Please Help! 2nd Mortgage Owner Is Suing Me After Foreclosure!!!!
My home was foreclosed on by the bank (holder of my first mortgage) in October of 2003. The holder of the second mortgage (the prior owner) is now suing me (about $30,000). Can he do that?? I have absolutely nothing to give. No money, nothing. My car was also repossessed at the time. I don't even have money to hire an attorney to fight him. How can he do that when the property was foreclosed upon?
If your mortgage loan was "without recourse" then the lienholder is just out of luck if the property does not have enough equity to pay off the loan balance..
On the other hand, if your loan was "with recourse" then you pledged that you would be personally liable for the loan balance. When you defaulted, and the proceeds of the foreclosure sale were insufficient to payoff the lien, the note holder sought a judgement against you personally.
Re' 2nd lender suing you, was the 2nd part of your original purchase? in some states they are non recourse, while others allow for deficiency judgements. Check it out, and good luck to you.
Ozzie
If the prior owner is an individual (not a loan company) suing you for loan default there's probably nothing to stop him. Companies usually don't do it because it's not cost effective. Individuals sue if they smell money: he may think you have money stashed somewhere or can be pressured into agreeing to an installment scheme to pay off his loan, or simply be suing out of pure revenge.
Filing for bankruptcy normally gets rid of all pending lawsuits (unless deliberate fraud on your part has been alleged). Even if you don't want to file bankruptcy consider talking to a bankruptcy lawyer to ask if this lawsuit would be dismissed under bankruptcy. Some bankruptcy lawyers will give you a free initial consultation, call around till you find one who does. After you talk to him you can write a letter to the person suing you (or to their attorney) telling them you've consulted with a bankruptcy lawyer because you can't afford to fight the case and can't pay if they win. Give the name of the bankruptcy lawyer you consulted. Make the letter polite. If you haven't already given the prior owner a full explanation of why the foreclosure happened & you defaulted, also explain that in the letter. And write how broke you are now. If he believes you he might drop the lawsuit. If he doesn't, you could either go to court yourself without an attorney - you'll probably lose but it takes for ever for winners to collect on judgments and they often don't succeed - or go ahead and file the bankruptcy.
Great advice Dave!
You need to find out like what Dave mentioned what the deal is with the loan.
If you have to, worse case scenario, file
BK with a paralegal.
"You can get blood out of a turnip."
Good Luck,
Jeff Adam
[addsig]
If you have a credit card debt, that debt is considered unsecured. If you own a house and take a loan against it, then it is considered secured debt.
As far as I know, once your property has been foreclosed, any remaining loans against the house become 'unsecured'. Now, I know that this is true for the State of Washingtong, but I don't know if it's true in all states, or whether this is a federal law.
If this does apply to your case, then the lender can sue you all they want, but they have nothing that they can attach the loan to. That's why if you file for bankruptcy, the bankrputcy court, upon review of your situation and financials, etc., will then throw them out. That's why sometimes, if you just let them know about your situation, they will just leave you alone, because they might realize that they are throwing good money after bad.
Good luck!
If you are in Calif. and that second was part consideration taken back by the seller of the house. It is a Purchase Money Deed of Trust and there can be no
action against you. Now the goody questions. What state are you in?
Check it out.post back and let us know
Awaiting Lucius
Thank you everyone for your comments. I live in Texas. I talked with a bankruptcy attorney yesterday, and its seems Chapter 7 is the way I need to go. Its my only choice as my husband is still without a job and I also have two school age children. My car was also repossessed in Nov. 2003 so my husband and I are sharing a car. So I have absolutely no extra money right now. Please let me know any more comments or advice any of you have. I appreciate your time in answering my questions.
I understand your situation. However, you still have one game plan open to you and that is the utilization of the BK as a lever to achieve release from claims and pending actions.
You file and right after filing either with your attorney or by self. You start to bargain with those to whom you owe money or whom are about to file actions against you.
If done properly you may get them all settled. Blood from a Turnip is most difficult. You can always withdraw the filing prior to first creditors meeting and you are back with square one. If they will not deal, then take the BK 7 and utilize it as a starting point to begin all over again
Sit with the Hubby and figure out which of you is the most marketable as to skills and experience. Sometime it is the wife. Then you start to transfer home duties bit by bit and the most marketable of the team gets a job. No matter how humble. Then you start in your spare time to insert into Real Estate Transactions without using your non existant funds. You utilize your time and your push and you do it.
