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Mysteryvxn, Other/Just Looking in Orange County, CA

What happens after a foreclosure. I live in Southern CA and my house foreclosed in July '08. I didn't get

Asked by Mysteryvxn, Orange County, CA Tue Dec 9, 2008

calls or mail until this week from collectors on my 2nd loan. Yes, I refinanced it once and the amount was somewhere around $5-6000 to pay off a credit card. Do I owe the IRS/banks/etc? I see so many answers about short sales....what about foreclosures? I don't have the income to pay anything or anyone back. Am I also included in Bush's plan or somehow be forgiven or 1099?

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I just went through a foreclosure on my home. Decided not to file bankruptcy as I was able to negotiate with the creditors on my own an able to settle all credit card debt for 30-45% of amount owed. Try creditors back every 30 day (depending on end of your statement cycle) each month they accept less (in most case). Careful to check if they write debts off in 6 months or 12 months. Closer they get to write off the better deal you get to close.

I was also concerned about my second mortgage as they can come after you for the balance owed. Most people will try to convince you they won't...But they can and will for years to come. I was able to settle my second at 15% of the balance. This was an awesome deal as most will settle 20-50%. Sounds to me that 17k is a good deal you can make a counter (which I did) and they can stick with the 17k or accept/compromise on lower amount...Maybe try 10-12k. Worst scenario you accept the 17k move on and know they can't come back after you for the difference.

CAUTION - Make sure when you settle with mortgage company or CC companies you get a letter stating they will not pursue additional collection and the amount they are accepting is considered paid in full. Some will try to scam you and in small print note they can come after you for deficiency later. Also, I live in WA and a law was passed this year that you don't have to claim 1st or second mortgage write offs as income so no taxes. I believe this is federal and covers all states but double check. Best of luck sounds like you are on the road to financial freedome!
1 vote Thank Flag Link Wed May 5, 2010
I'm not exactly sure what question it is you are trying to answer or which question is "getting old", Administrator from LA, but I have decided to file for bankruptcy. I absolutely found the best lawyer there is. She is amazing. I was nervous from the start and when I walked in, she was extremely helpful and sweet. She explained everything in detail and answered all of my questions before I could even ask them! I passed the Mean Test and am able to qualify for Chapter 7 Bankruptcy. I'm sure she sees several people a day over this matter that I am assured she knows what she is doing. It just makes more sense to file. I went over all the other options with her and I came to realize...why worry about paying this debt anymore? If you file, its done, over with and you get a new start. It will stay on your record for 10 years. Foreclosure stay for 7. What's 3 years? Not much. Either ding on your report is going to take awhile to come off. All I know is if I pay these collectors, I am still going to be in trouble with my other debts.

My lawyer is going to cost me $2000. That is including the mandatory classes you need to take before filing and all the other junk related to filing. I think that is pretty good. Better than 100k or even the 17k the collectors are asking for. She is great and I feel comfortable with her. I don't need to look for anyone else or anyone more affordable.

Thank you all very, very much. You have been a great help to me and I'm sure others that have kept reading this thread. Nancy, I hope you are still reading this and you have made your own decision in this matter. 2009 is going to be a better year for me. I'm glad I am taking care of this now. Please keep this thread going. I will still check it and help out any way I can.

Thanks again, Sean and others.
Good luck, everyone!
1 vote Thank Flag Link Tue Jan 20, 2009
Thanks. I just made an appointment with a bk attorney for tomorrrow morning. Hopefully, I can trust them enough to use them.

The credit counselors from the cccsoc seem reputable but unsure really until I can talk to them. I still have an appointment with them on the 28th....we'll see what happens....

Talk to you all tomorrow....I hope Nancy is reading all of this...
1 vote Thank Flag Link Wed Jan 14, 2009
So, can a bankruptcy attorney help me even if I don't actually use them for filing a bankruptcy? Can they call and make the negotiating for me so that I don't have to? Or do I get a regular attorney? What about my appointment with the consumer credit couseling? I thought that they would be able to neogtiate for me and speak to the collectors so that I wouldn't have to. But I am starting to get the impression that the counselors are there only after the negotiating. I only like to use them since they are low cost and sometimes even free.

Yes, I told him I had a problem with him wiping me out with taking every dollar of my credit cards. Because as we all know, 17k on credit cards will turn into triple that amount with monthly payments. He claims since its available, its spendable and fighting that I don't have that kind of money is....I forgot what he said....but basically false.

