Bernadette, Home Buyer in Minnesota

my arm is due may of 09 with my 1st mortgage and 2nd mortgage is may 2010. i tried to refinance with

Asked by Bernadette, Minnesota Wed Jul 2, 2008

my
present lender and many other different lenders but failed. they said my credit score is low- about 630 with one bureau and the other was 680. what else can i do if i can't refinance- foreclosure? i am running out of time. thank you!

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https://www.revisor.leg.state.mn.us/statutes/?id=582.30&…

It appears that the vast majority of the time a foreclosure by advertisement will result in the loss of the lender's right to a deficiency judgement. However, there are some exceptions to that rule of which people facing that situation should be aware. That statute is very complicated and as such I would recommend that anyone reading this because they may be facing foreclosure contact an attorney to find out what your specific rights are.

Cameron Piper
Web Reference: http://www.campiper.com
0 votes Thank Flag Link Mon Jul 7, 2008
I don't beleive there is legislation preventing collecting a deficiency judgment when doing Foreclosure by Advertisment. The advantage of this method vs. judicial is that is much faster and streamlined...a lot less hassle vs judicial foreclosure. BUT - judgments are allowed...seems to be more of a practice to not collect the judgment so the case can be closed out, and be done. Maybe a local attorney there can site legislation that confirms what Aaron says...here is a good site for explaining more details:
http://www.extension.umn.edu/distribution/businessmanagement…
0 votes Thank Flag Link Sat Jul 5, 2008
Aaron,

I have heard other agents state this but have never been able to find the statute that specifically dealt with it. I have had attorney's tell me conflicting information on this. Are you able to quote a source about foreclosure by advertisement not being able to take a deficiency judgement so that I can settle this in my mind once and for all?

Cameron Piper
Web Reference: http://www.campiper.com
0 votes Thank Flag Link Sat Jul 5, 2008
Thanks Aaron for clarifying the specific rules for Minnesota. Some states allow Judicial Foreclosure, Others Non-Judicial...in Minnesota, both are allowed. From my understanding of Minnesota's law, with a Foreclosure by Advertisment, any bid in excess of the amount owed the mortgagee at the sheriff's sale/auction is a surplus that MAY be reached by junior lien holders. If no such holders exist, the surplus must be returned to the mortgagor. Any SHORTAGE though is a deficiency that can be pursued. When the redemption period is twelve months, the mortgagee can obtain a deficiency judgment in the amount of the difference between the fair market value of the property and the amount remaining unpaid on the mortgage by initiating a lawsuit within 90 days following the foreclosure sale. I guess the point is, this is exactly why I ALWAYS get a total release and waiver in writing - I don't care what state the client is in or what the practice is...if the law allows a judgment, I need something in writing to protect the homeowner.
0 votes Thank Flag Link Wed Jul 2, 2008
Tom's 1st 1/2 of his answer was great but in Minnesota most foreclosures are "foreclosure by advertisement" in which the lender gives up the right to place a judgement against the homeowner.
0 votes Thank Flag Link Wed Jul 2, 2008
I have a client in a similar situation - but he is actually an investor that got in over his head and has an ARM adjusting that will put him in a negative cash flow...he can't refi, and the lender won't do a loan modification.
I will be representing him to sell his home for less than he owes, and have the bank consider the lower sale price full payment for his outstanding mortgage...this is called a SHORT SALE.
The reason we are doing this is because if there are no other programs he can qualify for to refi into a fixed loan, and assuming he wants to preserve as much of his credit as possible without showing a foreclosure, lien judgment, or bankruptcy, a short sale is the beest option. When you get foreclosed on, the judgment for the amount you owe on your mortgage follows you ... i.e. garnished wages, lawsuit, etc...UNLESS you file for bankruptcy. If for example you owed $250K and the house sold at auction for $200K, there would be a judgment against you for the different of $50K. With a short sale, and depending on who your lender is and how your case is presented to the lender, the debt is forgiven once the short sale closes. And although you will have a ding on your credit due to possible missed payments, and reflecting the settlement via short sale, you can recover from that much easier and quicker vs showing a foreclosure or bankruptcy on your credit profile.

Go to the FAQ section of my website http://www.shortsaletosell.com for more information on short sales and how they work - or call me at: 732 822 6870 Good luck. Tom
0 votes Thank Flag Link Wed Jul 2, 2008
Check this government web site out... http://www.hud.gov/local/mn/homeownership/foreclosure.cfm

It can direct you to state approved counseling and lending resources geared toward your situation.
Good Luck.

Phyllis Lerner
Associate Broker
Legends Realty Group LLC
http://www.westchester-real-estate.us
0 votes Thank Flag Link Wed Jul 2, 2008
I think you need one of the new FHA Secure loans that i think go into effect this month. Call an FHA lender in your area. The law changes just went into effect and are specifically geared toward people in your situaton. Good Luck.
Web Reference: http://www.CarolPease.com
0 votes Thank Flag Link Wed Jul 2, 2008
Bernadette: you can call your lender(s) and ask for a loan modification. If you can prove to them the reajustment of the rate will cause you to fall behind on payment they likely will hold your rate where it is. I have seen a lot of my clients do that and it works well. Best of all its free! Good luck.
Web Reference: http://www.lennyfrolov.com
0 votes Thank Flag Link Wed Jul 2, 2008
Bernadette,

If you can't refinance, you really have two options.

You can stay in your home and adress the payments as they adjust. Read your documents and find out how fast they can go up and then calculate what your payments will be when they do, you may be surprised. Your loan officer or a good realtor would also be able to help you with this if you don't feel comfortable doing it on your own.

Your second option is to sell your home and rent for a time while your credit is repaired and you can save up some cash for a downpayment.

Please let me know if you have any further questions or if I can be of any assistance.

Cameron Piper
Web Reference: http://www.campiper.com
0 votes Thank Flag Link Wed Jul 2, 2008
Take a look at the terms of your ARM... you might not reset as much as you think. If you've been rate shopping too much that could bring down your score some as well. Talk to a good loan officer regarding what things you can do to improve your credit score... you have 10 months, which should be plenty. If you go through foreclosure you end up destroying your credit, which raises rates on your credit cards and makes things very hard for you credit-wise for several years to come. It should be your last resort.

What about taking on a roommate?
Web Reference: http://www.AaronSOLD.com
0 votes Thank Flag Link Wed Jul 2, 2008
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