How can my mom protect her house from going into foreclosure? 17 Answers as of June 26, 2013

My mom signed a loan for a house for my sister and brother in law. My moms name is the only one on the loan for the house for my sister. My sister lost her job and can't pay for the loan and it might be going into foreclosure. My mom also has a house that she lives in which is 3 payments away from being paid for and would like to know how to protect her home and herself from financial ruin and loosing her home. What can my mom do to protect her? Can they take her house that she has had for years if the other house goes into foreclosure?

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Bankruptcy Law office of Bill Rubendall
Bankruptcy Law office of Bill Rubendall | William M. Rubendall
In a situation where your mom signed a loan for a house for your sister and brother in law and is the only one on the loan she can protect other property that she owns by filing a homestead declaration.
Answer Applies to: California
Replied: 8/11/2011
Tucker Legal Clinic
Tucker Legal Clinic | Samuel Tucker
Your mother is a long way from losing her house, but she does have some exposure. If sisters house is foreclosed, mother could be liable for any deficiency.
Answer Applies to: Mississippi
Replied: 8/10/2011
CONSUMER PROTECTION ASSISTANCE COALITION, INC. (DE).
CONSUMER PROTECTION ASSISTANCE COALITION, INC. (DE). | Gary Lee Lane
One choice is Bankruptcy but it is only temporary. We regularly sue banks.
Answer Applies to: California
Replied: 8/10/2011
Paul Stuber, Attorney at Law
Paul Stuber, Attorney at Law | Paul Stuber
It is very unlikely but not impossible for one foreclosure to create a lien and a foreclosure on another property. As I understand it there is no foreclosure process started on either home. The best thing to do is to put your sister's home on the market and present it well enough to get a sale that would satisfy the loan or work out a short sale with the bank. The only way your mom would lose her home is if the sister's home was foreclosed on and sold through a foreclosure sale for much less than what was owed and then the bank got a judgment against your mom for the deficiency and put a lien on her home. If they were aggressive enough they could then force a foreclosure on her home but she would still be entitled to her homestead exemption.
Answer Applies to: Colorado
Replied: 8/10/2011
Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
I have seen this question before.... Your mom needs to see a lawyer NOW.
Answer Applies to: California
Replied: 8/10/2011
    Theodore N. Stapleton, PC
    Theodore N. Stapleton, PC | Theodore N. Stapleton
    I already responded to you that your sister could file a bankruptcy to stop the foreclosure and your mother needs to meet with me to discuss asset protection. I am happy to discuss the issue with you.
    Answer Applies to: Georgia
    Replied: 8/10/2011
    Law Office of Michael Johnson
    Law Office of Michael Johnson | Michael Johnson
    No but she may want to do a bankruptcy which will allow her to keep her home as it is a homestead and get rid of all other debt.
    Answer Applies to: Florida
    Replied: 8/10/2011
    Law Office of John C. Farrell, Jr.
    Law Office of John C. Farrell, Jr. | John C. Farrell, Jr.
    They cannot take the house your mother lives in. MA recently changed the Homestead protection to automatically protect up to $125,00 in the equity of the home. If a Homestead is filed with the registry of deeds then it will protect up to $500,000, If she hasn't already I would suggest filing a Homestead which I believe current cost about $35.
    Answer Applies to: Massachusetts
    Replied: 8/10/2011
    Eric J. Benzer, Attorney at Law
    Eric J. Benzer, Attorney at Law | Eric Benzer
    File bankruptcy..hire lawyer
    Answer Applies to: Maryland
    Replied: 8/10/2011
    Heupel Law
    Heupel Law | Kevin Heupel
    If your mother has more than $90,000 of equity (assuming she is over 60 years old), then yes, the creditor can force the sale of her home in order to pay the foreclosure deficiency from the sister's house. In terms of how to protect your mother, it really depends on her income, debts and assets.