The collector was non-threatening (of course, I know this because its the law) but he was trying to corner me into making a decision by this weekend and that 17k was probably all they can accept. Is it true he still negotiates this offer with the banks or is he really just telling his boss what he offered? And honestly, he over estimated my available credit and it probably really amounts to less than 10k. I explained that I can't get any help from any friends or family and I obviously can't get a co-signer on a loan. I would just be fine if it was 10k or even maybe 15k. His explanation is that he has never seen a bank (esp Wells Fargo) go less than 20% of what I owe. He says that my offer of 10k is not reasonable....then he goes back to my available credit. BUT, he still asks me what I can give right now.

Don't worry. I know to speak to professionals, but I like to gather info from here and other resources before I see one. Because, these days, everyone wants money. Whether it is a bk attorney or the collectors.

My concern is....is negotiating even worth it or is bankruptcy a better option....if credit card debt (which isn't alot) and this 100k debt is all I have....won't it all be wiped off in I file for bankruptcy? Than I'm just looking at 10 years of bankruptcy on my report.....correct?

I would really like to wait after I do my taxes to see what I really owe this gov't. But, I'm sure the collectors don't want to wait that long.
1 vote Thank Flag Link Wed Jan 14, 2009
A few months ago, I received a property tax bill. I received it after the foreclosure. I assume it was sent and accounted for when I owned the home but received after the foreclosure. It wasn't a supplemental bill. Do you think I still owen on that? There is no "new" owner yet. That I know of. The last I was told 2 months ago, was that the bank still owned it. Do you know the answer to the foreclosure tax consequences? Tax season, as we know, is coming right around the corner and not sure how much, if any, that I may owe. Because I was caught off guard by the collector wanting to negotiate on the spot, I neglected to give him other debt I may owe....for example, taxes on the foreclosure or even the association. Do you know the answer to this? I'm afraid the collector may try to have me locked at 17k when my real debt may amount to more with all other into consideration.
1 vote Thank Flag Link Wed Jan 14, 2009
I just wanted to give everyone an update on my progress here....

I called CCCSOC (Consumer Credit Counseling of Orange County). They can help you with your financial problems and such. I won't explain it all here. But you can look it up at cccsoc.com

I did tons of research thru HUD and this great resource on you debt and collectors that are calling you. Go to the link below...

http://www.dca.ca.gov/publications/legal_guides/dc_1.pdf

I'm not sure I did the right thing by calling the collectors myself but I just was calling them to tell them I had an appointment with a counselor (Jan 28) to fix this situation. Unfortunately, he told me they do not work with Credit Counselors, but when you settle your large debt with the collectors, cccsoc will help you with your final debt.

Remember, my 2nd loan that the collectors are trying to get from me is a little over 100k. Of course, this guy was able to keep me on the phone and try to settle with me. I ended up being on the phone with him for about 40 minutes. We went back and forth about everything. This is what he ended up offering...(this is after my initial 3k offer...haha...I tried!).

These collectors have your actual available credit information. He was telling me that I have at least 17k in available credit and if it was ok with the bank, they could possibly settle for that, no tax consequences. Of course, that is totally wiping me out but a bit better than 100k. Am I jumping the gun here? Is it wrong for me to believe that is a good settlement?

Well, of course I didn't settle even though the guy was trying to convince me the banks will most likely not go lower. They tell you to seek help from others or to even take out a loan for what you settle, which I think is ridiculous since they won't give me a loan in the first place. But of course, the solution is a co-signer. Who the heck wants to co-sign a loan with a person who is 100k in debt already?

I told the guy to give me the weekend to decide.

First, of all....my question is....does anyone know the tax consequences on a foreclosure? Tax season is coming up and I'm not sure if I can settle for 17k or lower if I am going to get charged for taxes on a foreclosure. Also, my association went unpaid and racked up over 3k. They never came after me, but was wondering if they will later. And last, what about my property taxes? I didn't pay my last two which probably is about 8k I didn't pay out. Sorry to dump my finances on everyone but just curious if anyone knows the answer to all of this. The 17k sounded more of a relief until I though about all the other stuff I may owe.

Please let me know if I any of you think I am doing the right thing or if I just screwed myself....I ended up having a break down on the phone with the collector!!!
1 vote Thank Flag Link Wed Jan 14, 2009
As I mentioned before, my LEASE is up and I don't have any other choice but to get a new car or renew my lease. Either way, I have to get a loan. That's the way leases work. Trust me I wouldn't be buying a car just because I want a new one. The last thing I need is another debt or bill to worry about. Everyone borrows money to buy a car. Unless, I guess if you're rich or have the cash saved up. I don't have that kind of cash hanging around to buy one without borrowing money....obviously. Most people don't. The 2 things in life that most people will always have to borrow money for are a home and a car. I don't think part of the problem is buying cars on credit. The auto industry is just a mess. I know. I work out of Detroit but live in LA. The problem here is the mortgage crisis. Just trying to put Nancy at ease here...that life will go on. I am definitely in the same situation.
1 vote Thank Flag Link Fri Jan 2, 2009
Here's what may help Nancy a bit...I am the one that started this whole Q&A thread....I feel very overwhelmed by everything as well. Please don't let it take over your life. You can be back in control. I think about this everyday but I need to still live my life. Everything will work out. Here is what I plan on doing...

