doing so, it is still good leverage with the bank because they do not know you will not do so--- then it is unlikely the lender will spend the time and money necessary to get a judgment they believe is uncollectible in the end.

 

The other choices are a short sale or a deed in lieu of foreclosure. I would avoid a short sale. I would either do a deed in lieu of foreclosure with the bank (where the bank accepts a deed in exchange for releasing me from the loan) or I would let the bank foreclose. A deed in lieu of foreclosure saves the bank the time and expense of foreclosure. A short sale only frustrates the buyer and costs you more because the broker is paid a commission which results in less proceeds being available to the bank.....and if the bank is going to release you from the deficiency, it would do so under a deed in lieu of foreclosure without the frustration to the buyer and the payment of the broker commission.

 

If either of the banks come after you personally, then consider bankruptcy get any judgment discharged.

 

 

I hope this has given you information that has been helpful to you. I wish you the best of luck!

 

If you have a follow-up question, please remember that there might be a delay between your follow up questions and my answers because I may be helping others or taking a break.

 

If I have adequately answered your question, even though the answer might not have been the one for which you hoped, I would appreciate it if you would please click the GREEN ACCEPT button so that I receive credit for my work; otherwise, though you have made a deposit, I do not receive credit.

 

If you need additional clarification on this question after clicking ACCEPT, please do not hesitate to click Reply and I will be happy to do what I can to help you further. Thanks for allowing me to be of service to you.

 

Please be aware that the information provided here is not legal advice. Rather it is simply general information. All states have intricacies in their laws and any information given is simply information only and specifically is not intended to be, nor does it constitute, legal advice. This communication does not establish an attorney-client relationship with you. I hope this answer has been helpful to you.

 

 

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Customer reply replied 6 years ago

Our bank is currently Bank of America. We called and discussed with a mortgage officer the idea of deed in lieu. He said we could not do that until we tried a short sale.

Our first choice was to go with deed in lieu because we were still current on our mortgage payments.

 

How do we proceed with a deed in lieu? We will not be current on our mortgage with out a tenant in the Month of March.

 

 

Lawyer: insearchoftheanswer, Lawyer replied 6 years ago
Just stop making payments on the loan. Once you do that and you are a few months behind, you will get the banks attention. They really won't deal with you until the loan is non-performing because until then they simply have no incentive to do so.
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Customer reply replied 6 years ago

Would you advise us to seek out a local attorney to initiate the process? Is that how the deed in lieu is taken seriously?

Or wait a couple months with non-payment and talk to the bank again?

Lawyer: insearchoftheanswer, Lawyer replied 6 years ago
You don't need an attorney yet. Wait a few months without making payments and then talk to them yourself. Having an attorney actually sends the wrong message...you're trying to convince them you have nothing for them to get and having an attorney can irritate them because they think you have money to pay the attorney, but not them.
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Customer reply replied 6 years ago
If we proceed with a deed in lieu, would we be held liable for the home equity line of credit?
Lawyer: insearchoftheanswer, Lawyer replied 6 years ago

The deed in lieu with the first lienholder will not release you from the other one. You will need to negotiate with them separately.

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Customer reply replied 6 years ago
Okay, it is the same bank and it was all part of the purchase of the house. So, the bank will look at the mortgage deed in lieu separate from the home equity? Is there a process to 'getting out of' the home equity line of credit??
Lawyer: insearchoftheanswer, Lawyer replied 6 years ago
If it's the same bank, then you can negotiate a release of both of them at the same time as part of the deed in lieu.
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Customer reply replied 6 years ago
What is the typical time a deed in lieu affects your credit rating poorly, as to not being able to purchase another property?
Lawyer: insearchoftheanswer, Lawyer replied 6 years ago

Typically 2 years before you will qualify for a conventional loan.

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Customer reply replied 6 years ago
In the event we are taken to court by the mortgage company, does the court attach assets to settle the deficiency of the mortgage?
Lawyer: insearchoftheanswer, Lawyer replied 6 years ago

The court does not do that, the creditor does if the judgment is awarded in their favor.

 

 

I would appreciate it if you would please click the GREEN ACCEPT button so that I receive credit for my work; otherwise, though you have made a deposit, I do not receive credit.

 

 

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Customer reply replied 6 years ago

I guess I am unclear on the process of deed in lieu. If the mortgage company, after a few months of non-payment of the mortgage, will not reconsider the offer of deed in lieu on our part, what is the typical next step? Does the mortgage company pursue foreclosure? Does this mean they take us to court?

 

What would constitute the court ruling in favor of the mortgage company?

 

 

Lawyer: insearchoftheanswer, Lawyer replied 6 years ago
If the deed in lieu is not worked out and there is a foreclosure, then the bank will make a determination as to whether pursue you for any deficiency. That would be a separate suit from the foreclosure.
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