Besides it is sort of fun. damn you hit the bottom now it is all uphill. Invest with your time and your mind.
Keep posting we wanna see you do it.
Cheers Lucius
Yes, we did hit bottom and I don't think it can get any lower. Thanks everyone.
JoKarol
Great advice Lufos. Use the threat of Ch. 7 Bankruptcy to force the (now extant) second mortgage holder to negotiate with you. If you are discharged, now an unsecured creditor, they will likely see nothing. Offer a lump sum (if you can do it) or a partial repayment plan, whatever works for you, to satisfy a portion of the amount owed. I would suggest something to the tune of 10-25% of the amount owed, nothing more.
We have no extra money to spend right now so I cannot give him anything. I have talked to a bankruptcy attorney and I feel a little better (knowing about my Chapter 7 option). The attorney also has a payment plan and the whole thing should cost about $500. Thanks again to everyone for their responses.
Hi Heath! I hoped you don't mind if I can use your forum to ask advices from other members. I have the same problem like you, my 2nd mortgage is also about $30,000, except my 2nd mortgage owner is the bank and the forclosure happened about 9 years ago. I just got a call from the collector today and telling the truth, I'm still shaky now. Like you I don't know what to do, I thought that nightmare was already gone but actually it's coming back. Currently I do own my own house and have a stable income. Other members, would you give me some advices too. Thanks a lot, by the way I lived in California.
Heath, please hang in there. After many years struggling with life, I did get out and thing starts getting better (may be not anymore), but if I can do it, you can do it too. Take care yourself and your family.
Nope cant get blood from a turnip. What he is doing in all likelyhood is just trying to get a judgment against you to put on your credit report so if you go to buy another house (not likely with a foreclouser) or get some real estate he can go after you.
this same thing happened to me too! i was laid off from enron only 5 months after i bought my home. the first mortgage lender foreclosed, sold it for a ridiculously low price and so the second mortgage lender is suing for deficient $50,000. the company that bought my home turned around and sold it for an immediate $40,000 profit! i can't believe the first mortgage lender was able to do this!
how are your bankruptcy proceedings going? do you think this was your best option? are the concequences of your bankruptcy that much worse than the foreclosure on your credit report?
people in texas have really been hit hard.
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If your foreclosure was nine years ago and the folks just now coming at you. Check the statute of limitations in your state for actions. That may have long expired. If you find the statute has expired, tell them to take a walk.
Actually bankruptcy, although not good for your credit report, is better than foreclosure so I hear from the many mortgage brokers I work with.
Although I empathize for people in this situation, I have occasionally been on the other side of the fence where I have given the $30,000 2nd mortgages to someone who's ended up filing bankruptcy.
Don't think we're all just fat cats, such big meanies, how dare we sue to get our money back.
Believe me, a blow like this can hurt us too. If we were foolish enough to do this too many times it could even put us out of business.
On the other hand, if you have absolutley nothing what are you going to do. Lufos offered a wonderful suggestion.
BTW -- What's the worst that happens when you get sued like this. The guy suing you gets awarded a judgement. If you can't pay that judgement, they can't force you to pay. You can't be sent to jail. It's really not that scary if you understand the process.
I had a $5000 debt owed to me by a young lady. She had just got divorced, she had one child and another one on the way. (BTW - why do people with such large financial issues choose to have more kids? or fail to protect themselves from having more?) I took her to court and was awarded the judgement. I knew she could not pay. I suggested she turn her life around and see how things were going in three years. I even gave her a lead on a job a friend of mine was offering. She never called him. She didn't file bankruptcy because she already did the year before.
Three years later I looked her up. I found out where she lived from the public records. She was on public aid and things weren't going much better for her. I'm not judging her, but it is a shame, she's a fairly intelligent person.
She agreed to pay me $25 per month and has been doing so for several months. If she took advantage of an opportunity and was able to offer me $2000 to settle the debt, I'd take it in a heartbeat.
Melissa