| As a part of our daily business of dealing with | | | | your bank will try to contact you and try to work out |
| homeowners in distress, we speak to people who are | | | | payments. If something cannot be worked out, they will |
| being given horrible advice in relation to deficiency | | | | eventually file for foreclosure and proceed through the |
| judgments. Most Realtors, and many attorneys have | | | | legal system to take back the property. Depending |
| no clue about how a deficiency judgment is obtained, | | | | upon what state you live in determines how much time |
| how it's enforced or even how much of a judgment | | | | you have and in what manner the bank proceeds in |
| can be sought. | | | | their foreclosure route. |
| So we have been posting questions that we have | | | | You next question.... "In foreclosure, could they come |
| received in an effort to help homeowners in | | | | after my house and assets?" |
| foreclosure who may need guidance. At a minimum | | | | Remember, the foreclosure lawsuit is specifically a |
| the questions we answer allow homeowners | | | | way for the bank to recoup the amount they have |
| contemplating a short sale the ability to find out if they | | | | loaned you. They foreclose on the mortgage so that |
| have a real estate agent that is competent or one that | | | | they can sell the asset (the home) to be able to just |
| is not. | | | | that. THEY CANNOT FORECLOSE ON YOUR |
| Today's Question: | | | | PRIMARY HOME. Well, they can if you do not pay |
| I have a single family home in Atlanta which we hold | | | | your mortgage on your primary home, but not in the |
| as an income property and rent out. The house was | | | | case you describe above. If, however, the get the |
| bought with 4 of my friends. Title is held in a | | | | investment home back in the foreclosure, sell it, and still |
| corporation but I am the only one on the mortgage and | | | | do not recoup the amount that they loaned you, they |
| it's in my name, not the name of the corporation. I am | | | | can file for a deficiency judgment. (some states allow |
| behind on the mortgage and decided to sell it and listed | | | | this and some don't) |
| the house as a short sale with a real estate agent. | | | | In Florida, deficiency judgments are indeed allowed. |
| My question is this. What would happen to me if we | | | | The judgment would be for the amount of the |
| were to stop paying the mortgage payments? FYI...my | | | | mortgage and fees, less what the bank recouped |
| permanent resident is in my wife's and my name. I | | | | when the house was either sold at auction or when |
| have money in the bank and good income. I do not | | | | the bank takes possession and re-sells it as a bank |
| have enough income to support both houses. If the | | | | owned property. |
| house does not sell and it gets repossessed by the | | | | So for example, if you owe $250k between mortgage |
| bank, could they come after my personal residence | | | | and fees and they sell the property for $150k. They |
| and personal assets? | | | | could then go back to a judge get a deficiency |
| Answer: | | | | judgment in the amount of $100k. That judgment would |
| Let's start by talking about the different legal | | | | be attached to you and your assets since the |
| instruments we have in play here. First, we have a | | | | mortgage is in your personal name. |
| deed. As you state in your question, the deed is held | | | | Notice I said "go back to the judge". There is so much |
| by a corporation. Second, you have a mortgage. | | | | misinformation going around about deficiency |
| These 2 documents, although usually created at the | | | | judgments. This is the single biggest fact you need to |
| purchase (closing) of the property, are mutually | | | | remember. A deficiency judgment is not issued by the |
| exclusive. As you mention above, you are the one that | | | | bank, a collection agency or any other creditor. |
| owes the money because you signed the note | | | | Don't be harassed by phone calls or think that |
| mortgage. The corporation (4 friends) own the house. | | | | someone else can call you to collect on a |
| Now, to your specific question.... "What would happen | | | | deficiency...well they can call...but unless a judge |
| to me if we were to stop paying the note?" | | | | ORDERS a deficiency judgment, then there is none. |
| As soon as you stop paying, the bank will report your | | | | Hence the word "judgment". That should give it away |
| late payments to the credit bureaus. This will start to | | | | but most people somehow miss that judge part of the |
| affect your credit right away (as soon as reported). | | | | equation. |
| After a certain amount of time, roughly 30-60 days, | | | | |