What is the worse case senario for foreclosure on a rental house I own? 20 Answers as of October 28, 2011

I own a rental house that is most likely going to be foreclosed on by one of the two banks that I have mortgages with. Can they put on liens on or seize other property I own that has nothing to do with that house or that bank without my consent? Will they just pursue me personally for the difference from sale price by getting a judgement? Do most banks accept payment plans after a judgement is granted?

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Eric J. Benzer, Attorney at Law
Eric J. Benzer, Attorney at Law | Eric Benzer
You'll lose it and get sued for balance.
Answer Applies to: Maryland
Replied: 10/13/2011
AZ Law Group of Trezza & Associates
AZ Law Group of Trezza & Associates | Stephen Trezza
The worse case is they file a lawsuit to obtain a judgment and attach assets.
Answer Applies to: Arizona
Replied: 10/10/2011
Bird & VanDyke, Inc.
Bird & VanDyke, Inc. | David VanDyke
Generally, lenders on rental homes in CALIFORNIA will foreclose on the home by way of non-judicial foreclosure. This means that on the First Deed of Trust they will take the property back and you will owe no deficiency regardless of what the home is worth now. However, they will usually sue you for sums owed on second/junior loans against the property if there is a deficiency. Another huge worry for you is the potential income tax liability you may have in the event of foreclosure on rental properties as a result of cancellation of debt income.
Answer Applies to: California
Replied: 10/7/2011
Theodore N. Stapleton, PC
Theodore N. Stapleton, PC | Theodore N. Stapleton
They have to file a confirmation action after the foreclosure sale in order to pursue an unsecured deficiency against you.
Answer Applies to: Georgia
Replied: 10/28/2011
Eliza Ghanooni, Attorney at Law
Eliza Ghanooni, Attorney at Law | Eliza Ghanooni
The answer to your questions depend on a variety of factors. Where is the rental property located? Did you fill out the loan application as a primary residence or as a rental property? Did you ever refinance the property? How many loans are on the property? An attorney needs answers to the questions above before answering your questions. Also, if you do get a deficiency and you qualify for a bankruptcy, the bankruptcy can prevent the creditors from pursuing you.
Answer Applies to: California
Replied: 10/7/2011
    Bankruptcy Law office of Bill Rubendall
    Bankruptcy Law office of Bill Rubendall | William M. Rubendall
    After a foreclosure a lender may have the right to sue you for the deficiency. If they obtain a judgment they can collect using the various methods spelled out in California law, included wage garnishment or levy on bank accounts. Another method of collecting is filing a lien on your property. You may want to consult a bankruptcy attorney.
    Answer Applies to: California
    Replied: 10/7/2011
    Bankruptcy Law Center
    Bankruptcy Law Center | Bill Zurinskas
    Foreclosure and bankruptcy in Colorado go hand in hand these days. After the foreclosure, the 2nd deed of trust holder usually becomes an unsecured creditor and has the right to sue you for the amount of the 2nd mortgage. The 1st deed of trust holder will have the right to sue you for any deficiency after foreclosure, if that is the case (Imost foreclosures do not have a deficiency). You need to call the public trustee to find out if there is a deficiency. If you get 1099'd that means the creditor has written off the debt, and even though the debt doesn't exist anymore you may (but not always) have to pay taxes on the amount written off.
    Answer Applies to: Colorado
    Replied: 10/6/2011
    Dan Wilson Bankruptcy
    Dan Wilson Bankruptcy | Dan Wilson
    As far as I know, creditors cannot place a lien on other property without first getting a judgment. Creditors are becoming more aggressive about going after deficiencies. You may have to file bankruptcy to discharge your debt. Creditors will usually settle for a discount if you have cash particularly 2nd mortgages.
    Answer Applies to: Colorado
    Replied: 10/6/2011
    The Law Office of Darren Aronow, PC
    The Law Office of Darren Aronow, PC | Darren Aronow
    The lender for the property is entitled to go after you for a deficiency judgment. Once they get the judgment, then it will attach to any other property that is in your name. You are better off trying to short sale the house and negotiate with the lender for no deficiency rather then let it go to foreclosure.
    Answer Applies to: New York
    Replied: 10/6/2011
    Law Office of Lynnmarie A. Johnson
    Law Office of Lynnmarie A. Johnson | Lynnmarie Johnson
    They can get a deficiency judgment for what you owe them and go after any assets the Court allows them to. Whether or not they will accept payments after the judgment is granted is up to the individual creditor and depends on what kind of assets you have. If you think this is the way you want to go, why not do a deed in lieu of foreclosure and offer to settle for a certain amount on the deficiency or the estimated deficiency and set up payments now?
