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Cherchez la Femme Donating Member (1000+ posts) Send PM | Profile | Ignore Sat May-02-09 03:51 PM
Original message
Need advice from lawyer re: home repossession
My brother, who lives in NYS, cannot afford his house anymore.
He had to move to another state for work and has been paying the mortgage for at least 3-4 years now on an empty house. He's tried to sell it but not a nibble.
Even if he did want to rent it out (a BAD idea considering the types who would rent there, sorry to say but it's become a HORRID neighborhood, even I have seen the conditions of the rental properties were left in after people 'moved' i.e. evicted; they were literally destroyed) he can't because his mortgage contract stipulates that it cannot be used as a rental property.

It cannot be sold to even break even on the mortgage balance because the neighborhood has deteriorated so very badly since he bought it (about 22 years ago) the property values are practically nil. 25K is considered a GOOD sale price now in that neighborhood.
--even people on welfare their entire lives have moved out because it's become such a bad neighborhood: prostitution, constant shootings, break-ins, stabbings, beatings, car thefts, gangs, tagging... total and the worst of urban decay. If anyone did want to buy it, it would be for at least 10K less than what's owed; not that it would sell anyways.

It hurts him greatly to let it go, but it's a millstone around his neck. He's gone into default on all his credit cards to hang on to the place and ruined his credit completely, while his mortgage payments are still constantly late; so everything is bad about the situation. Even with letting it go, by paying off his credit cards and other bills he would be in much better shape credit-wise than he is now -- that $800 a month would go far to correct his other bills and even start a little savings again. He's also completely cleaned out his 401K account.
It must be terrifying for him and no end can be good; I feel terribly for him.

My advice to him is to just let that damn house go but he has it fixed in his mind that if the house is sold by the bank for less than what is owed, 'they' (the bank, I guess) would come after him for the balance, therefore it wouldn't be much of an answer.

Does anyone know the law in New York regarding these issues?
I wish I could help him but I am in financial straits myself, and he cannot even afford to hire a lawyer to help him at this point. Out of this last paycheck he had to pay both rent and that mortgage which leaves him a little over $100 for 2 weeks, with no groceries in his fridge and gas needed to commute to work.

My heart is breaking for him, and I hope his assumption that he still will be financially responsible for the property once it is repossessed is wrong ...would anyone know or at least have some information?

He is desperate and very depressed. I am very worried about him and his mental health and stability. If anyone could help in any way with any advice or contacts, I would be VERY appreciative.

Thanking everyone in advance
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BrklynLiberal Donating Member (1000+ posts) Send PM | Profile | Ignore Sat May-02-09 04:12 PM
Response to Original message
1. See if anything here helps out. In any case, he may need a lawyer.
See if there are any local agencies that will help out. There are many groups around now to help people with foreclosures. /

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mzmolly Donating Member (1000+ posts) Send PM | Profile | Ignore Sat May-02-09 04:12 PM
Response to Original message
2. Has he contacted the bank and asked about a modification via the new stim package?
Edited on Sat May-02-09 04:15 PM by mzmolly
More on this HERE


Not sure what the laws are in NY but I found some interesting info from the SF Gate:

One Action States

In some states, lenders are only permitted a single lawsuit to collect mortgage debt. This plays out differently depending on the states laws. In New York, for example, a lender must choose between the actions of foreclosing on the property or suing to collect the debt. The following states have some type of one action statute:





New York



It sounds like he can let the house go into foreclosure in NY without being responsible for the unpaid debt? Unless they choose to sue sans foreclosure? I'd consult a bankruptcy attorney up front just in case.

It seems to me it's in the banks interest to try and work something out?

Best wishes.

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Hannah Bell Donating Member (1000+ posts) Send PM | Profile | Ignore Sat May-02-09 04:14 PM
Response to Original message
3. no lawyer, but, there's some stuff on-line for folks looking at foreclosure. / /

maybe you can find some answers through the links. you might try calling the closest legal aid office too, & see if they have any related assistance. /

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davidwparker Donating Member (1000+ posts) Send PM | Profile | Ignore Sat May-02-09 04:15 PM
Response to Original message
4. Susi Orman says let it go. If I loose my job, I was planning to use my
Edited on Sat May-02-09 04:15 PM by davidwparker
401k to continue to live. She said that was a bad idea.

If he is out of state and things have gotten so bad that he cannot sell it, let it go. Let the banks try to sell it. Good luck to your brother and the banks.
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Barack_America Donating Member (1000+ posts) Send PM | Profile | Ignore Sat May-02-09 04:17 PM
Response to Original message
5. Houses like this tend to end up on fire in Detroit.
I'm not advocating arson, of course, just pointing out how desperate people in this situation often become.

As for advice, I second the suggestion of contacting an attorney.

Best of luck to your brother.
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Mr. Ected Donating Member (1000+ posts) Send PM | Profile | Ignore Sat May-02-09 04:20 PM
Response to Original message
6. I'd Check With the Lender About Short Sales or Loan Modification
If the lender forecloses, his credit takes the biggest whack. If he could find a buyer at around 82% of what is owed on the mortgage, and can display a hardship (not hard to do), he could escape relatively unscathed. Loan modification would be the best, but from the fact scenario, he would probably not want to hold on to the property due to the deterioration of the neighborhood.

If a lender forecloses, in many states they are able to sue for a "deficiency judgment" for the difference between the note balance and the price at foreclosure. It is the lender's prerogative, though in the current economic environment, many lenders lack the resources to pursue a deficiency judgment.

Also, if I'm not mistaken, the IRS may have a claim to any deficiencies, as income to the borrower. Ouch.
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xiamiam Donating Member (1000+ posts) Send PM | Profile | Ignore Sat May-02-09 04:20 PM
Response to Original message
7. welcome to the new and unimproved us of a..nt
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flvegan Donating Member (1000+ posts) Send PM | Profile | Ignore Sat May-02-09 04:27 PM
Response to Original message
8. In Florida, it's called a Deficiency Judgment
Edited on Sat May-02-09 04:28 PM by flvegan
When the home is worth less than the Final Summary Judgment of foreclosure, the lender can ask for a Deficiency Judgment as part of the same case. It's VERY rare here, but I have no idea about New York. Best bet, talk to a lawyer. Good luck to your brother.

on edit: No, I'm not a lawyer, just been in the biz for a long time.
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Xithras Donating Member (1000+ posts) Send PM | Profile | Ignore Sat May-02-09 04:48 PM
Response to Original message
9. I'm flirting with this right now.
I quit making payments on a rental I own (moved the tenant out first) because I couldn't afford it anymore. The property is in short sale and has offers, but there's still a possibility that it might be foreclosed on.

Two things: First, there are so many houses on the market right now that it's rare for lenders to pursue anyone. Banks are typically just charging these off nowadays, and they don't pursue for the debt once a chargeoff is lodged. The odds that he'll be pursued by the bank are fleetingly small.

Second, even if hell freezes and it does pursue him, he always has the bankruptcy option. It sounds like he qualifies, and that it won't do any more damage to his credit than what he's already enduring.

And if I can tack on a third...if I were talking to him, I'd remind him that it's NEVER worthwhile to destroy your life or stress out over a number in a computer, or a pile of bricks and plaster. If the house is destroying his financial and social life, it's worth dumping. He'll be better off in the long run.
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