Filed under: Bad Credit
Question: I have gotten into big trouble with my credit cards. I am currently working with credit counseling to negotiate lower terms for all six of them. Many have already been handed over to collection agencies as they are 6 months past due. Not that it matters, but I “had” a gambling problem. My question is this:
I want to sell my condominium in about 1 year and buy another less expensive condo in another part of town. My current mortgage is $150,000 at 6.8% and I pay it on time. The new mortgage will hopefully be about $25,000 less. How difficult will it be for me to qualify for another mortgage because of my tarnished credit report? I hope to profit about $50,000 from the sale and use the proceeds to pay down my debt, credit cards included. Next, if I don’t qualify on my own would a co-signer help the situation any? Thanks, so much!
Answer: Your credit record it toast for about 10 years. The key thing is your FICO score, and I have little hope that it will qualify you for a conventional mortgage. A co-signer will help, but you will likely still be paying a higher interest rate as punishment.
You may have options with a low-doc or no-doc loan. This will take something like 40% down, so you will need that $50K as a down payment.
I do, however, like your plan. Downsizing to raise cash to pay off debts is the responsible thing to do, and hopefully, it will be relatively painless for you to do (other than the pain of moving).
The only thing that I can think of is to visit a mortgage loan company right now, and find out first hand where you stand. That gives you a year to fix what you can, and come up with a plan. You may end up looking at “brokered mortgages”, which is a higher risk category, so talk with a real estate agent that you know and trust to get a referal to a mortgage broker that can be trusted. There are a lot of shady people in that business. There were a couple things in your post I didn’t understand. What’s a low-doc loan? And what does “brokered” mortgages mean? DH and I have flawless credit and got our latest mortgage through a broker recommended by our realtor. The interest rate was very favorable and the whole process was accomplished with one short phone call. This was a lot less hassle than the previous mortgage, which DH wanted to get through a bank he’d done business with for years. There was no actual problem there, just a lot more forms to fill out, documentation required, etc.
To the OP: even if your credit is indeed toast another option that might be available to you is seller financing, which typically might last not more than 5 years but would give you additional time to repair your credit and become eligible for conventional financing.
January 1, 1970
Question: I’m 37 years old, with a wife and 5 kids. I’ve always rented and after a two year near-unemployed period am deep in debt, so deep in fact that we are considering bankruptcy. Will I ever be able to afford to buy a home at this rate?
Answer: I’m aware of a 32-year-old married gentleman with no children whose credit is messed up because of some student loan default problems. The lenders he spoke with were willing to work something out in the way of an “in-house” mortgage because of mitigating circumstances surrounding the defaulted loans. He managed to avoid going through all of the fuss though, because his wife’s credit was good enough (and she had held a job for the miminum of 2 years) and her income was just enough to allow her to qualify for a $72K mortgage. They knew that getting a mortgage would be a problem because of the defaulted loans so they kept their finances separate – she had her own savings accounts, credit cards, etc.
I am under the impression that, even if the husband _had_ applied along with his wife, the banks were willing to work out loans – just at a higher interest rate. The key factors seem to be 1.) a good credit rating (doesn’t have to be *both* individuals), 2.) a steady income (they seem to like two years in the same profession – though not necessarily at the same employer), 3.) few liabilities (might be a problem for you as I suspect that both of your names appear on those loans – if so, that’s a problem).
My questions are: Is your wife employed? How long have you been _steadily_ employed? Are you self-employed? Do you and your wife share credit card accounts (ie. both of your names appear on the account)? Is there a chance you can get a consolidation loan (on your own) to put all of your debts into one payment per month (there are banks out there that will do this to help you avoid bankruptcy)? If you have to file for bankruptcy, will be be for reorganization or to wipe the slate clean? If it’s to reorganize, you are basically arranging to make payments at a different pace. You can do this _without_ filing for bankruptcy in most cases. As long as the creditor sees an earnest effort being made to pay off the debt, they should cooperate.
Maybe you can consider getting counselling on your finances. There may be progams in your area (libraries, etc.) geared toward helping folks like yourself to dig out. With five children, it seems like you should qualify for a host of family services….don’t let your pride get in the way. You pay tax dollars just like the rest of us and those programs are there to help us out when we really need it. If you’re a first-time home buyer, there are low-interest programs (usually aimed at particular neighborhoods) with relaxed qualification requirements.