    Answer Applies to: Michigan
    Replied: 10/6/2011
    Ashman Law Office
    Ashman Law Office | Glen Edward Ashman
    In Georgia they can sue you, put a lien on all your property and garnishee your pay and bank accounts. You do NOT want to wait until after a judgment. That is too late. See a lawyer IMMEDIATELY to discuss your options.
    Answer Applies to: Georgia
    Replied: 10/6/2011
    Law Office of Asaph Abrams
    Law Office of Asaph Abrams | Asaph Abrams
    In a non-judicial foreclosure, the mortgagee's remedy is the foreclosure sale; they can't collect on the deficiency. However, a junior lien holder not paid off from the foreclosure sale could pursue the debtor personally.
    Answer Applies to: California
    Replied: 10/6/2011
    Heupel Law
    Heupel Law | Kevin Heupel
    After the foreclosure you will owe the deficiency to the banks. The banks can sue you for the debt, garnish your wages and bank accounts, and put liens on other property that you own. Some banks will accept a payment plan. If you're heading towards foreclosure, then you should consider bankruptcy. Foreclosure has a worse impact on your credit than bankruptcy and it takes longer to recover.
    Answer Applies to: Colorado
    Replied: 10/6/2011
    Charles Schneider, P.C.
    Charles Schneider, P.C. | Charles J. Schneider
    Yes to all of the above. I can't however tell you which is worse that depends on your judgment.
    Answer Applies to: Michigan
    Replied: 10/28/2011
    Law Office of Harry L Styron
    Law Office of Harry L Styron | Harry L Styron
    The worst case scenario is that the banks will foreclose and when they sell the property they will seek a deficiency judgment against you for the difference between the mortgage balance and what they get for the property. You should consider filing a Chapter 13 bankruptcy, which, if you have a steady source of income would get rid of the unsecured debt, perhaps reduce any 2nd on the houses to unsecured, and permit you to keep everything while you make payments on a 5 year plan.
    Answer Applies to: California
    Replied: 10/6/2011
    Janet A. Lawson Bankruptcy Attorney
    Janet A. Lawson Bankruptcy Attorney | Janet Lawson
    If you bought it to live in (and the loans were taken out to buy it), there is no deficiency. If you bougth it as a rental or you refinance the loan or loans, yes, they will come after you for the unpaid balance. How they treat you in terms of making payments is up to them.
    Answer Applies to: California
    Replied: 10/6/2011
    Law Offices of Robert P. Taylor
    Law Offices of Robert P. Taylor | Robert P. Taylor
    I can't give a specific answer without knowing more. That said, typically the 1st trust deed holder would get the proceeds of the sale and if not enough to payoff the loan, they would be out-of-luck. The 2nd and subsequent lien holders would get whatever is left and then could sue you for the balance of their liens (unless you have a true purchase money second and then they'd be out-of-luck too) but I digress. At any rate, the 2nd and subsequent lien holders can't seize or lien your property without getting a judgment against you first. So until you've been sued, you're probably okay. One exception is a right ot set off. For example, if you have money on deposit with Wells Fargo and you've defaulted on a Wells Fargo loan, they can take the money out of your account without your prior knowledge or consent. So don't keep money in a bank you have a defaulted loan with unless you want them to seize your account. You should consult a bankruptcy attorney to see what relief is available. Depending on your circumstances, you may save considerable $ and there may be tax benefits to filing as well. Good luck!
    Answer Applies to: California
    Replied: 10/6/2011
    Grace Law Offices of John F Geraghty Jr.
    Grace Law Offices of John F Geraghty Jr. | John F. Geraghty, Jr.
    they can forclose but to get any excess amount they will have to get a Judgment against you
    Answer Applies to: Georgia
    Replied: 10/28/2011
    Colorado Legal Solutions
    Colorado Legal Solutions | Stephen Harkess
    The bank will seek a judgment for the rest of the money you owe (which will include all of the junior mortgage in most cases). Then they will use that judgment to put liens on all other property you own (related or not) and will then try to find wages or bank accounts to garnish. You can negotiate payments on these amounts in many cases.
    Answer Applies to: Colorado
    Replied: 10/6/2011
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