I am taking the advice from everyone here at this site.
Sean has been a very big help. I understand completely that I still need to speak with a professional attorney etc. who is trained and knowledgeable about this stuff. It is comforting to know that this info is coming from personal experience.
I am going to call several people regarding my situation. For example, counselors, friends, attorneys, other agents, even someone like Suze Orman!! I am taking notes and comparing them.
I won't settle until I feel I have collected enough info and can trust whomever I choose to help me with my situation, whether it be a mortgage attorney who can help me settle or bankruptcy.
Nancy, Sean is right. There is always a solution to any problem. This one may result in bankruptcy for me and you, depending on what you decide, but I feel comfort in knowing if I choose that route, I won't feel as overwhelmed with my debt.
This is what I am doing for 2009. I am not going to fight, sue, or make it any harder for me. I just want it to be over. I could care less about my credit score. There is nothing you can do. I am in the process of buying a new car (my lease is up on the car I have now) and I am worried but know that they are giving cars to people who are in financial crisis or even bankruptcy. We all know how the auto industry is at the moment....

Also, although I absolutely appreciate the advice, please refrain from telling Nancy and I or others what we "should have done" or this....."Too bad you didn't try to sell your home through the short sale - it would have been much less damaging to your credit and you wouldn't be receiving collectors calls now". It's too late for this information. I get enough of this stuff from my Mother.

We obviously know this already. Our morale and esteem is low as it is. Please ask or read through the thread so you understand why this route did not work out for myself or maybe even Nancy.

Thanks again, especially, Sean. Good luck Nancy. Please keep us updated on your progress as I will too. Try to have a Happy New Year!
1 vote Thank Flag Link Thu Jan 1, 2009
Thanks again for helping me understand my situation a little bit better and knowing what my options are. Is there someone like a counselor or something that I can talk to first before hiring a mortgage attorney or a bankruptcy attorney? I'm sure I will hear the same stuff I have heard here, just want to be certain. Like Nancy, is this attorney stuff going to be another debt I can't afford. Just curious if any of you knew off hand. I know how much it is to file for bankruptcy....Also, if i file for bankruptcy, it isn't a guarantee that they will dismiss my outstanding debt with my 2nd? Is this something that I should take care of before the end of 2008?
1 vote Thank Flag Link Sat Dec 20, 2008
Can someone explain in better detail what the guy below me is talking about? Can you file a wrongful foreclosure? It's been almost 6 months since its foreclosing and, by the way, yes I am out of the house. (Remember, the house was originally on short sale with n offer I accepted and suddenly foreclosed.) What's this $250k he's talking about. His response is very confusing!!
1 vote Thank Flag Link Thu Dec 18, 2008
So, it does sound as if bankruptcy is the better out in this situation. As the agent from Sacramento said..."However, if you work something out with the collection agency that results in a debt forgiveness, you may still have to deal with tax consequences". Does she mean even if let's say I work out a deal to give these collectors $10k and they agree, they may still tax me on the original $100k debt? It's just never-ending is it? And all this other stuff about some collectors will give up and go away may take up to 5 years or so, right? I just want it to go away now or soon. really don't want to ride it out and worry about this debt for life.
1 vote Thank Flag Link Wed Dec 17, 2008
Ok, I'm a little confused. So, I am correct in saying that I'm still in trouble with my debt because I refi'ed it about 3 years ago to pay off a credit card. So, it is no longer considered just a purchase money loan. Correct? I'm confused about insolvency. The collectors are coming after me for $100,000 I have no savings or cash saved up before and esp. after the foreclosure. My income is very small you might wonder why I was given a loan in the first place. Can't I fall under insolvency? Also, the 1st foreclosed and it says it foreclosed at $350,000+. The loan was $320,000. What does this mean for me?
1 vote Thank Flag Link Sat Dec 13, 2008
Thanks again, Sean. I appreciate your feedback. Thanks for letting me be able to live life again with not alot of worries. I will take your advice. I will do anything to avoid bankruptcy if I could. By the way, these collections people can't take property or personal stuff from me in the meantime, can they. For example, dip into my 401k, IRA, stocks etc. My IRA is in the same bank my 2nd was in. It's all not very much in total. But enough for say, a settlement.
1 vote Thank Flag Link Tue Dec 9, 2008
Thanks sean, that was really helpful and put me at ease for a bit. I am no attorney or good negotiator but if I call these collections back, can I just try to negotiate it myself over the phone. And say (in so many words) let's settle for $5-10,000? I can handle that amount than the initial collection.
1 vote Thank Flag Link Tue Dec 9, 2008
Yes, I have received my first collections bill this week and it is legitimate. I also have been getting tons of calls all this week.