Don’t lose hope. Be creative. Creativity is one of the most important factors in getting what you need.
Good luck!
January 1, 1970
Question: In 1995 my father, Frederick Langer, transferred the title of the negative-income apartment property at 37 Metcalfe St, Toronto, to me for no consideration. His lawyer, a partner at the respected law firm Fogler Rubinoff, forged documents to show an arms length sale for $690, 000.00, the value of the mortgage on the property. They had arranged the price through a land appraiser, and intended to use the capital loss of more than $800, 000.00 to evade income tax (Fred had bought the property from an associate in 1989 for $1, 550, 000.00, at non-arms length). Despite the mortgage fraud against our income tax agency, and the resulting harm against my family and I (the property tax assessment is based on a $2, 000, 000.00 valuation), little has been done about this crime, since it appears that Fogler Rubinoff has serious political connections, which are priceless in a totally corrupt Canadian legal system. After seven years of legal battles with Jewish Organized Crime, I have finally realized that I have title to a worthless property, which is tainted by fraud, and must now decide how to cope with the damage to my family. With bailiffs pounding at the doors, and bills in unopened envelopes stacked on my floor, I watch the disaster these inhuman mobsters have created in my family: my children are nervous wrecks (the youngest has high blood pressure), my wife is exhausted and sits in the corner with her head in her hands weeping, and I am completely hopeless. This is the REAL cost of crime, the human cost. I suppose it helped that my wife is black… although for years I couldn’t understand how educated Jews, my own relatives, could ignore their own history and treat a black family like dogs. Now I realize that organized crime, whatever its ethnicity, is based on theft, and has no moral underpinnings whatsoever. To the Toronto Jewish Mob my black wife and her children are like insects, to be crushed like the Nazis stamped out the Jews in the Holocaust.
Answer: Wait a minute!!! You confess to multiple felony class crimes IN WRITING, and you are complaining that nothing has been done about your crimes? Go git’em, boys. Lock him up and throw away the key, he’s BEGGING for it. Sheesh. The real crime here is that you are not taking your meds, and it is ruining your family life. Go back to the doctors and take those meds. Even if you think the pills are trying to control your mind, you have to do it for the good of your children. with all due respect, you confuse the antagonist and the victim, and are a bit too quick to render judgement… at the time of the frauds, my relatives abused their position of trust to obtain financial benefit, that is, they used their unknowing children’s names to defraud the government of income tax. They did this by submitting forged income tax records, without including the signatures of the children. Furthermore, they had me sign blank documents, which they later forged to appear as a legitimate real estate purchase and sale agreement, for the same reasons. When I discovered these frauds, I immediately reported them to the authorities. As for the tone of your response, it tells me that 1. you do not understand the concept of criminal fraud.. or, that 2. you are legally knowlegable but biased against the victims of crime for some peculiar reason (perhaps you can share this reason with the Group).. or, that 3. you stand to benifit something by siding with orgainzed crime against their victims
In any case, thanks for a thoughtful message,
January 1, 1970
Question: http://www.usatoday.com/money/economy/housing/2006-10-22-young-flippe…
I’m not sure what was worse- him digger himelf deeper and deeper or the banks lending money to do so without a shred of oversight.
Answer: Don’t worry about the banks…they’ll make out. They always do. Worst come to worst, they’ll turn to the American taxpayer for a bailout. Happened before, will happen again.
As for 24 year old Casey Serin – the old saying applies….”you make your bed, you sleep on it.” What this article didn’t mention that local articles on him did is that he steadfastly refuses to file for bankruptcy. “Considering” is not “doing”. That it seems to me depends on whether you believe the person was simply a “victim” or whether he was his won worse enemy. But, according to the article, it seems, he was his own worse enemy. He “gambled” and he lost. The banks will probable make out in any event, because unless they were dumb enough to lend this guy more than 80% of the value of the house, they have at least a 20% “cushion” to work with. The people that should be worried about, whether it is a bank or some other group, is those who may have given him a second mortgage, because unless they have deep pockets, they are out of luck. And that applies to anyone who may have give him a third mortgage, they are really out of luck, whether it be a bank, savings and loan, or anyone else. Most of the foreclosures in my area were 100% loans including one on my block which I knew the particulars. The banks were giving these loans out like candy expecting rapid appreciation. Of course you pay a slight premium for no documentation and more than 80%. But the premiums are pretty much offset by teaser ARM rates. Most of these loans had government insurance, especially if you were a minority. Loans standards declined significantly in the last four years of the bubble. Everybody wins- the homeowner gets to walk away without a deficiency; the real estate agent and mortgager broker get their commissions, and the banks gets the foreclousure loan made good by gov’ment insurance.
