I've seen two seller's have their home foreclosed on - now the 2nd lender has sent them to a collection

Asked by Jacque Mcburney, Sacramento, CA Thu Feb 28, 2008

agency. Is this legal? Can they really come after you this way?

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Alex Amaro, Agent, Sacramento, CA
Thu Feb 28, 2008
I hope all the other Real Estate Pros agree on this one with me - Those two sellers you are referring to should talk to an attorney.
I would suspect though that if these banks are trying to collect, then the loans were not purchase money loans. The two homeowners that you refer to probably refinanced and took cash out with those 2nd lenders. And that is what is driving them to try to collect.
Have a good week Jacque!
Alex Amaro
Web Reference:  http://www.alexamaro.com
1 vote
David Turtur…, , 95826
Fri Apr 9, 2010
Bankruptcy may avoid foreclosure under a Chapter 13 repayment plan of arrearages or by stripping of a second mortgage entirrely (where the value of the home is less than the first mortgage, leaving the second note holder "unsecurred"). The second is not stripped until the completion of the plan, at which time the lien is stripped and the debt is discharged.

A bankruptcy may also buy more time to complete a loan modification. In some cases, the bank loan mod department and their legal department fail to coordinate, and homeowners are being foreclosed upon smack in the middle of their loan modification negoatiations. Attorneys here in Sacramento (California Eastern District Bankruptcy court) are requred to assist homeowners with their loan modifications if representing a Chapter 13 debtor ("reaffirmation agreement negotiations" in Bankruptcy Law terminology). If you have run out of time (a Notice of Sale is pending), don't assume the bank will hold off on the sale simply because you are negotiating a loan modification. Get your automatic stay as Cooper Group discusses.

-David Turturici, Attorney/Broker
Web Reference:  http://visvires.net
0 votes
John Cooper, Agent, Roseville, CA
Tue Apr 22, 2008
I am sorry to say that bankruptcy DOES NOT STOP foreclosure, it only postpones it. If you are in default on your notes and your go into bankruptcy the court typically does not touch the house. They put a “STAY” on the house because on the debt typically owed. Then when they are finished with your bankruptcy the foreclosure process starts right back up again. Now if you have property with a lot of equity I would be careful again because they might require you to sell your home to get the equity to pay off the bad and or defaulted other debts. But remember bankruptcy is not a cure all and in a lot of cases does not do much to relieve debt it only restructures the debt and you still owe it.
0 votes
John Cooper, Agent, Roseville, CA
Thu Feb 28, 2008
I just wanted to throw my 2 cents in! Yes they can is the loans where refi’s. in California and purchase money note is a no recourse note, meaning that in the instance that that maker defaults they can only go after the collateral. In any case that you are looking at foreclosure you should probably try a short sale first! And of course… here is comes… I specialize in them! With a higher than industry average closing percentage!
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