joe_momma
19th April 2010, 07:18 AM
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/04/19/MN3C1CQGOC.DTL&type=business&tsp=1
Turns out in California, you can still be on the hook for the second mortgage, even if you've been foreclosed or short sold. Whoops - wanna bet that most banks are not mentioning that little fact when working on the short sale?
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Eleven days after losing his home to foreclosure, Jorge, a Napa construction worker, received an ominous letter in the mail. It said he still owed $78,000 on his home's second loan.
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"I was afraid and felt pressured," said Jorge, who asked that his name be withheld because he is embarrassed about his situation. "I called them to say I had already lost the house in a foreclosure," he said, speaking in Spanish through a translator. "They told me it doesn't matter, you have to pay the money anyway."
Jorge's experience is being mirrored elsewhere. Debt collectors are starting to hound people who lost their homes to foreclosures or short sales over their second mortgages.
In California, a foreclosure generally wipes out the borrowers' obligation on the main mortgage but not necessarily on other home loans.
"We've seen a lot of folks coming to us, saying, 'I was foreclosed on, now these people say I owe $150,000 for my second loan; I thought everything was going to go away, what do I do now?' " said Noah Zinner, an attorney with Housing & Economic Rights Advocates in Oakland.
Some experts think the trend will accelerate, causing foreclosure pain to linger.
"I think the other shoe is going to drop soon," said Shannon Jones, a real estate attorney in Danville who gets several calls a day from people concerned about their liabilities post-foreclosure. "In the next two years we will see a huge volume of (debt collection on) second loans. We're seeing a number of lenders start filing suit or turn them over to collection companies."
California is a nonrecourse state, meaning lenders cannot pursue borrowers for unpaid balances on home-purchase loans. However, home loans not used for the purchase - home equity lines of credit and second loans taken out after purchase - are recourse loans, which means lenders are legally entitled to collect the unpaid balance. Depending on the type of loan, they have four to six years to pursue borrowers, Jones said.
Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/04/19/MN3C1CQGOC.DTL&type=business&tsp=1#ixzz0lYW2794s
***
:)
Turns out in California, you can still be on the hook for the second mortgage, even if you've been foreclosed or short sold. Whoops - wanna bet that most banks are not mentioning that little fact when working on the short sale?
****
Eleven days after losing his home to foreclosure, Jorge, a Napa construction worker, received an ominous letter in the mail. It said he still owed $78,000 on his home's second loan.
Get Quote
"I was afraid and felt pressured," said Jorge, who asked that his name be withheld because he is embarrassed about his situation. "I called them to say I had already lost the house in a foreclosure," he said, speaking in Spanish through a translator. "They told me it doesn't matter, you have to pay the money anyway."
Jorge's experience is being mirrored elsewhere. Debt collectors are starting to hound people who lost their homes to foreclosures or short sales over their second mortgages.
In California, a foreclosure generally wipes out the borrowers' obligation on the main mortgage but not necessarily on other home loans.
"We've seen a lot of folks coming to us, saying, 'I was foreclosed on, now these people say I owe $150,000 for my second loan; I thought everything was going to go away, what do I do now?' " said Noah Zinner, an attorney with Housing & Economic Rights Advocates in Oakland.
Some experts think the trend will accelerate, causing foreclosure pain to linger.
"I think the other shoe is going to drop soon," said Shannon Jones, a real estate attorney in Danville who gets several calls a day from people concerned about their liabilities post-foreclosure. "In the next two years we will see a huge volume of (debt collection on) second loans. We're seeing a number of lenders start filing suit or turn them over to collection companies."
California is a nonrecourse state, meaning lenders cannot pursue borrowers for unpaid balances on home-purchase loans. However, home loans not used for the purchase - home equity lines of credit and second loans taken out after purchase - are recourse loans, which means lenders are legally entitled to collect the unpaid balance. Depending on the type of loan, they have four to six years to pursue borrowers, Jones said.
Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/04/19/MN3C1CQGOC.DTL&type=business&tsp=1#ixzz0lYW2794s
***
:)