January 1, 1970
Question: Sell your home by May. Then go away. Over the next two years there is going to be blood on estate agents9 carpets from Thurso to Torquay.
The outlook is now extremely serious for Britain9s housing market
contrary to the optimistic forecast by the Nationwide building society yesterday that most of us can expect at least double-digit price increases this year, after a 25 per cent boom in 2002.
I side with the pessimists and expect to see a 30 per cent fall in prices between the middle of 2003 and the end of 2005. So, if you can do it without ruining your personal life, my professional advice is that you should put your home up for sale as soon as possible.
I am not persuaded that even in the long run homes will offer as good a return as they have during my lifetime. Firstly, the income tax advantages of owning bricks and mortar are lower than they have been for decades, and mortgage interest relief will never return.
Second, the birth rate is falling. On current estimates the British population will start to shrink sometime around the year 2025, which will be bad news for the demand for homes. Third, as more parents allow their children to have sexual partners living in the family home, the incentive, especially for young males, to flit the comfort of the nest for separate accommodation will steadily drop.
Fourth, Gordon Brown9s stamp duty tax on house purchase (now 4 per cent of the value of any house costing more than #500,000) will encourage people to stay put and live more densely within the same housing space. Fifth, it is only a matter of time before more of the green belt is overcome by the harsh laws of demand and supply in the South East: inevitably, more houses will have to be built within that region.
Consider the intellectual case for such new year gloom. We have been brought up to believe that sustained falls in the price of houses are impossible. Tell that, however, to those who live in Hong Kong, where prices fell by 65 per cent. Or go to the library and examine the wave-like graphs of British history. Once inflation is subtracted (so that we look at 3real2 prices), one finds that by 1977 the value of homes stood 30 per cent below their peak in the early years of that decade. At the end of 1995 the real value of homes was 40 per cent below the top of the market reached in the early 1990s. I have looked at current data, and I expect the Great Crash of 2003-5 to be just as severe.
One useful piece of formal economics has percolated into public debate. The best indicator of what will happen in the housing market is historically an arithmetical formula, namely, the ratio of house prices to incomes. In Great Britain, the long-run ratio of the average price of a home to the typical person9s earnings is approximately four. In other words, if a representative Briton earns #25,000 a year, then house prices are happily in equilibrium when they average about #100,000. That sustainable ratio tends to be a little higher in London and the South East, and a bit lower elsewhere, but the ratio of four is the right broad-brush number.
Unfortunately, we are now considerably above a safe ratio. House prices have reached a multiple of five times average earnings. Danger signals are not merely flashing but are on the verge of fusing. Low interest rates have never saved us in the past and they won9t save us this time.
And be in no doubt, it will hurt. In earlier times, inflation and rising pay levels took away some of the pain. What matters in a red-hot property boom is to get the ratio of house prices to earnings down from the stratosphere. When pay was rising fast, the ratio fell. But this time around, with inflation at only a couple of per cent, almost all the unpleasantness is going to have to come through drops in the price of our homes.
Take my tip: move into rented accommodation in time for summer sunshine. After that, put as much money as you dare into the stock market. Alternatively, one could take the view, as with a pension portfolio, that housing will go up and go down, and that one should grit one9s teeth and stay fully invested. Yet the argument against doing that is a good one: if I live in a #300,000 house or flat and if I could get my timing perfect
in and out of renting
I might be able to save nearly #100,000, tax free. That kind of figure concentrates the mind.
As in most markets, when things get overvalued, a decline in prices does not merely return us to the long-run average. Things overshoot. In other words, when people start selling, they get carried away, and prices go too far down. The same happens in the upwards direction, of course. Excessive herd movement happens on the way up and the way down.
Take, for example, the stock market. The value of shares is dictated, essentially, by people9s confidence in the future. More precisely, the price that traders are willing to pay for a share such as Tesco or Barclays is fixed by their gut feeling about the degree of prosperity to come in the British economy. Share prices tell us about confidence.