The whole story is this:

I put my house up for short sale. I got an offer almost right away. I accepted of course. We were waiting to here from the banks, as I know it takes forever, and eventually I was told the banks just let it go to foreclosure. I find it hard to believe the banks would do that but I hear it happens. So, I never intended to "walk away" from my home. I wanted to negotiate thru a short sale. The house said it was up for auction but i have been told the title is in the banks name. I was told the 2nd was going to get the shaft and that was it. I didn't know they would be able to come after me. I'm pretty scared and am wondering what happens now. So I get it now that I am responsible. So, there is no other way out of this debt unless I file bankruptcy or speak with an attorney? Why does the 2nd loan work like that? Is there no more negotiating when it is given to collections? The debt in over $100,000.
1 vote Thank Flag Link Tue Dec 9, 2008
So I take it I am not included in Bush's Mortgage plan? I understand and don't understand. If I couldn't pay for the loan when I owned it, how can I pay for it now that it's in collections?
1 vote Thank Flag Link Tue Dec 9, 2008
I dont know why they choose a question from Dec 2008 to feature however this question is one that does affect alot of people. In brief if you are in this position the first thing you need to do is stop teh harrassing phone calls. Simply ask the collector for a fax number, tell them you are faxing a letter about your debt. Simply write a letter requesting that they do not contact you by phone at any number not limited to work, home ,cell, family or any other phone number. Sign and date it. keep a copy for your records. Now that you stop teh harrassing phone calls you can have some time to think about it. They can not just attach you, take your paycheck or your belongings. You can choose to negotiate with them if you can pay something to settle. The longer you wait the more they will discount. Make sure you get everything in writing before you pay them anything. The settlement should be that the debt is considered paid in full and no further collection activity will be conducted on the forgven or discounted amount. You can also negotiate how they will report it to the credit bureaus. Ask that no negoative information be posted.
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Sat May 8, 2010
Bankruptcy may have better served me prior to foreclosure, but it's not like it's helping me any less after foreclosure. I am totally and completely happy and satisfied with the choice I am making now. People make mistakes. People may have be given the wrong information and the wrong advice. Some people are only gaining more info now that it becomes more available. It's great that you can now give this information to people who are in a similar situation or thinking about foreclosure or bankruptcy that way they can read this thread and decide. I am now running into people who want to know what to do and I am happy to help and tell them what to avoid or steering them to not foreclose.

To go after the lender for predatory lending sounds like a pricey ordeal. If you have any to spare for ALL of us going thru the same situation or if it happens to be less than what I am paying in bankruptcy fees or it is all put to an end within 6 months....please, by all means, let me know.
0 votes Thank Flag Link Mon Feb 2, 2009
Hello again

Question getting old refers to the number of times this comes up on this site. No offense TPlease.

The bankruptcy attorney is something that better served you prior to foreclosure. But do ask her to have the loans evaluated for affordability and excess. If the loan is predatory and the amount of financing exceeds what you would qualify for - that is the toxic piece of the puzzle.

How can a lender commit a crime and then come after you for repayment? You also lost an asset valued less than what you owe. That’s assuming basis in the property is above the price determined at trustees sale. That amount is a charge against capital gains. Where’s the tax issue friend? Ask your attorney and reply back please, so readers can have confidence for information provided to you to date.

Thanks so much and good luck!

Web Reference: http://www.borrowerhotline.com
0 votes Thank Flag Link Sun Feb 1, 2009
Mysteryvxn, I have come here to read this discussion several times and just wanted to thank-you for starting it, sharing the process, fishing out the different opinions, and participating. I think this discussion may help many people if it does nothing more than make them think.

Thank-you and I wish you the best, Dunes (Keep us informed on how it goes) Thumbs up!
0 votes Thank Flag Link Tue Jan 20, 2009
No way . California is a one action state. THIS QUESTION IS GETTING OLD YEAH?

Your basis in the home is higher than the trustees sale price. That means you owe more than the house sold for. ..correct?

you have a capital loss issue versus a gain - Do you want to really get mad. 1) second is likley proven to be a predatory (illegal) loan -thats what we do - establish standing for you and your attorney in court. so it cannot enforce. 2) if there was a TS sale below your combined purchase nd carry - - - and they did not cure the f irst - 3) is there an issue with proceeds of loan and ordinary income. yes but has "nodda godda ding " to do with your second charged off to a LOSS.
0 votes Thank Flag Link Tue Jan 20, 2009
A good BK attorney should help you weigh ALL your options including negotiation, and they should absolutely be willing to negotiate with creditors on your behalf. If not don't use them.

