How much time do I get before I have to leave?

[larryprg]

What is the name of your state (only U.S. law)? Nevada

We owe $225,000 on a brand new home in a project where identical homes are currently selling/sold for $85,000-$99,000.

We have not made a payment in almost 12 months and the well-known Mortgage holder refuses to reduce the principal. They have informally said we may get a 3.5% loan modification to replace the current 6.5%, but that's it and that wasn't even what they called, "guaranteed".

We are close to declaring a bk, since neither one of the two of us can find full-time employment since we bought the home and moved here over two years ago.

We had a notice of default some 6-7 months ago.

How much time do we get to stay in this residence after they finally get around to telling us we have to leave?

[FlyingRon]

Hard to predict how long you can carry on. The first is how long before the bank forecloses, second is how long after the sale before whoever buys it wants you out and can legally do so. I'd not expect to spend more than a few weeks after the sale happens.

Depending on what ever else is going on debtwise BK may be silly. It doesn't do anything with respect to the house other than some temporary time delays.

[larryprg]

Thanks Ron!

I should've mentioned that we lost our life savings in the past two years including $35,000 down on the house. Although the house is our only debt, we owe $200,000 for the principal and $25,000 for the 2d TD with the same lender. We bought the house with a 10-10-80 loan. So we need the bk to remove the 2d TD from our debt.

We could keep the house, if they'd fold the 2d into the 1st and lower the principal to 150K (50K more than it's worth), but they refuse to work with us. Apparently, they'd rather let the house go for well under 100K to someone else than help us.

It really doesn't make any sense, but little does nowadays, especially in the Las Vegas area with so much unemployment and foreclosures.

[FlyingRon]

The BK is not going to remove the second. Secured loans are not discharged by bankruptcy.

Of course the banks are a little squeamish about outright handing you the $75,000 you are asking for. A refi down to 3.5 of the current principal appears to be within $50 of the same payment as what you are asking for (unless you wnat them to gift you $75000 PLUS a bargain interest rate).

They're probably specifically squeamish since you appear to have no income and wouldn't pay the mortgage regardless of how big of a gift they give you. They will see it as them handing you $75,000 and still being stuck with the foreclosure.

[larryprg]

Thanks so much for your responses Ron!

As for the 2d TD, secured loans are not dischargeable in a bk, but as I understand, there is no equity whatsoever in the home (the market value being almost a third of the loan amount), so the 2d is dischargeable, but that's a question for another forum.

Anyway, both of us have stable, continuous part-time jobs with a consistent income stream, just not enough for the original house payment, that's why they sort-of initially offered a 3.5% mod. If they reduced the principal, we can make those payments. BofA/Countrywide is apparently not doing any principal reductions and is taking big losses on homes they're reassuming.

For some reason they're taking big hits when if they were reasonable, it would save everyone a lot of money, time, paperwork and energy. The bureaucracy of such huge financial organizations is overwhelming.

My biggest concern right now is how much time we have before we really have to leave the home when the time comes to do so.

In the current capacity or after forclosure, are we considered tenants?

[HomeGuru]

Originally Posted by larryprg

Thanks so much for your responses Ron!

As for the 2d TD, secured loans are not dischargeable in a bk, but as I understand, there is no equity whatsoever in the home (the market value being almost a third of the loan amount), so the 2d is dischargeable, but that's a question for another forum.

Anyway, both of us have stable, continuous part-time jobs with a consistent income stream, just not enough for the original house payment, that's why they sort-of initially offered a 3.5% mod. If they reduced the principal, we can make those payments. BofA/Countrywide is apparently not doing any principal reductions and is taking big losses on homes they're reassuming.

For some reason they're taking big hits when if they were reasonable, it would save everyone a lot of money, time, paperwork and energy. The bureaucracy of such huge financial organizations is overwhelming.

My biggest concern right now is how much time we have before we really have to leave the home when the time comes to do so.

In the current capacity or after forclosure, are we considered tenants?

**A: only the court has the say as to when you need to move out. If you file BK, there is an automatic stay on any foreclosure action so it would buy you some time. If you do not file BK and the foreclosure goes through, there will be court confirmation of sale and a writ of possession. The writ is the court order demanding that you vacate the property. If you remain on property during the foreclosure process, you are deemed a debtor in possession.

[larryprg]

Thanks. That helps a lot. Now I know more than I did before my original post.

[Sgt. Pepper]

Originally Posted by FlyingRon

The BK is not going to remove the second. Secured loans are not discharged by bankruptcy.

The liens may still exist after the bankruptcy, but the loans themselves are discharged.

[larryprg]

It makes sense to do the bk to discharge the liens and protect our future.

[Sgt. Pepper]

Originally Posted by larryprg

It makes sense to do the bk to discharge the liens and protect our future.

The bankruptcy won't eliminate the liens, but it will eliminate the loans. That probably seems confusing to a layperson, but what it means is that you would no longer be legally liable for the loans. You couldn't be sued for them and they won't appear on your credit report as outstanding debt.

But the liens still remain. That means the lender would still have the right to take the house and sell it to satisfy your unpaid debt.

I think what you were told overall makes sense. There's no reason to file for bankruptcy unless the lender attempts to go after you for a deficiency. A bankruptcy is the worst thing you can do to your credit report, while a foreclosure is only the second worse thing. If the lender forecloses and never goes after you for a deficiency, then you'd be in better shape than if you filed for bankruptcy.

That answer assumes that you have no other debt.

[larryprg]

The house is our only debt.

Again, I think a bk as soon as possible after the forclosure is called for, because we have no assets now (other than low-value autos).

There will be a $150,000+ deficiency in the foreclosure and it doesn't seem to make sense that we start improving our financial affairs in the near future with a major potential financial burden in the wings.

When we get back on our feet, getting things back together. It makes no sense to lose everything because we didn't protect it when we could.

Am I still not thinking properly?

[Sgt. Pepper]

I doubt that is the best move, but I can't say for sure without researching it (which I can't do right now). Usually the mortgagee only has a short window of time to pursue a deficiancy. It's probably days, not years.

[larryprg]

Now that's something I was not aware of.

I will try some researching on my own, but if you can elucidate more, I know I'd certainly appreciate it and I'm sure there's plenty of others reading this that may as well.

[Sgt. Pepper]

If the mortgagee doesn't ask for a deficiency judgment within 6 months of the foreclosure, then it's too late.