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Massi, Home Seller in New Jersey

I am a co-borrower on my firend's house. How a short sale will affect me ?

Asked by Massi, New Jersey Wed Mar 11, 2009

I am a co-borrower on a $195,000 home equity on a house owned by a friend of mine. My friend also has a mortgage on this property for the amount of $350,000, he has been paying the monthly required home equity loan, but started defaulting on his mortgage and he is now on his 5th month and the default amount including penalties is around $16,000. The property is located in New Jersey. I asked him to get my name out by refinancing and consolidating the 2 loans to 1 loan, but banks do not want to refinance him since he owes about $560,000 and the property is appraised to $500,000. I asked my friend to pursue a short sale of the property, since these 2 loans are from 2 different banks, would the 2 banks agree to short sale?. How the short sale will affect me (being a co-borrower on the equity) ?. Any other advice how to get out of this mess is welcome.

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Thank you for the advice, I have been monitoring online the home equity loan payments and so far so good ,my friend is making the monthly paiments. And I just got my credit report, the home equity loan is shown on my credit report, but since my friend is paying there is no negative comments. But What I am concerned now is that if the bank holding the home equity loan would not agree to short sale, or if the short sale goes thru but the 2nd bank won't get enough to cover the equity they will come after me. I want to get a legal agreement that will keep my friend honest on continuing the paiment of the equity left to be paid. My question is: what kind of lawyer should I consult, general practice ?, finance ? or real estate?. Thank again for your great advice.
0 votes Thank Flag Link Thu Mar 12, 2009
I agree with the first answer.
Your credit is definitely being affected.
My suggestion to you would be to contact the bank who has the home equity loan and make sure that your friend is paying as he says he is. He may not be paying.
Then I would suggest that you contact a lawyer for legal advise in this matter.
Whatever your friend does to rectify HIS situation will definitely affect YOU also.
You need legal advice.
Web Reference: http://www.Needhammer.net
0 votes Thank Flag Link Thu Mar 12, 2009
Hi Massi, I am afraid you are already in trouble. If you are a co-borrower on the loan, it is reflected on your credit report. Since loan is already 5 months over due - your credit score is taking a beating.

Short sale is your best shot to get it off. You should hurry, because banks usually start foreclosing precess after 6 months delinquency. And having a Foreclosure on your credit is not fun at all.

Good luck!
M.
0 votes Thank Flag Link Wed Mar 11, 2009
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