Is there a chance they may forgive the remainder especially seeing that we had financial difficulty and are not strategically defaulting? 4 Answers as of August 29, 2013

We are having financial difficulties even after just completing our chapter 13. Our house is upside down and we are thinking about walking away, not because it is upside down but because we are struggling to pay the 2 mortgages and are unable to sell the house because of loss of value. If our house forecloses, the first loan will definitely be paid in full but the second loan may only be paid half of what is owed so the 2nd will receive some money. Is there a chance they may forgive the remainder especially seeing that we had financial difficulty and are not strategically defaulting? Also I am wondering if we should continue paying our property taxes and insurance until the house forecloses?

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Janke Legal Consulting | Bruce C. Janke
First, instead of just "walking away," you should try negotiating a cash-for-keys deal with the first mortgage lender. In order to save the costs of foreclosure and eviction, many banks will pay relocation costs. I have heard of deals for as much as $10,000. If the second mortgage is not paid off, the lender can sue for the deficiency. It's possible the lender might decide not to if it determines that you have no assets to satisfy a judgment. But the lender can get the judgment and then hope you will some day acquire enough assets to go after. The judgment would be good for ten years and can be renewed indefinitely.
Answer Applies to: California
Replied: 8/29/2013
The Law Offices of Mark Wm. Hofgard, Esq.
The Law Offices of Mark Wm. Hofgard, Esq. | Mark Hofgard
You should investigate selling the house on a short sale basis with reference to the second mortgage. Under this type of sale, the house could sell for enough to pay off the first mortgage, and pay some to the second mortgage holder. Your Realtor uses the Colorado Real Estate Commission Short Sale Addendum to the contract, which requires that the lender approve the sale. You will need to negotiate release of any balance on the second mortgage during the short sale approval process.
Answer Applies to: Colorado
Replied: 8/29/2013
The Law Office of Darren Aronow, PC
The Law Office of Darren Aronow, PC | Darren Aronow
If you default then the lender will pay the insurance and property tax. The 2nd may forgive the debt or go after you for the deficiency after a foreclosure sale. You should try a short sale so your attorney can negotiate that you have no deficiency.
Answer Applies to: New York
Replied: 8/29/2013
J. Norman Stark, Attorney & Reg. Architect | J. NORMAN STARK, ATTORNEY
Foreclosure and Sheriff's Sale will wipe out the second mortgage. In order to obtain resolution and immunity from the total debt, you should consider filing a petition for a Chapter 7 bankruptcy. consult, retain an experienced Attorney to assist and advise you ASAP, to stop worrying.
Answer Applies to: Ohio
Replied: 8/29/2013
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