What can a bank do if I default on the home loan? 16 Answers as of January 27, 2011

We have moved and homes are not selling in the city where we moved. We can't keep up on the house payments there and where we are living now. My husband has a different job and is on winter lay off. I can't make all of the payments on what I make. The loan is only in his name, but home is both of ours. My husband has spoke to the bank about lowering the payments, but they refuse to help. What are our options?

Ask a Local Attorney. 100% Anonymous. Free Answers.

Free Case Evaluation by a Local Lawyer: Click here
Law Offices of Geoffrey Nwosu
Law Offices of Geoffrey Nwosu | Geoffrey Nwosu
The bank can foreclose on your house if you default on your payment. They may also have other legal options especially if this is a second loan or a second home used as an investment property. You may consider shot sale since it may have a lesser impact on your credit. Please consult with a bankruptcy lawyer in your state especially if you live in a community property state.
Answer Applies to: California
Replied: 1/26/2011
Mettias & Associates
Mettias & Associates | Jimmy Philip Mettias, Esq
Thank you for submitting your questions to our firm, Mettias and Associates, in regard to the actions a bank can take when a debtor fails to make payments on a home loan. Currently, there are many people in your situation, and there are several avenues a bank can pursue in either recovering the debt, or foreclosing on the home to recoup their losses. There are several factors that can influence your personal situation, like the terms of the loan, whether you would qualify for a re-modification etc. Please schedule a free consultation with our office to review your legal options.
Answer Applies to: California
Replied: 1/26/2011
Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
I'm not sure where you are from. The short answer is that they will foreclose, but that could take quite a long time. So stay in the house even if you are not making the payments. You should consult with a lawyer.
Answer Applies to: California
Replied: 1/26/2011
Steven D. Keist, Attorney at Law
Steven D. Keist, Attorney at Law | Steven D. Keist
Not knowing what state the house is in that you are unable to Make payments on, foreclosure may be the best deal If there is no deficiency balance that you would be responsible for on the first mortgage. If you have two mortgages you will most likely be responsible for a deficiency balance on the 2nd. I would urge you to discuss this issue with an attorney in the state where the property is located for guidance.
Answer Applies to: Arizona
Replied: 1/25/2011
Ursula G. Barrios Law
Ursula G. Barrios Law | Guillermo Machado
Depending on nature of home loan (recourse vs. non-recourse; 1st vs. 2nd, etc.): They can 1) foreclose or2) collect through lawsuit or 3) write off the loss and issue a 1099.
Answer Applies to: California
Replied: 1/25/2011
    The Law Offices of Robert L. Driessen
    The Law Offices of Robert L. Driessen | Robert L. Driessen
    It would be best to hire an attorney to assist you.
    Answer Applies to: California
    Replied: 1/24/2011
    Carballo Law Offices
    Carballo Law Offices | Tony E. Carballo
    Your husband has to apply for a loan modification. The bank is not obligated to grant one but if you meet all the requirements of HAMP you are supposed to get one since the banks agreed to do that with the federal government if they were rescued. Assuming your bank was rescued and you meet the HAMP guidelines you are supposed to get a loan modification. You might need someone to help you with that since you need to present a budget that shows that you qualify. There has been a lot of fraud with people who promise modifications for a lot of money and don't deliver but you might need some help because how you fill out the application will determine your chances of qualifying. If you do not get a loan modification then you need to contact a bankruptcy lawyer. You can pay any arrears (unpaid amount) in a Chapter 13 Plan if you have sufficient income to show that you can afford the Chapter 13 plan payments and the house payments. That is going to be tough if you cannot even make the regular payments. If your house is going to be sold in foreclosure you might not have a choice but to file bankruptcy under Chapter 7 or 13 to stop the sale and maybe save the property. If you have two loans you need to worry about the first loan because it is the bank holding the first loan that will foreclose and in many cases you can get rid of your second loan in a Chapter 13 case after a modification. If you are in default and are denied a modification then the bank will give you a Notice of Default. You will have 90 days to pay everything owed to that date. If you do not do that, then the next notice will be a Notice of Trustee's Sale giving you only 21 days notice of the sale of the property at an auction sale. During thos 21 days you can pay the entire balance of the loan and the sale will have to be canceled. Since that is impossible then a bankruptcy case may be necessary to stop the sale and try something else. Do not wait until the last moment and have a consultation with a bankruptcy lawyer about your options so that you are ready when the time comes to take immediate action to stop a sale. You might want to consider selling the property in a short sale. That could delay foreclosure and avoid having to file a bankruptcy case assuming you do not otherwise need to file a bankruptcy because of other debt such as credit cards.
    Answer Applies to: California
    Replied: 1/24/2011
    DiManna Law Office, LLC.
    DiManna Law Office, LLC. | Dawn DiManna
    A bank can foreclose if you are in default of your loan.
    Answer Applies to: New Hampshire
    Replied: 1/24/2011
    Javia & Moore
    Javia & Moore | Marisa-Andrea Moore
    Generally, the bank has the right to foreclose on a mortgage that is in default. I recommend consulting with a bankruptcy or debt relief attorney for further options.
    Answer Applies to: California
    Replied: 1/24/2011
    Law Office of Aaron Nielson
    Law Office of Aaron Nielson | Aaron Nielson
    It depends on where you live. Maybe they can take the home back, maybe they can come after you for the balance owed after they sell it. You need to talk to an attorney and they need to look at the laws where you live now and where the house is that you moved out of.
    Answer Applies to: Washington
    Replied: 1/24/2011
    William C. Gosnell, Attorney at Law
    William C. Gosnell, Attorney at Law | William C. Gosnell
    You can get a bankruptcy.
    Answer Applies to: Tennessee
    Replied: 1/24/2011
    The Orantes Law Firm
    The Orantes Law Firm | Giovanni Orantes
    I understand there are some programs to modify loans that are fostered by the government. You can explore those programs, but beware that many non-attorneys in need of work promise to get modifications but there is simply no guarantee that the banks will agree. N.A.C.A. is conducting a loan modification session for certain banks at the L.A. Sports Arena from 1/20/11 through 1/30/11, which is very crowded but may be worth exploring.

