QUESTION
Is there a chance they may forgive the remainder especially seeing that we had financial difficulty and are not strategically defaulting?
Asked on Aug 28th, 2013 on Foreclosures - California
More details to this question:
We are having financial difficulties even after just completing our chapter 13. Our house is upside down and we are thinking about walking away, not because it is upside down but because we are struggling to pay the 2 mortgages and are unable to sell the house because of loss of value. If our house forecloses, the first loan will definitely be paid in full but the second loan may only be paid half of what is owed so the 2nd will receive some money. Is there a chance they may forgive the remainder especially seeing that we had financial difficulty and are not strategically defaulting? Also I am wondering if we should continue paying our property taxes and insurance until the house forecloses?
1 ANSWER
First, instead of just "walking away," you should try negotiating a cash-for-keys deal with the first mortgage lender. In order to save the costs of foreclosure and eviction, many banks will pay relocation costs. I have heard of deals for as much as $10,000. If the second mortgage is not paid off, the lender can sue for the deficiency. It's possible the lender might decide not to if it determines that you have no assets to satisfy a judgment. But the lender can get the judgment and then hope you will some day acquire enough assets to go after. The judgment would be good for ten years and can be renewed indefinitely.
Answered on Aug 29th, 2013 at 11:23 AM