The same has to be true in the housing market. Both shares and homes are assets. They are worth something now because they will produce a stream of returns in the future.
This takes us to a point that seems not to have been made in public debate. It makes no sense for the stock market to be valued below its long-run trend while housing is valued way above its long-run trend. Because both are assets, that cannot be sustained. Either people are confident about the future, in which case both houses and shares should be worth a lot, or they are not confident, in which case the prices of both shares and houses ought to be low.
But what of the idea that experts fix share prices, while amateurs fix house prices? Perhaps this means, it might be argued, that the housing and stock markets can take separate paths. No: even amateurs eventually catch on.
I believe that house prices will continue to rise about 5 per cent or a little more until summer 2003. Then I expect them to fall by almost one third. One way to understand this is to work out the numbers and study history. Another is to use pure logic. Both, however, point to the same conclusion. This market looks impossibly stretched.
Why? The over valuation of house prices is being driven by low interest rates and a lack of logic by purchasers. Buyers have mistaken low interest rates as a sign that houses are, in some sense, cheap. Regrettably, that is an illusion.
Just because my mortgage repayments today are lower than they would be in a situation of high inflation and high interest rates does not mean, in a true sense, that my home is now less expensive. A #30,000 Saab is not cheaper in a world where interest rates are low, nor dearer in a world where interest rates are high. The price is the price.
It is the same with houses. Indeed, the appropriate interest rate to look at, if any, is the real cost of borrowing. This is the interest rate compared to the inflation rate. Despite borrowers9 perceptions, that interest rate is not especially low at the moment.
The crash will probably start something like this:
In the spring of this year it will begin to be generally recognised that house prices have stopped rising. Purchasers will cease to be enthusiastic. Many with buy-to-let properties will begin to sell. House prices will shudder. Then, by late summer, I see confidence in housing ebbing more substantially. Prices, even outside slowing London, will crumble. Headlines will appear: house prices fell 4 per cent last year, 8 per cent last year, perhaps 12 per cent. Panic will thus set in.
Sadly, there is really nothing that can now be done. In the long run, we must think hard about how to make the British housing market work more sensibly. In the short run, the message is simpler. Sell up now.
Answer: I am always amused by those who are so sure of themselves. A friend of mine is a bankruptcy lawyer, and sudh people comprise the bulk of his clientele.
The problem is that risk is so much greater than reward right now. I am reading and hearing that even good properties are vacant. That has nothing to do with selling up and moving into a caravan to wait out the firestorm, but it does make one cautious. I didnt predict if there is a boom or a bust coming (though I agree the risks of a bust seem higher). However, whether there is one coming is certainly not supported by the original poorly argued article which was my beef with it. I suspect it is the froth which is blowing off. I learned from the Seventies and Eighties slumps to avoid areas reliant on City and overseas tenants. Great for short-term gains. Disastrous if you get caught napping.
I’m happy with the reliable market around #700-800/month level for inner-suburb Fairview and Barratt flats. I’ve just said I don’t have a great deal of evidence, but here from a google search is an article which was posted in this group-from the Guardian
http://groups.google.com/groups?hl=en&lr=&ie=UTF-8&oe=UTF-8&selm=aove… l%241%40knossos.btinternet.com&rnum=1
also look at this calculation by Rainer- our resident mathematician (statistician?) numbers guru.
http://groups.google.com/groups?q=house+rent++group:uk.finance&start=… en&lr=&ie=UTF-8&oe=UTF-8&selm=5zNC9.6049%24vr6.45704424%40news-text.cableine t.net&rnum=154
and thats about as far as I can be bothered searching, but I have seen material in a similar vein in newspapers and on TV- but of course I cannot provide references.
I also found people saying they were selling up almost a year ago to rent because they were worried about house prices- and of course they would have missed out on 23% gains in the past year.
January 1, 1970
Question: I have located a property that is in foreclosure on the first mortgage. There was a second mortgage that was included in a bankruptcy last year. My question is, if I buy this house for the default amount, will I be responsible for the second mortgage, or is that now discharged, or somehow no longer a factor?
What is a reliable resource for getting questions like this answered, other than a lawyer?
