If I stop payments now, how long till deficiency judgement?

[crucifixion]

Wrong. A lender can foreclose from second position. They must pay off the first. Or if THEY have both first and second, they simply foreclose on their second.

And, as I understand it in CA, if these loans are not PURCHASE MONEY MORTGAGES, they ARE recourse loans.

I'm sorry, I thought you had read the entire thread.

In my situation, I have a first of 340k, and a second of 112k, two different banks, both are non-recourse (both were acquisition loans and I read the documents and they state the loan is secured by the house). So I owe $452k and in my area, the same townhomes in my complex are selling for 300-330k (not even enough to cover my first).

So in my situation, the second has no power. The second will run numbers and see that they can not pay off the first and still have anything for the second. They won't be able to pay off the first, period.

So with that said, hypothetically speaking, if I were to only stop paying my second, what could happen? Only thing I see is that my credit will go down and after about four months my second will be asking me for a negotiated pay off, which I would estimate could be $10K to settle a $112k debt.

Thats what I think. Am I completely 100% wrong?

 

[crucifixion]

Thats what I think. Am I completely 100% wrong?

Can anyone let me know if I'm completely wrong here? If the second is non-recourse and I just stop paying it (but keep paying the first) and there is no equity for the second to get at (e.g. property value is less than the total of the first mortgage), then I don't see why I can't be in the position of strength and negotiate a buy off of like $5-$10K (since the only negative to me is credit)?

 

[crucifixion]

Hi.

I was hoping to not start a new thread, but I think I may have to since I'm pretty much talking to myself in this thread now.

I'm hoping someone can answer this for me:

Can anyone let me know if I'm completely wrong here? If the second is non-recourse and I just stop paying it (but keep paying the first) and there is no equity for the second to get at (e.g. property value is less than the total of the first mortgage), then I don't see why I can't be in the position of strength and negotiate a buy off of like $5-$10K (since the only negative to me is credit)?

Thanks in advance.

 

[LindaP777]

And how do you know your second mortgage is "non-recourse"?
From what I know, 1st mortgages in California may be non-recourse, but second mortgages are. Now you may know more than I do on the subject, but let's think about it. What lender in their right mind would loan money for a 2nd mortgage if it were non-recourse with no equity in the property? Certainly none that I can think of, but I have been wrong before.

What proof do you have that your second is non recourse? Just because the loan is "secured by the house" does not make it non-recourse. All mortages that I am aware use real estate as the security. The second mortgage company can foreclosure and be prepared for them to come after you for a deficiency judgement.

If you start another thread simple because you are not getting the answers you want, it will be marked as a duplicate thread and removed.

 

[crucifixion]

And how do you know your second mortgage is "non-recourse"?
From what I know, 1st mortgages in California may be non-recourse, but second mortgages are. Now you may know more than I do on the subject, but let's think about it. What lender in their right mind would loan money for a 2nd mortgage if it were non-recourse with no equity in the property? Certainly none that I can think of, but I have been wrong before.

What proof do you have that your second is non recourse? Just because the loan is "secured by the house" does not make it non-recourse. All mortages that I am aware use real estate as the security. The second mortgage company can foreclosure and be prepared for them to come after you for a deficiency judgement.

I called the bank and confirmed, it is a non-recourse loan.

With that said,

Can anyone let me know if I'm completely wrong here? If the second is non-recourse and I just stop paying it (but keep paying the first) and there is no equity for the second to get at (e.g. property value is less than the total of the first mortgage), then I don't see why I can't be in the position of strength and negotiate a buy off of like $5-$10K (since the only negative to me is credit)?

 

[FlyingRon]

You can always negotiate.

However, the second can always foreclose anyhow and take their lumps.

 

[junjun1570_2]

same situation

Hi Crucifixion,

Currently, I have same situation the only difference is that i have same lender to my first & second mortgage (Wachovia Bank). I also live in CA. If you don't mind, pls. let me know what happen to your case.

 

[crucifixion]

You can always negotiate.

However, the second can always foreclose anyhow and take their lumps.

Thanks Ron, but what does that mean, "take their lumps"?

Are you saying the second would "take their lumps" by paying off the first just so they can foreclose on me? In this scenario, the second not only loses out on the $112K I owe them, but they'll pay off the first of $340K, just so the second can foreclose and own the home? So then I guess they could sell the home for $250K in a sherrif sale and the net loss to them would be about -$200K or so. So just for the principle of foreclosing, they would pay out $200K just to foreclose? I highly doubt that, but I guess that would be their option, and could be their bargaining chip to negotiate a deal with me so that they can drop their second and I can still keep my house.

 

[FlyingRon]

No, they don't have to pay off anybody. They foreclose hoping that the sale will net at least enough to pay the first. At least they can officially write off the loan at that point and stop carrying it on the books.