    Outside of that, you can try to negotiate with one of the banks to surrender the property in exchange for a deed-in-lieu, but it is not certain that the bank will negotiate.

    Another option, should you default for too long, is to file a bankruptcy case and surrender one of the properties and get current on the one you want to keep.

    As to the basic question regarding what the bank can do if you default, it can foreclose on your property. The process starts with a Notice of Default, usually sent via certified mail to you, which is also recorded with the County Recorder's office. You should consult counsel familiar with Chapter 13 as soon as possible as your facts may change the specific answer.
    Answer Applies to: California
    Replied: 1/24/2011
    The Law Office of Mark J. Markus
    The Law Office of Mark J. Markus | Mark Markus
    Bankruptcy is certainly one option to deal with whatever you owe on the debts after a foreclosure sale. You should have a consultation with a bankruptcy attorney to assess your options.
    Answer Applies to: California
    Replied: 1/24/2011
    Greifendorff Law Offices, PC
    Greifendorff Law Offices, PC | Christine Wilton
    Your options include short sale, foreclosure, deed in lieu, and/or bankruptcy. The bank will foreclose if you do nothing and you may be liable for the deficiency if you owe more than what it's worth. Consult with your tax advisor, bankruptcy attorney and/or realtor for help.
    Answer Applies to: California
    Replied: 1/24/2011
    The Law Office of Brian Nomi
    The Law Office of Brian Nomi | Brian H. Nomi
    One option is to seek a modification of the home loan. Another option is to let the house be foreclosed on, and to walk away from it. Always a good idea to discuss a plan like this with a competent bankruptcy lawyer.
    Answer Applies to: California
    Replied: 1/24/2011
Click to View More Answers:
12 3 Free Legal QuestionsConnect with a local attorney