Foreclosure in 85035>Question Details

Colroc, Home Seller in 89128

We live in Vegas and have applied for a short sale with 1st. We owe 72K to WF Bank on a 2nd and have stopped paying. How bad can they hurt us?

Asked by Colroc, 89128 Thu Sep 30, 2010

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What exactly do you mean by "hurt?"

Every time you miss a payment, it dings your credit history. If there's value in the home, they could foreclose, but they'd have to satisfy the 1st and then sell the house to recapture their cash. They could sue you for the difference, but the law, as interpreted only by an attorney, would be the determining factor. Anyone can sue anyone.

So, I'm not sure what your definition of "hurt" is.
0 votes Thank Flag Link Wed May 18, 2011
as part of the negotiation your Realtor should suggest an amount to pay to the second lien holder. That could be somewhere around 5k. However, if your laws are similar to AZ, after a foreclosure a lender can go after you for the deficiency on the 2nd mortgage if it was a non purchase money loan. That effects your negotiating position when you do the Short Sale. In a Short Sale you need to negotiate that the lenders (both of them) release you from the deficiency. If you don't have savings and a low income you have a better position to negotiate on the 2nd. I suggest you talk to an attorney now because what they say may effect your choice between short sale and foreclosure and may be bankruptcy and also your strategy in the short sale negotiation.It sound more difficult than it is. A good real estate attorney should be able to lay out the options and consequences for you. I work with one here in Phoenix. He does such a consultation for $95 over the phone. It's half an hour and you know where you stand. I hope you find someone like that in Vegas.
0 votes Thank Flag Link Tue Oct 5, 2010
HI:
Before you go any further, you should talk with a lawyer who works in short sales and a cpa. The question is tough to answer because there are a lot of varaibles.good luck.
0 votes Thank Flag Link Fri Oct 1, 2010
Anytime you have late payments or no payments on any loan or line of credit it will have negative ramifications on your credit.
0 votes Thank Flag Link Fri Oct 1, 2010
One small addition. We recommend people talk with either a tax attorney or enrolled agent (a higher level CPA) who is well acquainted with IRS rules regarding deficiencies. Some, perhaps many, CPA's are not well studied in this area of tax law and you could end up with incomplete information and advise.
0 votes Thank Flag Link Thu Sep 30, 2010
As others have suggested you need to speak with an attorney and an accountant in your home state. Recently FHA announced if a person voluntarily walks away from a mortgage backed loan that they could afford, FHA will not give them another loan for 7 years. In addition banks are going to start collecting the loss on their loans from the borrowers. Banks are negotiating the sale of the home at less than the mortgage amount. The home is only the collateral on the loan. There is a thought out there that, the promissory note borrowers signed can still be enforced. This is one reason why you need legal and accounting advice.
Web Reference: http://www.gergurroz.com
0 votes Thank Flag Link Thu Sep 30, 2010
Colroc,

Was the $72K used for acquisition of the property? That is a key issue. Is the property in ARIZONA or NEVADA? You really need to speak to an attorney in the state in which the property is located.

We (agents) see this question or similar questions asked often. Not only are real estate agents prohibited from giving legal or tax advice, but even if they could, your financial situation is completely unique and would require someone to know the most intimate details of it in order to give advice that could impact you for years. Do yourself a favor and spend $250-$300 dollars to talk to someone that can really give you good sound advice and good luck! If you're in Arizona here are some possible links for legal assistance:

http://www.azbar.org/LawyersHelpingYou/freelegal.cfm
http://www.azlawhelp.org/housing.cfm
http://www.azbar.org/LegalResources/findspecialist.cfm
0 votes Thank Flag Link Thu Sep 30, 2010
You should be asking both lenders for a short sale. The first mortgage will take the biggest amount and someone should negotiate with the second to take a less. I hope you do have a Realtor or an attorney assisting you. It does happen as long you do have a financial hardship.

Bottom line is the second gets nothing if the first forecloses
0 votes Thank Flag Link Thu Sep 30, 2010
I would strongly advise you to contact an attorney & tax consultant. They will best advise you on your financial & tax liabilities. If you agent is not using an attorney or negotiator, insist that your short sale approval letters include language releasing you of liability for the difference owed. Good luck.
0 votes Thank Flag Link Thu Sep 30, 2010
You will need to apply for a short sale to all liens. You are asking a question that is best directed to a real estate attorney who can assess your overall situation. I would suppose your worst case scenario would be that they foreclose on you and also hit you up with a difficiency judgment.
Web Reference: http://www.jameswehner.com
0 votes Thank Flag Link Thu Sep 30, 2010
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