Be careful to know who the credit counselors work for. They can be fantastic, but their bread is often buttered by creditors, so keep in mind that some are really there to help creditors minimize losses in a "consumer friendly" way.
0 votes Thank Flag Link Wed Jan 14, 2009
The collector wants you to max out your credit (credit cards, I presume) to the tune of an additional $17K on whatever balances you currently have to settle? That sounds like a remarkably bad idea, and a means to end up in a nasty cycle of credit woes.

If I were in your situation... I'd hire an attorney that can assess the situation, explain the impact of a bankruptcy and file a BK if need be. Then I'd advise the collection agency I've retained legal counsel and further correspondence should be directed to him/her.

You're sitting on $100K debt with collectors trying to get as much as they can, most likely no regard to your future. While message boards are helpful, it's not a situation you want to go through alone. Hire counsel.
0 votes Thank Flag Link Wed Jan 14, 2009
The bank is as responsible for property taxes as any other owner. You can check with the county tax collector, but I think you are likely fine on the property taxes.

The tax consequences of forgiven debt are more complicated, and I'm less familiar. There are a number of exceptions, including there possibly being no tax liability if you were insolvent at the time of foreclosure. Find a good accountant to review your specific situation - no generic answer on the internet is going to be sufficient IMHO.

I'd still recommend getting a BK attorney - and giving him instructions to try to settle it before filing. Offer the BK attorney an extra $500 if he can get you a good settlement. The debt collector will have a tough time arguing with your attorney when he says there isn't the money there and that he has a BK ready to go if they don't accept your offer. Debt collectors definitely know that something is better than nothing.
0 votes Thank Flag Link Wed Jan 14, 2009
With few exceptions the back property taxes will be paid by the new owner after foreclosure. One example exception would be a supplemental assessment - additional taxes for the time you owned it that weren't on record at the time the property was sold (back to the bank) at foreclosure auction. Unlikely an issue if you owned the home for a year or more before the foreclosure (properties are re-assessed when sold/purchased).
0 votes Thank Flag Link Wed Jan 14, 2009
call and talk do not ignore by the way you have awhile but see if you can woprk out do not ignore the process will go on with or w/o you
0 votes Thank Flag Link Mon Jan 5, 2009
Hello and Thanks again Mysteryvxn and Sean and everyone else giving me suggestions. I am going to follow Mysteryvxn's method and try to seek help from professional people out there. I know it sounds horrible to think this, but I feel a bit better knowing I am not the only person in this situation. I was feeling like the Arby's commercial with the word Arby's replaced with Foreclosure, In debt, Bankruptcy, Loser, etc written in neon on top of my head for awhile. I felt as if everyone knew my situation and looked at me in disgust. But it's a new year and Mysteryvxn is right. I want this to end. It's so weird how much we have in common... I just got a letter from my Auto Lease notifying me to contact them about end-of-lease options... sigh.. I'll keep updating if I find anything that may be of use... Happy New Year
0 votes Thank Flag Link Sun Jan 4, 2009
Mysteryvxn and Nancy,
Maybe you can rent an apt together, this will reduce costs. Maybe you can share a car. Good Luck. Happy New Year.
0 votes Thank Flag Link Fri Jan 2, 2009
Hello,

The part of the "Too bad you didn't try to sell your home through the short sale - it would have been much less damaging to your credit and you wouldn't be receiving collectors calls now" was written, so possible friends, relatives or readers might benefit from this information... So many people have no idea what short sale is and are walking away from their homes without knowing about their options.
Buying new cars on credit is part of the big problem Americans face now, so in my humble opinion, don't even consider it... Simplify your life, don't keep on borrowing more money... I strongly recommend Suze Orman's books! Have a few in my own library, and read all of them.
Happy New Year!
0 votes Thank Flag Link Thu Jan 1, 2009
Your credit went down possibly by about 300 points by now. Try to negotiate with the collectors - they might accept much less than what you owe as payment in full, and you can possibly reach an agreement where you'd take a note to pay x amount back over for so many years - it might be less than what you'd pay in attorneys fees if you decide to declare bankrupcy....
Too bad you didn't try to sell your home through the short sale - it would have been much less damaging to your credit and you wouldn't be receiving collectors calls now.
To my best knowledge, Debt Relief Act applies to the taxes you would owe on the loan amount you owed to both lenders, not to the actual debt.
Take one step at a time, simplify your life as much as you can, try not to get into anymore debt, and slowly work on re-building your credit. You're not alone in your situation. Good luck and Merry Christmas!
0 votes Thank Flag Link Thu Dec 25, 2008
Nancy - One of the wonderful things about the United States is the ability get a fresh start. Despite what any debt collector may claim, we have no debtor prison here. Beyond some hassle there is really very little long term impact to this kind of financial trouble. So while it may feel overwhelming, know that you are not alone. Thousands of your neighbors are in the same situation. And everyone can and will make it through - likely wiser and stronger.

