Posted on 10/02/2011 11:41:53 AM PDT by Borough Park
By JESSICA SILVER-GREENBERG
LEHIGH ACRES, Fla.—Joseph Reilly lost his vacation home here last year when he was out of work and stopped paying his mortgage. The bank took the house and sold it. Mr. Reilly thought that was the end of it.
In June, he learned otherwise. A phone call informed him of a court judgment against him for $192,576.71.
It turned out that at a foreclosure sale, his former house fetched less than a quarter of what Mr. Reilly owed on it. His bank sued him for the rest.
The result was a foreclosure hangover that homeowners rarely anticipate but increasingly face: a "deficiency judgment."
(Excerpt) Read more at online.wsj.com ...
More of that hopey changey BS. Thanks Barry!!!
Pretty common, I believe. The house doesn’t sell for the price of the mortgage, the mortgagee is on the hook for the difference. Same with cars.
Yup, “walking away” only works in no-recourse states, where the terms of mortgages are such that ceding the collateral to the lender is held to fulfill the debt in its entirety, regardless of the market value of the property at the time of foreclosure.
Yes, this is always the case.
It’s like wrecking a leased car - you still owe for the lease.
Barney Frank’s gift for the middle class.
I better arm the Phalanx system. Okay, now I can state that I have little sympathy of Mr. Reilly who should have obtained sound legal advice before he stopped paying the mortgage on his vacation home, who should have contacted the lender when he lost his job to work out a deferment/payment schedule, who should not have ignored the legal notices sent to him, etc.
As the saying goes, “Mr. Reilly, you asked for it. You got it. Now live with it.”
Idiot, I have told people here a thousand times, the only way to prevent this is to deed the property back to the bank, catch your payments up, deed the property to the trustee and walk, make sure you take plenty of pictures with a witness as you leave.
Barney the queer had nothing to do with a vacation home. Damn!
Lenders still sue for loan shortfalls in only a small minority of cases where they legally could. Public relations is a limiting factor, some debt-buyers believe. Banks are reluctant to discuss their strategies, but some lenders say they are more likely to seek a deficiency judgment if they perceive the borrower to be a "strategic defaulter" who chose to stop paying because the property lost so much value.
I knew a married couple, with one new kid, guy drove a Hummer, seemed pretty well off. He scammed the bank. He took out another mortgage for 43,000. Then he just skipped town. Let the home go into foreclosure. Hope the bank got that guy.
“Credit unions and smaller banks are the most aggressive pursuers of deficiency judgments, a review of court records in several states shows. “
This one is juicy. I just get so tired of people here going on and on about the wonders of credit unions. Maybe they are good...in most ways, but it seems from the above post that one should use a BIG bank when taking out a mortgage.
He should have done that the moment he decided to stop paying on the mortgage. Best for all concerned to get that 7 year clock ticking immediately.
“Vacation home”, huh?
Wish I could afford a “vacation home”... Hey! Maybe now I CAN!
No, It is not always the case. It depends entirely on individual state law as many states have no recourse.
bump for later
When Congress, Presidents, and the Fed conspire to create ‘zero-down’ mortgages, this is what results.
Washington DC created the housing boom and Washington DC owns the housing bust.
Don’t let the politicians try to tell you that the banks are the cause.
When people have to put 20% down payment on a house, they then have the financial wherewithal to weather financial storms.
Some people have no business in purchasing a home that was/is way overpriced. Should have waited and saved up a significant downpayment and then live in a house well within the means of finances. Why be a slave just to pay the mortgage?
The nation is in the economic toilet due to irresponsible Govt, Banks and some unwise citizens.
“”Some people have no business in purchasing a home that was/is way overpriced. Should have waited and saved up a significant downpayment”””
During the Florida housing boom people were convinced that Florida was running out of land and they needed to buy immediately at whatever cost.
It is truly amazing what happens when the herd decides to go in a direction. The members of the herd turn off their brains.
Once you leave the immediate gulf coast of Florida the land is the same ranch land for the next 150 to the Atlantic Coast.
But during the boom people were convinced they needed to pay $400,000 for a house that cost $150,000 to build.
He’s screwed one way or another...
If he has to pay the judgement, he’s ruined. If it’s forgiven, he will owe the IRS taxes on the amount forgiven as regular income.
He’s screwed.
Mark
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.