Q: I have been sick for over one year and my income has drastically decreased. My life is in shambles. Car was repossessed, no cable, internet or home phone, gas and electric. I have shutoff notices, but I was eligible for programs to help me. Today I opened the mail and a letter from my bank where I have a 30K HELOC is telling me they have charged off the balance on my account of $30,788.88 and accelerated this balance. Now I owe it in full. I’ve been trying to work with them for the last 6 months and have gotten nowhere. They were sending me an application for a hardship assistance, but I NEVER got them. They said it was sent twice. My main concern is if they can foreclose on my mortgage and must I pay them in full? I’m not even working, I don’t have that kind of money laying around. I am frightened and don’t know what to do, please help me, I am really scared. (Pittsburgh, PA)
A: Get to a consumer law attorney immediately. If this home equity line of credit is a lien filed on your home, they certainly can foreclose. It is my hope that a civil complaint has not been filed against you and you failed to answer it and thereby a default judgment has been taken against you. If there is time to answer the complaint, an attorney can do that which will slow the process. The creditor cannot just foreclose without filing a lawsuit against you and obtaining a judgment in court. Normally, the creditor goes after the property and does not seek a judgment against you personally, for any deficiency between what the house resells for and what you owed on the contract. However, the contract would need to be reviewed in order to confirm this. Again, look for an attorney.
Q: Borrower is current on first mortgage, but over 120 days delinquent on the second mortgage. Borrower has refused a loan modification and does not wish to sell the home. There is approximately $70,000-$90,000 in home equity. (Pittsburgh, PA)
A: You cannot go right to Sheriff’s Sale. You must file a foreclosure proceeding first. Moreover, your mortgage will be second to the first mortgage holder so the first mortgage holder will need to be paid first.
Q: What are the consequences if you walk away from your mortgage payment. Would you need to file bankruptcy first?After 10 months my sister is receiving no child support, though she was awarded a sum of money, since her estranged husband doesn’t work. She can’t afford her home and daycare for 2 young boys, along with the rest of her bills. She was considering filing bankruptcy or just not paying her mortgage. What are the differences between these two options.
A: If she fails to pay the mortgage, it may take 6-9 months or even more for the bank to foreclose. They will just take the home back. Sometimes, they will pursue a deficiency judgment against her. This is the balance of what was owed on the mortgage and what they eventually sell the house for at foreclosure. If the bank is owed, they can, and sometimes do, sue the person on the mortgage for that deficiency balance. Sometimes I have negotiated with banks to not pursue the deficiency, and just take the home back and be done with it, in exchange for the mortgage holder’s cooperation in signing all documents and surrendering the keys. This helps the bank in that they don’t have to sue the mortgage holder, post the house with the sheriff, etc. Bankruptcy may present a better option, depending on the circumstances as the bankruptcy stay can give additional time in the home and other debts the person is having difficulty paying, can be addressed through consolidation or discharge.