You can end ALL collection calls immediately by declaring bankruptcy. You can likely find a bankruptcy attorney for as little as $500. Friend's of mine just went through the process with a fantastic attorney for $1500. Find an attorney who works on a fixed fee, will give you a free initial consultation and takes the time to listen to you. Someone who makes you feel comfortable. If they are condescending or rushed, find someone else. And to your earlier question - you will not still be liable for the second after bankruptcy.

While I understand "Administrator's" desire to see the banks held accountable, his suggestion to sue the lender will likely be a very hard and expensive road.

I've been at this quite a few years now, and went through foreclosure myself almost 20 years ago. Though I'm not an attorney I'm familiar with most of the laws, and have been consulted by attorneys and CA lawmakers for my foreclosure expertise. You can read more about me, and from me, at ForeclosureRadar.com and ForeclosureTruth.com.

I hope this helps you rest easy tonight, and enjoy Christmas day tomorrow. Best wishes to you.

Sean
0 votes Thank Flag Link Wed Dec 24, 2008
Oh boy... I'm really confused now... The year is coming to an end and I still don't know what to do. In the meantime, the collection calls are increasing and I don't know where to turn to... I am starting to understand the feeling of people who have commited suicide over these matters...
0 votes Thank Flag Link Wed Dec 24, 2008
To Admin-HomeBuyer-LosAngeles:

1) Perhaps, but the laws are pretty clear and courts don't make laws. And in any case your "originated as combo" claim, even if correct doesn't apply to this person's question.
2) Perhaps, but only with regards to tax consequences - doesn't change what you owe or not.
3) Under state law lenders can open the bidding for whatever they want. RESPA, TILA, and HUD do not have any say over state foreclosure laws. Nor do the tax consequences for those lenders, fair or not, change a thing for you.

You have the tax liability vs. the loan liability issues so confused I really don't know where to start. Sounds like you are still struggling with the loss of your own home and a 2nd that is in collections against you. I honestly hope you do find an alternative way out of your predicament - until then I think the four options I listed below are the only reasonable alternatives.
0 votes Thank Flag Link Fri Dec 19, 2008
Foreclosure Truth-
Outstanding .attempt to fall into the mortgage lies of the American Public. So away we go.....

1) The courts have yet to rule on the merit for enforcing a second that is the "Toxic" piece of a subordinate combo lien. If both were originated at settlement as a combo obligation. - GOOD LUCK HOLMES

2) you must establish your "Basis" or calculate
Example - the assts contribution value. Buy a stock for $100.00 and sell it for 50.00 . You lose 50.00 . This Loss is going to offset any capital gain or 1099....why are we talking about this?

3) The Trustee sets the sale price at below the outstanding principal balance - - -at sale ! Wazzz up ! Fraud! ! ! (a power of sale in Cali is the lenders right to R-e-c-o-v-e-r-y and not for establishing a reduction to offset write downs. Fraud! But this how you trigger a write down of the asset under FASB and GAAP Lender and will now carry the REO at the new “book value” and now REO (acts to trigger) at a new and reduced entry . This is instead of taking the write down on assets later. (Give RESPA TILA and HUD the finger here cause the SEC has a bite and HUD . . . no teeth!_

So the borrower is homeless and on the street and waiting for a 1099. . .if it comes at all. Throw it back Use the trustee sale to establish a Reversion price (forced or otherwise) YOU USE THE DIFFERENCE TO ALLOW THE CAPITAL LOSS TO OFFSET THE CAPITAL GAIN WHICH IS SCHEDULE "D" VERSUS VS ORDINARY INCOME.

