Home Mortgage issue question

[gmane215]

Hey guys i'm new to the forum! My mother is in a tight situation but wondering what's the worst outcome.

My father passed five months ago and she is not able to afford the house by herself, the county just raise the house tax again by 3%, and he did not leave any income behind for anybody to use.

Another bad part is, she had to get a 2nd load modification to save the house a few years ago due to domestic issues which now the loan balance is over $30,000 from what the house is worth. So if she was to sell it, she is not able to walk away free & clear!

If she was to walk away and leave the house, What's the worst thing that can happen to her? Can the bank seize her bank account after awhile?

She did file Chapter 7 bankruptcy two years ago but it was to clear her credit debt from my father maxing out credit cards on joined accounts, her credit is now in great shape finally! As far as i know, she not able to file Chapter 7 bankruptcy until seven years after she filed first one from what i was told?

Any advice is appreciated. Thanks

 

[quincy]

What is the name of your state and your mother’s state (if different)?

I am sorry about the loss of your father.

 

[gmane215]

What is the name of your state and your mother’s state (if different)?

Thanks for reply, we're both in Pennsylvania

 

[quincy]

Thank you for providing your state name, gmane215.

Is your mother a senior citizen?

Has your mother missed any mortgage payments yet? Has she spoken to the mortgage company to see if another modification is possible?

Is your mother’s house large enough to accommodate a (well-screened and employed) tenant to help cover housing costs (if you and your mother are comfortable having someone else in her house)?

If your mother walks away from her house, the bank will eventually foreclose and probably try to sell the house at auction. If the proceeds from the auction do not cover the outstanding loan, the bank potentially can sue your mother to recover the difference.

With a foreclosure on her credit report, your mother could find it difficult to find other housing. Many landlords are reluctant to rent to former homeowners who could not pay their mortgage.

It is generally better to try to sell the house before foreclosure, even if you are not going to realize enough from the sale to pay off the mortgage loan in full - but if your mother does try to sell, she should speak to her lender to see if they will accept a “short sale” (less than what is owed) as a satisfactory payoff amount on the mortgage loan. Some lenders prefer that to having to market and sell the house themselves.

Here is a link to Pennsylvania Law Help with information and resources that could help your mother avoid foreclosure: https://www.palawhelp.org/resource/preventing-foreclosure

The fact is that most mortgage companies do not want to foreclose. They are in the money lending business, not the home selling business. They would much rather work with a homeowner than take over a house.

 

[zddoodah]

I'm copying my response from the other site where you posted this (since it's not permissible to put a link here).

If she was to walk away and leave the house, What's the worst thing that can happen to her? Can the bank seize her bank account after awhile?

The worst thing that can happen is that she'll get sued and have a judgment entered against her, which will make her wages subject to garnishment and her bank account(s) subject to levy. There are, of course, other ways to try and enforce a civil money judgment, but wage garnishment and bank levies are the overwhelmingly most common ways.

She did file Chapter 7 bankruptcy two years ago but it was to clear her credit debt from my father maxing out credit cards on joined accounts, her credit is now in great shape finally! As far as i know, she not able to file Chapter 7 bankruptcy until seven years after she filed first one from what i was told?

There's no question here, despite your use of a question mark. You wrote that your mother obtained a second mortgage "a few years ago due" and that she filed bankruptcy "two years ago." When did she obtain the loan relative to the bankruptcy filing? Did she list both the first and second mortgages on her bankruptcy schedules? If not, why not? Did she reaffirm either or both mortgages? Did her bankruptcy result in a discharge? These are important questions, so please answer each one (even if the answer is "I don't know") and, if you don't understand anything I'm asking, please say so.

 

[FlyingRon]

There are limits on deficiency judgments in Pennsylvania. They're capped at the FMV. If it's just the first that's been modded up over the FMV, then they will not be able to get a judgment if they foreclose.

 

[quincy]

The HEMAP program is one that mom should check out. It potentially can buy her enough time for the housing market to improve so she can sell her house at a higher price.

 

[gmane215]

I'm copying my response from the other site where you posted this (since it's not permissible to put a link here).



The worst thing that can happen is that she'll get sued and have a judgment entered against her, which will make her wages subject to garnishment and her bank account(s) subject to levy. There are, of course, other ways to try and enforce a civil money judgment, but wage garnishment and bank levies are the overwhelmingly most common ways.



There's no question here, despite your use of a question mark. You wrote that your mother obtained a second mortgage "a few years ago due" and that she filed bankruptcy "two years ago." When did she obtain the loan relative to the bankruptcy filing? Did she list both the first and second mortgages on her bankruptcy schedules? If not, why not? Did she reaffirm either or both mortgages? Did her bankruptcy result in a discharge? These are important questions, so please answer each one (even if the answer is "I don't know") and, if you don't understand anything I'm asking, please say so.

