Wanting To Sell Our House But We Are Delinquent On 2nd Mortgage...

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pamzam

LoanSafe Member
Mar 29, 2010
40
2
8
Hi everyone!
I wasn't sure where to post this exactly. Here's our scoop...We have a 1st with WF, of which we've remained on time. In July 2011, we quit paying on our 2nd (GreenTree, now DiTech), owing around $65,000.

My question is this: we are considering a move (to where houses are cheaper and taxes are much lower) within the next year. Now, if we sold the house, (it's worth, on paper, $209,000, and we owe $138,000), with the 2nd in default, how would that work? If we sold the house for $190k, let's say, we'd have about $56k. Again, we owe around $65k to DiTech. So...would this be a wash, basically, or would DiTech sue us for the remaining $9k (or so)? Perhaps they would 'settle' for the $56k and forget about the $9k...? (I know no one knows for sure what they'd do, but has this happened to anyone when you sold your house?)

Would this be considered a short sale?

We've been following the Settlement Strategy (haven't talked to them in about 6 years now, July will be 7 yrs).

Thanks for any feedback, everyone. Have a good one!
 

Moe Bedard

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Aug 10, 2007
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Hi pamzam!

Yes, it would be considered a short sale and you will have to get permission from Ditech to cooperate which they might do because they will only lose about $9k. But they may say no and force you to come to the table with the $9k when you sell.
 

pamzam

LoanSafe Member
Mar 29, 2010
40
2
8
Has anyone gone this long, 6 yrs, without paying a 2nd? Is this unusual?

It looks like maybe a short sale would be out of the question. 1) I spoke with a short sale attorney who told me that yes, you'd have to be behind a month or two on your mortgage but that also the banks need to see a hardship. We don't really have one, per se, other than by the time we pay the mortgage and our other bills, there's not much left. We've been current on our 1st (which we did not reaffirm in a Chapter 7 BK in 09).

Now my dad said he would buy us a house outright for 45k (a fixer upper). At first he said he'd put it in his name, but now he's changed his mind and is insistent it go in our name; he wants to "gift" us the money and then WE buy it. I explained to him the whole short sale/hardship thing and how it just wouldn't look good for us if we file for a hardship and then they see a deposit for 45k, and they'd say "you don't have a hardship!!" At which time, we'd be denied, and then we'd HAVE to let the house go (8 yrs ago, we filed chap 7, and we did not reaffirm the 1st, which is good, but for some reason we did reaffirm (or affirm, however the wording is) the 2nd).

So if we let the house go, then I'm terrified the 2nd is going to come after us and "our new house."

--Will filing BK again, a new case, help us with the 2nd this time, if we don't reaffirm it? Can a NEW Chap 7 on the same mortgages be done? In Chapter 7, can you not reaffirm both?
--Do we offer the 2nd a settlement (but I'm afraid to poke that bees nest after 6 yrs.)?
--do we just let the house go and see what happens?
--what kind of attorney would be able to help us with this?
--should I beg my dad to just put it in his name til we get this cleared up?!?!

Thanks so much. This is just such a mess.
 

Erik Sandstrom

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Jan 14, 2011
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--Will filing BK again, a new case, help us with the 2nd this time, if we don't reaffirm it? Can a NEW Chap 7 on the same mortgages be done? In Chapter 7, can you not reaffirm both? - I'm not sure if you can file bankruptcy again if you already have? I'm not a bankruptcy attorney and not best suited to answer this question.

--Do we offer the 2nd a settlement (but I'm afraid to poke that bees nest after 6 yrs.)? I wouldn't think that it would hurt, that 2nd is going to follow you and/or the property for awhile. If it's been 6 years since it's been charged off, you may want to just stick it out. This again is a topic that I am really unable to answer, you'll need to consult an attorney or credit repair company to determine how long it would remain on your credit.

--do we just let the house go and see what happens? It sounds like you're in a predicament of foreclosure, short sale or DIL. Short sale and DIL will damage your credit the least however all are viable options, especially after including the home in bankruptcy. Home loan options after bankruptcy are available. We also just launched a product that will allow for an outstanding 2nd mortgage that is not tied to a property that starts at 15% down.

--what kind of attorney would be able to help us with this? Not sure what exactly you're seeking help for, a bankruptcy attorney or real estate attorney or both.

--should I beg my dad to just put it in his name til we get this cleared up?!?! That sounds like the best idea, or see if he's able to gift the money into escrow for the purchase so it's not deposited into your account.