Outstanding attempt to challenge the misconceptions being CREATED by lenders who are so smart. I talk to the second's (benfeficaries) doing this none sense at least once a week and call the bluff. They don't call back!
Last Friday Duetshe Bank Vs Spicer DISMISSED 1st and 2nd – We have more you know!
0 votes Thank Flag Link Fri Dec 19, 2008
So how much does a bankruptcy attorney cost? Is there some kind of place people like us or low-income people can go to? I seriously cannot afford to pay my 2nd loan back. Even after bankruptcy, am I still liable for this debt?
0 votes Thank Flag Link Fri Dec 19, 2008
Admin HomeBuyer from LA - you are terribly mis-informed if you thing the 2nd can't chase you for the next 20 years trying to collect on that 2nd. They do not need a deficiency judgement, THEY never foreclosed, so the loan remains intact against you. They have only lost their security - but that changes nothing with regard to your signature on the loan promising to repay. And while CA is a "one-action" state as you say, note that your 2nd has NOT yet had their one action - they did not foreclose.
If you don't have the income or assets to pay it back, you likely only have 4 choices: 1) ignore it, 2) settle it, 3) declare bk and try to have it dismissed, or 4) sue them under predatory lending or other lending laws (unlikely you'll find an attorney to do it pro-bono or on retainer and the attorney bill will likely be more than the loan amount - and even if you win the judge will likely only forgive interest and fees, not principal).
I don't mean to be a kill joy - but an awful lot of folks are terribly confused when it comes to the significant liability they have on refinanced 2nd mortgages after letting a 1st foreclose.
0 votes Thank Flag Link Thu Dec 18, 2008
I didn't get calls or mail until this week from collectors on my 2nd loan.
[There is nothing there. They will try and argue the second did not participate in the foreclosure and they can seek a deficicency judgement. The Capital gain or charge off is offset to your basis in the house (is what you paid for plus closing fees and interest on the first and second.) If you owe more than the value of the house determined at sale then you can't be charged a deficiency, and California is a one action State so STOP! Their terrorizing you!]

Yes, I refinanced it once and the amount was somewhere around $5-6000 to pay off a credit card. Do I owe the IRS/banks/etc?
[Again a capital gain or LOSS is going to offset the 1099 they threaten to send you]

I see so many answers about short sales....what about foreclosures?
[the loan is owned by a wallstreet investor (likley]. Many are paid off to date from over colateralization and insurance...just keep it simple. They may have been paid off, maybe. The securities (stock) offering maybe tanked and now the lender (who is not the lender) may be trying to double dip and take your home under a foreclosure disguise. Its a mess - read the paper, watch the news talk to a hairdresser - do somthing ]

I don't have the income to pay anything or anyone back. Am I also included in Bush's plan or somehow be forgiven or 1099?
(Everyhomeowner has a $250,000 deduction on the home they live in. Your covered up to $250,000)

COMMENTS - You need an attorney to guide you. I cannot nor anyone else here can give legal or accounting advice where not licensed to do either. This is informational purposes only and cannot be held liable for its cont ent.

Each situation is different. However, we are experts who provide testimoney and who consult court room professionals for a living. Folk here maybe getting tired of me but its true. The lenders of America messed up big and thats a fact!. Just last Friday we had another borrower win in court - case dimissed.
So I left my web page http://www.borrowerhotline.com and I am at admin@borrowerhotline.com
0 votes Thank Flag Link Thu Dec 18, 2008
I personally don't think it will go away if you ignore it. Someone will buy that debt for the right to hound you until you pay or have it discharged in bankruptcy, so settling or bk are really your only answers. Forgiven debt may not be taxable depending on your circumstances, especially if you are insolvent at the time. Check with a qualified tax accountant to see what your personal liability would be (make sure they know the rules around debt forgiveness before hiring them).
0 votes Thank Flag Link Wed Dec 17, 2008
The first step is to stop the harrassing phone calls by simply asking for their fax number. Then write a letter with the title cease and desist all phone calls requesting they do not contact you by phone at home or work. You can go to http://www.ftc.com and go to debt collection for rules and laws. After you type and sign the letter fax a copy to them at once and mail a letter to them certified mail. They will now have to stop calling you. you will still get the letters but at least have some peace of mind. Your nbest step will depend on how far they want to go. Most will simply go away while some may try to get a court hearing if you own other properties. You may want to seek advice from an attorney as well. But definately write the cease and desist to stop the phone calls. good luck with working things out.
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Mon Dec 15, 2008
So pretty much, the only way is Bankruptcy...?
0 votes Thank Flag Link Mon Dec 15, 2008
Hello Mysteryvxn. In summary, based on what you describe, you had a non-purchase money second and the security interest was wiped out as a result of the foreclosure by the first, but the underlying note survived as an unsecured loan. Many people don't know that and they are surprised when they receive a collection notice after the foreclosure. You need to seek the advise of an attorney a.s.a.p. The debt forgiveness relief act does not apply when a second does not forgive the debt, which is apparently the case here since you have been contacted by a collection agency. However, if you work something out with the collection agency that results in a debt forgiveness, you may still have to deal with tax consequences. That's why you should not attempt to do this on your own. Seek the advice of a bankruptcy attorney. I have a good referral for you. E-mail me (through Trulia - go to my Trulia profile) if you'd like to get the name of a good BK attorney.

Good luck to you.
0 votes Thank Flag Link Sat Dec 13, 2008
Ute Ferdig -…, Real Estate Pro in Newcastle, CA
MVP'08
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The extra funds above the amount you owed would go to the 2nd, but I'm nearly certain that you just owed more than you thought and that the entire $350k went towards the balance on your 1st.