Thanks alot for reponse! She filed 2 years ago, she did not file bankruptcy on house because she moved out for 2 years to a apartment for peace of mind due to serious domestic violence from my father. Furthermore, she decided to live with him again for another chance to supposedly save her years long marriage. She didn't reaffirm mortgage, just to clear all her credit card debt because they had joint credit accounts and he maxed every card out over 50k in negative balance that was stuck on her credit so she was screwed. Her credit is back to being great again due to filing Chapter 7 bankruptcy for it

 

[quincy]

Thanks alot for reponse! She filed 2 years ago, she did not file bankruptcy on house because she moved out for 2 years to a apartment for peace of mind due to serious domestic violence from my father. Furthermore, she decided to live with him again for another chance to supposedly save her years long marriage. She didn't reaffirm mortgage, just to clear all her credit card debt because they had joint credit accounts and he maxed every card out over 50k in negative balance that was stuck on her credit so she was screwed. Her credit is back to being great again due to filing Chapter 7 bankruptcy for it

Your mother would be smart to seek out legal assistance (link provided earlier) to go over the options that are available to her.

She might find it possible to save her house by moving into an apartment again and renting out her house to someone who can afford to cover in rent amount the mortgage and tax payments.

 

[LdiJ]

Your mother would be smart to seek out legal assistance (link provided earlier) to go over the options that are available to her.

She might find it possible to save her house by moving into an apartment again and renting out her house to someone who can afford to cover in rent amount the mortgage and tax payments.

While that is a good idea in theory, it might not work for her in practice. Since she cannot afford the payment, she would definitely not be able to afford both the payment AND rent for any months that the house was empty. She might be better off renting a room to someone if she was going to rent.

 

[quincy]

While that is a good idea in theory, it might not work for her in practice. Since she cannot afford the payment, she would definitely not be able to afford both the payment AND rent for any months that the house was empty. She might be better off renting a room to someone if she was going to rent.

It is an option to explore, considering she has not missed any mortgage payments yet and she has good credit currently. If she waits too long, her options become more limited.

 

[zddoodah]

She filed 2 years ago

You already told us that.

Unfortunately, you ignored several important questions: When did she obtain the loan relative to the bankruptcy filing? Did she list both the first and second mortgages on her bankruptcy schedules? If not, why not? Did she reaffirm either or both mortgages?** Did her bankruptcy result in a discharge?

** - You wrote that "She didn't reaffirm mortgage," but that could mean that she didn't reaffirm either mortgage or that she didn't reaffirm one of the mortgages.

she did not file bankruptcy on house

That does not make sense -- either grammatically or legally. One does not "file bankruptcy on" any particular asset or debt. I hope this doesn't mean that she failed to list the house as an asset on her bankruptcy schedules.

Without clear information, it's impossible to assess your mother's present situation intelligently.

By the way, it's perfectly ok for you to say, if true, "I haven't the slightest idea what my mother's bankruptcy schedules said." And, if that's the case, then she needs to re-engage her bankruptcy attorney to advise her.

 

[quincy]

gemane’s mother filed a Chapter 7 to eliminate her debts but germane’s father was still alive at the time and living in the marital home.

It is a good bet that germane’s mother had a bankruptcy attorney to assist with the Chapter 7.

What germane’s mom needs to do now - before she misses a mortgage payment - is to get local help, for a personal review of her mortgage documents and her bankruptcy and her financial situation, to see what her best course of action is at this point.

 

[gmane215]

You already told us that.

Unfortunately, you ignored several important questions: When did she obtain the loan relative to the bankruptcy filing? Did she list both the first and second mortgages on her bankruptcy schedules? If not, why not? Did she reaffirm either or both mortgages?** Did her bankruptcy result in a discharge?

** - You wrote that "She didn't reaffirm mortgage," but that could mean that she didn't reaffirm either mortgage or that she didn't reaffirm one of the mortgages.



That does not make sense -- either grammatically or legally. One does not "file bankruptcy on" any particular asset or debt. I hope this doesn't mean that she failed to list the house as an asset on her bankruptcy schedules.

Without clear information, it's impossible to assess your mother's present situation intelligently.

By the way, it's perfectly ok for you to say, if true, "I haven't the slightest idea what my mother's bankruptcy schedules said." And, if that's the case, then she needs to re-engage her bankruptcy attorney to advise her.

Sorry for late response! I finally was able to get ahold of her lawyer, he was able to answer the following questions.

1) The first and second mortgage is listed on Bankruptcy.

2) Both mortgages are not reaffirmed.

3) Bankruptcy resulted in a discharge on, April 29th, 2018

By mortgage not being reaffirmed, does that mean she not liable for any of remaining house balance if she was to sell less than what the house is worth? Thanks again for your advice and support!

 

[quincy]

If both mortgage loans were discharged in the bankruptcy, the lender cannot collect from your mother any deficiency if she were to sell the house now. She can also remain in the house if she continues to make payments.