Answer: I am a Realtor and a full-time investor in Ohio. I am not a lawyer and I am not and cannot give you legal advice. Now that my disclosures are all done this is what I have found to be true in these situations… If you buy the property from the homeowner in the preforeclosure phase (I am assuming that you are in a state where a property is auctioned at sheriff sale) then the second mortgage would still remain on the property. While the bankruptcy will save the current owner from having liablity to the second if the home is repo’d by the lender, this does not erase the lien from the home in preforeclosure phase. You can negotiate a short sale with the holder of the second mortgage in many cases, which might still allow you to make a profit on the home and build in some equity or at least more equity than already exists. Like I said I am not a lawyer but I do consulting on real estate investing. You should not rely on a ng for advice of this sort. But here is some general guidance.
1. When a first mortgagee repossesses a property and it is auctioned, it is generally sold free of liens (tax liens may be paid off or will be obvious in the sale).
2. A lien is said to be “under water” when the property value is less than the total of liens. The bankrupt will (absent fraud, bad faith, etc.) wipe out his/her liability on the debt. (If s/he reaffirms the debt, or otherwise keeps the house, under certain circumstances the mortgagee may benefit from the increase in value — but not if the property is sold. See #3 below.)
3. The stripping of liens can be quite complicated. Here are some cases on that: http://www.doney.net/cases/
4. Buying title insurance will assure you that you are getting what you are paying for.
5. County clerks are not lawyers and do not give legal advice. They should be able to give you a transcript of liens on property, but those liens may or may not be valid. Often liens (such as judicial liens) that are wiped out in bankruptcy remain on title for some time. In my experience, title insurance clerks know more than anybody else — in fact lawyers inevitably defer to them in states such as New York where the title insurer’s clerk more or less manages the real estate closing.
January 1, 1970
Question: Hello everyone. Just to give you a little detail about myself. I am 25 years old. I accumlated some debt while I was in school and couldn’t handle the payment anymore so I filed for bankruptcy back in June of 2002. It has been almost 3 years now. Since then, I have been in a stable job making around 60k a year. I am single with no kids. Here are my expensive that I have which isn’t much. 1. rent with utilites is 700 2. 10k student loan with a 180/month plan. 3. Insurance 150/month
Thats pretty much it. I have no car payment. Insurance isn’t that much. I don’t have any credit card except a debit card from bank. Other than that, thats it. I was wondering what are my chances of getting a house loan? how much of a loan? what are my interest going to be? My FICO score is like 580 or something. I have about 10k saved up. I have about 12k in 401k investment. Other than that, thats pretty much it.
Some other question:
how would I improve my chances of getting a good home loan? I know about opening a secure bank card, how do I go about doing that? what company are good? and what company I should stay away from?
Thats pretty much it. If I can get some advise, I would greatly appreciate it. Thanks for reading.
Answer: The only way you will know for sure is to go to a mortgage lender (or three) and ask to get “pre-approved”. They will run through your situation, and tell you the real deal.
A 580 is pretty weak, but with your savings and income, you will probably qualify for a brokered loan, perhaps at 2 or 3 percent above the market rate. Who knows until you ask. Keep in mind that $60K in income is not going to support the kind of payments for a very expensive house. Think starter house.
As it turns out, renting is a great deal right now. Many rental properties are renting for far less than what they should cost based on their market value. Perhaps your best strategy would be to find as cheap of place as you can to rent for a few years. This will let you build up more cash for a better downpayment, and time will elapse, which will dramatically improve that lame credit score.
how would I improve my chances of getting a good home loan? I know about opening a secure bank card, how do I go about doing that? what company are good? and what company I should stay away from?
It always looks better on a credit record if you pay back your charged-off debts. That especially helps when you are iffy, and a human has to decide whether or not to grant your loan. Very few people, however, bother to payback their creditors after a charge-off or discharge, but God is watching and taking notes. Here’s some info coming straight from the horse’s mouth…..
I filed Ch. 7 in August 2003, and was discharged in Oct. 2003. I am like you, single, no kids. I am now home shopping since I have been approved for an 80/20 loan of $140,000 at a combined interest rate of 6.5%. What this means is that I am financing the first 80% at one rate, and a second mortgage of the remaining 20%. My payment will be $1050. This, on a $40k a year salary. Now, the one exception to my situation and yours is our credit scores. Mine, less than 2 years out of BK, are 692, 703, and 713, respectively. I have successfully disputed 8 of the 11 accounts I had included in my bankruptcy off my credit report. On 2 of the reports, I succussfully disputed the bankruptcy from the public records. Once the remaining 3 accounts are off those reports, one would not be able to tell that I had filed if they looked at those reports. Since we have a “moral authority” in here, I must add that all of my disputes were per the FCRA. If an item has *anything* wrong with it, you have the right to have it corrected or deleted from your report. USE THIS RIGHT!