Being insolvent isn't a free pass. It can you get out of the tax consequences of forgiven debt (which are not taxable if you were insolvent at the time), but otherwise doesn't automagically do anything. That said, being insolvent should make it easier to get the $100k second dismissed in bankruptcy.

Important to note that secured loans can't be removed in bankruptcy - but your second is no longer secured by the house, their security was wiped out at foreclosure sale by the 1st. As an unsecured creditor the second can now be dismissed in a BK.
0 votes Thank Flag Link Sat Dec 13, 2008
Purchase money AND loans that are foreclosed using non-judicial foreclosure - potentially with some exceptions, like fraud.
0 votes Thank Flag Link Fri Dec 12, 2008
Hello this is Nadeem Again. With some more research, I have found detailed answer to your question. In summary, even though California is a Anit-Deficiency state, it only applies to purchase money loans. Check out the details on the following website.
http://www.mortgagelawnetwork.com/life-after-foreclosure-in-…
It seems like some of the comments by others are true, they can come after you for collection in some cases. Please carefully check those cases.
0 votes Thank Flag Link Fri Dec 12, 2008
Nadeem - You are correct with regard to the foreclosing lender - however - the 2nd mortgage did not foreclose, and they CAN come after you unless the 2nd mortgage was a purchase money loan (ie used to purchase the house).

I think the best point you make is that it is easy to get confused by all these laws, so you should seek legal counsel, rather than mis-interpret a website such that you risk mistakenly believing you are free-and-clear.
0 votes Thank Flag Link Fri Dec 12, 2008
Hello all. I live in california and I am about to get into the same kind of situation. I was checking the law on attorney website and I found that California is an Anit-Deficiency state. It means that if you are foreclosed upon and the house sell for less, still the lender can't come after you to collect. If the are coming after you, they are taking illegal actions. I would say be stiff with them and remind them of the law. Check out the following link for details.
http://www.learnaboutlaw.com/deficiency-judgement-anti-defic…
I know these collection companies do many illegal things to get some money out of poor people in trouble. Here is another example; In California if a debt is more than 5 year old, and there is no judgement agains you, and you haven't made any payment for 5 years the collection agencies can't call or write you to collect; but they actually do to get some money out. Actually there is a whole program that Opera did on this subject. It is eye opening. People going through foreclosure, please stand for your rights!
0 votes Thank Flag Link Fri Dec 12, 2008
Hey, Thanks for all the feedback.. I am in the same position as Mystryvxn. I just got a collections notice for $201,000... I thought I have to commit suicide or something... There is no way I can pay that kind of money. That's why I'm in this position in the first place... Negotiating souds good...
0 votes Thank Flag Link Wed Dec 10, 2008
I'd be careful about negotiating this yourself, or offering an amount - if they think you have $5-10k, that will increase their hopes of getting more. If you do choose to try on your won I'd let them know you are planning to talk to an attorney about bankruptcy, but that you'd feel better about scraping the money together for them vs. a bankruptcy attorney. If they think their choices are a few bucks from you or getting completely wiped out by bankruptcy they are likely to become more receptive. Give them a deadline to make YOU an offer... ie. "My appointment with the bankruptcy attorney is Tuesday, if you want to give me an offer for a full settlement by Monday, I will seriously consider canceling the appointment."
0 votes Thank Flag Link Tue Dec 9, 2008
There is absolutely room to negotiate with the second. In fact many banks sell their seconds to collection agencies for as little as 5 or 10 cents on the dollar. If the collection agency in your case now owns the loan, and only paid $5k for it, they may be willing to settle for $10k or even less... if they believe that is all they can get.

I imagine we will start to see attorneys offering to help negotiate and settle these collections for a reasonable fee.

A good bankruptcy attorney should be able to walk you through your options, and even help with trying to settle if you decide to try that instead of bankruptcy. Just be sure to be careful about who you choose - search online for a good referral. I've seen folks compound their problems by choosing a bad attorney.
0 votes Thank Flag Link Tue Dec 9, 2008
I believe by "Bush's Mortgage Plan" you are referring to the tax consequences of receiving a 1099 for forgiven debt, which is considered income by the IRS. That does occur when the mortgage forecloses and is sold for less then the full debt owing - the balance is considered forgiven. But that only applies to your first mortgage, as the second mortgage has not been forgiven - you still owe it.

This is a very common mistake folks in foreclosure make. Letting their first mortgage go to foreclosure when they have a refinanced second. It virtually insures the homeowner will have to seek bankruptcy protection. And with the tighter bankruptcy rules these days they may not find the relief they hoped for. Better to keep your first current and let the second foreclose (thereby giving up their right to come after you personally).
0 votes Thank Flag Link Tue Dec 9, 2008
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