How screwed will we be?

[washmom]

What is the name of your state? WA

Hi,
I just received a letter in the mail from the company we use for note servicing - here's the deal. Last October we sold our home and agreed to finance the second mortgage in the amount of 38,000. We went back to school and were hoping to have the money avaiable to use in a couple of years when our family was ready to buy a house again.
The buyers have been (mostly) on time with their payments, but now they are claiming a financial hardship with one spouse working part time and have put the house up for sale - 15,000 less than what we sold it to them. What happens now? Obviously, there won't be enough money to cover 1st mort, agent fees, and us. Who gets paid first? How do we collect if we do not receive the full amount we lended? Are we up a river without a paddle? Can a bankruptcy judge (if that's the way they go with this) force them to pay the balance due us? I have tried to contact the owners (kindly) but have not been able to reach them.
Any advice would be great. Thanks!

[HomeGuru]

Originally Posted by washmom

What is the name of your state? WA

Hi,
I just received a letter in the mail from the company we use for note servicing - here's the deal. Last October we sold our home and agreed to finance the second mortgage in the amount of 38,000. We went back to school and were hoping to have the money avaiable to use in a couple of years when our family was ready to buy a house again.
The buyers have been (mostly) on time with their payments, but now they are claiming a financial hardship with one spouse working part time and have put the house up for sale - 15,000 less than what we sold it to them. What happens now? Obviously, there won't be enough money to cover 1st mort, agent fees, and us. Who gets paid first?

**A: the first mortgage lender gets paid first.

************
How do we collect if we do not receive the full amount we lended?

**A: you need to go to court and obtain a deficiency judgement.
*************
Are we up a river without a paddle?

**A: sounds like it.

**************
Can a bankruptcy judge (if that's the way they go with this) force them to pay the balance due us?

**A: no, especially if there is no money left over after a BK sale.

**************
I have tried to contact the owners (kindly) but have not been able to reach them.
Any advice would be great. Thanks!

**A: basically you're stuck.

[washmom]

Can we foreclose before the house is sold? Is it possible to reposses the house that way?

[washmom]

Just talked to owner - they have arranged a "short sale" with their 1st mort. and she thinks that means we (2nd mort.) will be paid first, then the 1st holders will take the balance from the sale. Does that sound right?

[HomeGuru]

Originally Posted by washmom

Just talked to owner - they have arranged a "short sale" with their 1st mort. and she thinks that means we (2nd mort.) will be paid first, then the 1st holders will take the balance from the sale. Does that sound right?

**A: no, read my post again.

[washmom]

Have been reading up on short sales and understand the whole process much better. At this point we just have to wait and see how things go. Thanks for your help, HomeGuru.

[HomeGuru]

Originally Posted by washmom

Have been reading up on short sales and understand the whole process much better. At this point we just have to wait and see how things go. Thanks for your help, HomeGuru.

**A: fyi, you as the second, need to approve the short sale.

[LindaP777]

Just curious, did you file your second mortage with the county? Your note just holding your note, are you? If it's filed, as HG said, you the second mortgage holder will have to approve the sale.
If you can not agree to the short sale price and the first mortage holder ends up foreclosing, you will more than likely be screwed if it goes to sheriff's sale, which, BTW, you must be there to bid up the house. It is possible you will buy the house back at the sheriff's sale.

[949]

i wasnt sure if you said you did record the note with the county?

[HomeGuru]

Originally Posted by 949

i wasnt sure if you said you did record the note with the county?

**A: what aren't you sure? Read the post.

[FlyingRon]

Originally Posted by HomeGuru

**A: what aren't you sure? Read the post.

Bankruptcy isn't really going to affect this (to answer one of the original questions). They are either going to start making the payments again or the house will be foreclosed.