I will also say that, in the 16 months since my discharge, I have established 7 positive credit card accounts, and 2 installment loans. The disputes of my report and these positive tradelines have taken my scores from just above 500 after I initially filed, to where you see them now.
As the other poster has pointed out, you should continue to rent for now. I would suggest taking some of your savings and opening a secured loan. For $20 in interest for the year on a $1K loan, it is worth the score boost on your report. You could also get a secured credit card to help build your scores. Trust me, once you do that, you will get many more. I have 3 cards now with $5K limits that all have a 0% interest rate through 2005. Not bad for my fresh start.
Stay positive. Read. Learn as much as you can about credit repair. Establish good accounts. Then you can sit on a nice rate mortgage.
Do yourself a favor. Visit www.creditboards.com to learn more on credit repair to put yourself in the best position for a mortgage.
January 1, 1970
Question: Which is more damaging to ones character: Filing for bankruptcy after several bad debt charge-offs; or settling on the bad debt charge-offs and not filing for bankruptcy. Which one is perceived as more responsible? Seems to me that not filing for bankruptcy leaves the door open to be accused of being a deadbeat while filing for bankruptcy appears as if circumstances were beyond my control. What are your thoughts? Thanks!
Answer: Here in the US, once your bankruptcy is discharged, you are deluged with pre-approved credit cards, can get a car loan immediately (albeit at a high interest rate), and most people can get mortgage loans in 2 years or sooner. … at a much higher interest rate. And lower limits. You are always better off discharging your debts by paying them off, even if you have to make arrangements to pay them off slowly. Bankruptcy will affect your ability to get credit for anything at reasonable rates. Mr. Weiss is not telling you a very complete story, and appears to be advertising for your business. I disagree completely.
Lenders of today, unlike those of past years, don’t care that you are making the effort to pay your debts. They make lending decisions based on computer models and credit scores, and often a human doesn’t even see your application (other than the data entry clerk who types it into the database).
There are several problems with slowly paying off your debts. First, there is a substantial expense in doing so. You could spent tens of thousands of dollars in payments over a number of years, with the interest, late fees, overlimit fees, etc. continuing to accumulate, or file for bankruptcy, pay the creditors nothing, and move on.
Second, your credit rating will stink while you are making these payments, which often takes 3-5 years or longer. During this time, many people won’t be able to qualify for a loan (car, mortgage or other) at *any* interest rate. The impact of a bankruptcy filing diminishes each month after the discharge is entered.
Given a choice of paying a higher interest rate and being able to get a mortgage or car loan for less, or not being able to borrow at all, I think most people would opt for being able to being able to get the loan.
As far as my “telling a complete story” and “advertising for his business,” you might want to look at the archives of this newsgroup (alt.bankruptcy) to see whether I have told posters the “complete story”. My “advertising for the original poster’s business,” as you call it, isn’t too good–I have no idea where he lives, and it’s 25 to 1 against the possibility that he even lives in a state where I’m admitted to practice, even if he decides to file.
January 1, 1970
Question: I’m considering loaning money to someone to purchase an investment house. The loan will be 65% of the house’s appraised value, and the borrower will not be living in the house (he intends to fix it up and resell it).
Question: In the unlikely event the borrower declares bankruptcy, will I still be able to foreclose on the house?
Answer: No, not at all. AND , it is possible that if the debts exced the assets that even though you are ’secured” that you could end up with a judge that drops your lien down and you get less than was borrowed. PLus, interest cold be dropped.
I had a balloon on a note due and the guy declared bankruptcy. the judge felt sorry for this poor guy that was left out of the boming economy (He decided he didn’t want to work, so stoppped for 8 months and then built his house on the lot he bought from me. the judge ignored that, and took all the unsecured credit cards and dropped them to ZERO payoff. This man had his house built for FREE because he bought all the lumber, appliances and trades on credit!) and said that my balloon for the lot was now to be amortized over 10 years. Period. And, my 10% interest rate would be dropped to 5%. Period.