    Answer Applies to: Colorado
    Replied: 8/10/2011
    Carballo Law Offices
    Carballo Law Offices | Tony E. Carballo
    The good news is that if your mother is only on the loan secured by the first mortgage and it is the holder of the first mortgage that is foreclosing, then your mother will not have to worry about owing anything to the bank after the foreclosure. In California when a bank forecloses using a Trustee's Sale non-judicial foreclosure (which is the way foreclosures are done in California in 99+% of the cases) then there is no deficiency owed the bank. This is called the "one action rule" and it means the bank cannot try to collect the loss from the property owner who signed the note secured by the first mortgage. However, if your mother is on the note secured by a second or junior mortgage then that would be a problem and she needs to consult with a lawyer to see if she would be liable on the second note if the the holder of the first mortgage forecloses. Most likely your mother is only on the note secured by the first mortgage and it is the bank holding that mortgage that is foreclosing but you need to sure of the facts. Even if your mother would not owe any money to the back after the foreclosure, it is likely that she will get a 1099-C and might have to pay taxes for the amount of the loan was that was not paid. If she gets a 1099-C after the foreclosure (in a few months) then she needs to see a tax specialist (attorney, CPA or IRS enrolled agent) about what can be done so that she does not have to pay income taxes on "debt cancellation" income (which is the amount of the loan that was not paid).
    Answer Applies to: California
    Replied: 8/10/2011
    Apple Law Firm PLLC
    Apple Law Firm PLLC | David Goldman
    Where is the home located?
    Answer Applies to: Florida
    Replied: 6/26/2013
    Ashman Law Office
    Ashman Law Office | Glen Edward Ashman
    When a person co-signs they are promising to pay for someone the bank believed could not pay. I assume she read the papers and knew the risk. No one should ever co-sign debts they don't plan to pay. Your mom has created a catastrophe that may have no solution. If there is a foreclosure, the bank can get a default judgment against your mom and that judgment will become a lien on her home. If she can work out a deal to make the payments on the other home, that may help. In Georgia a bankruptcy will not, as they will sell her home then too. Other deals may be possible. She needs to immediately retain a lawyer to see if she can cut some deal with the lender. Otherwise, she is seriously at risk of losing her home. This is a ticking time bomb that is an emergency. It may or may not have a solution, but if there is one, delay will eliminate it. She needs a lawyer today and needs to hire one regardless of cost.
    Answer Applies to: Georgia
    Replied: 8/10/2011
    Law Office of Maureen O' Malley
    Law Office of Maureen O' Malley | Maureen O'Malley
    There was a similar question recently. Was it you? Your mom should pay her own house first. If they can get your sister's house brought up to date afterwards, then great. Or your Mom could file Ch. 13 to pay arrearage or Ch. 7 so she doesn't get charged with taxes on the arrearage. I can't emphasize enough that, where it looks like a choice must be made, it must be to pay off your mother's house since she's so close to payoff. If this still doesn't answer your querstion,
    Answer Applies to: Virginia
    Replied: 8/9/2011
    Hines Law Offices
    Hines Law Offices | Holly H. Hines
    Most likely I can help protect your mom's house by filing a bankruptcy and using her homestead exemption to protect her home from other creditors. The homestead exemption can protect up to $500,000.00 in equity in her primary residence.
    Answer Applies to: Massachusetts
    Replied: 8/9/2011
    The Schreiber Law Firm
    The Schreiber Law Firm | Jeffrey D. Schreiber
    If the house is in California, if there is only a mortgage, and if the lender forecloses non-judicially (which is 99% likely on a house foreclosure), there is an anti-deficiency statute which prohibits the lender going after the borrower if the house sells at foreclosure less than what is owed. However, if there is a second mortgage and the first position mortgage lender forecloses, in that case the second position lender can go after the borrower after the foreclosure.
    Answer Applies to: California
    Replied: 8/9/2011
    Lewis Adams and Associates
    Lewis Adams and Associates | Lewis P. Adams
    Your mother is responsible for the loan on your sister's home. If the loan defaults and they home is foreclosed, any deficiency remaining can be collected from the parties on the contract. If the deficiency remains unpaid, and the lender files a lawsuit to collect, the judgment can attached to Mom's house until paid. If unpaid, the lender can eventually execute on the judgment by attempting to sell the home to get paid. In Utah, if a transfer is made to any other party without compensation, the transfer is considered a transfer without adequate value or a "fraudulent transfer" and can be un-transferred with a four year look back period. A Chapter 13 may protect mom's home, but 100% of any deficiency would probably be required to be paid due to the value of her home.
    Answer Applies to: Utah
    Replied: 8/9/2011
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