Post by Winnie Cooper on May 14, 2012 20:25:12 GMT -5
After going through a divorce, I lost my house to foreclosure last November. We had an 80/20 1st & 2nd mortgage. Only my name was on the 1st, but both our names were on the 2nd. I just started getting calls from the 2nd mortgage and just got a letter forwarded to me (originally sent to the house where I haven't lived for over a year) that says the April 2012 payment is late. I'm guessing he paid it for the year after the divorce since his name was also on the 2nd.
In talking with my lawyer during the divorce, and then after I moved and talked to a bankruptcy lawyer, it sounded like they might just "go away" due to the foreclosure, but when I talked to them everything was a "what if" scenario b/c I was still hoping at the time that we would be able to do a short-sale. It was in AZ, a non-recourse state, but now I'm renting in another state.
What is going to happen now? I have NO other debt and own my car. I have about 16k in savings, but the 2nd mortgage had a remaining balance around 54k.
Post by thedutchgirl on May 14, 2012 20:29:14 GMT -5
This is really specific to state law, so you should probably talk to your lawyer again. I'm not even entirely sure that being non-recourse means anything related to the second mortgage. It generally applies only to the first. I would call your lawyer.
ETA: I like your screen name. It is my dog's name.
Post by Winnie Cooper on May 14, 2012 20:57:15 GMT -5
From what I'm reading about 2nd mortgage recourse after a foreclosure in AZ, it seems as though I might actually be ok. I found a thread where people gave similar stories and said the 2nd showed up as open on their credit report and they had to dispute it.
If anyone has any further info, please oh please share!
I would call them and tell them the house has been foreclosed, and ask them what their course of action is going to be. Most banks have tried to clean up their foreclosure departments and they should be able to tell you something. AZ is a non-recourse state, and I'm pretty sure as long as the second mortgage was to purchase the home (not a refi or HELOC) it is also non-recourse. That doesn't mean they won't try to collect it though, it means they can't sue you in order to collect. They can still send you all the past due notices in the world.
Being as you have no other debt and $16k in savings, bankruptcy shouldn't really even be an option at this point. (You would have a hard time getting approved with that much in savings anyways.)
I think it might be worth your time to contact a real estate attorney, if nothing else, pay them for a few hours and hash out the details of what may or may not happen.
The second is like credit card debt. You owe it, whether you have the house or not. If you don't pay it, they can get a judgment against you for the balance plus late fees and attorneys fees. To collect, since you're in a different state now, they'd then have to get a judgment in your new state. Then could file to garnish your wages and bank account. they probably won't do that. It'll most likely just be a negative on your credit for 7 years. At the most they'll file for default judgment against you both in AZ, then write it off/sell the bad debt.