The courts suck when it comes to bankruptcy. People play it all the time. SO, yes, you can lose out. the only thing that didn’t change for this guy was the real estate tax liens. they remained intact, remained at full price, and remained at 16%. That’s why I like borrowing from my HELOC at 4% (prime) and buying tax liens at 16%. 
There may be a way to avoid loss, at least in some places. About 10 years ago I sold a house and took back a mortgage (“vendor take back”). The lawyer set it up so that, if the buyer later stopped making the payments and declared bankruptcy, I would still get the house back. This was in California. Maybe it is different in the case of lending the money to someone to buy a house rather than a vendor take back mortgage, I do not know. I cannot remember the details, but it may still be possible to protect yourself. Ask a lawyer. More or less, yes you can. However, there are some things to understand about a bankruptcy.
When a person files a bankrupcy (which is in federal court), all legal actions the person is involved in are stayed until the bankruptcy is complete. At the completion of the bankruptcy the bankruptcy judge will issue a final order, which will include orders to the judges of the other cases how they must decide the cases. In other words, if you foreclosure and the borrower files a bankruptcy, the foreclosure action is essentially removed from the local court and thrown into the bankruptcy court. Your foreclosure will still be successful, but there may be a delay because everyone has to wait for the final word from the bankruptcy judge.
Note that in a bankruptcy there are two classes of creditors: secured and unsecured. Secured parties are allowed first dibs on the collateral, i.e., if you have a first mortgage on the property you get the proceeds from the sale by the receiver in bankruptcy. After all the secured creditors get whatever their collateral brings, the rest of the debtor’s assets (including any surplus that the mortgaged property brings above the mortgage amount) are shared by the unsecured creditors.
January 1, 1970
Question: Why do people fall into Foreclosure.
For some people its just out of emotion or anger, They want to punish their spouse for a divorse. But have they ever stopped to think that buy going into foreclosure they are ruining their lives for a long time. It can be so bad that it not only ruins your credit, but it also can make things like car insurance to go up. And you may even have less job opportuinies when your credit is bad. Now a days companys look at your credit score before they hire you. But did you know there are other alternatives.
You are in possesion of something magic and that is your house and it had something called equity, this equity can save you from foreclosure almost every time. So if you just lost or job, or your spouse, forget about your anger and despressed feelings and here is what you can do. But you need to do it fast.
So read this and learn how to et the money to pay your mortgage in less than 30 days. This is not a scam, it is a known fact. Some people just never try to make things go right, don’t be one of them. If you get a foreclosure notice in the mail, you may think that you have no other choice but to do it, but this is not always the truth. I guess it depends on how many notices you received. But Unless this is the final 30 day notice and you have really bad credit, you can still borrow from your home equity to make a few “ontime” payments until you can sell your house.
Go to a few mortgage brokers and ask them for help. I bet a lot of people do not know this, but some private mortgage brokers can help you even if your credit is bad, They probably will charge you more closing costs, and a much higher interest rate, but they can usually get you a 10,000 or 20,000 loan even if you are unemployed.
The next step you do is you put this money in a bank account and you do not touch it. You use it to make your mortgage and other bill payments on time for at least a few months and you also use the same money to pay for the loans interest payments.
Meanwhile you have stopped foreclosure, you are fixing your credit report, because you are showing that you can make payments on time and now you have a few more months time to list your house for sale and sell it for a good price.
Now if you have good creidit and equitly you can do a lot more. I even know of some people that use equity loans to buy homes, make the down payment and first 6 months of payments on homes that they are fixing up.
Answer: You make it sound so simple,so cut and dried.I am a Foreclosure Counselor.The complexity of some people’s problems is mind- boggling.Take mine for example,I inadvertantly became a client as well as a counselor.I own my home(for over 25 years).I own a small mixed- use building,10-units,worth about $1m.It has a $365k mortgage,plus a $75k,hard money 2nd,that was unbelievably difficult to arrange,and has me on a tightrope.I am making efforts to refinance,but I was 89 days behind,so my fico took a 150 point hit.My situation will work out,but for most of the folks I counsel,my former nightmare, is a dream,that they would relish.People get into foreclosure for a myriad of reasons and solving their problems is very complicated.Lastly I must add,very few are there by choice.dale
January 1, 1970
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