Banks Pursuing Seller’s

Increasingly aggressive mortgage lenders are seeking to collect deficiencies from former homeowners who walked away from their properties or sold them in short sales. Many states, including Florida give mortgage holders as long as five years to seek a deficiency judgment. If granted, the bank gets up to 20 years to collect and the option to renew for another 20 years if the debt isn’t paid.

About one-third of U.S. states, including California and Arizona, prohibit collection efforts after foreclosure, but homeowners usually waive that protection in a refinance. Most states allow collection on unpaid home-equity loans. Banks are most likely to try to collect from people who walk away from a property on which they are still making payments. The bank is going to pull your credit report and if  you are current on your other bills, they are going to come after you and potentially ruin you.  So think twice about walking away.

Help for Struggling Homeowners

Liz DeAmbrose Broker-Associate

FHA defines FHA borrowers facing imminent default to be current or less than 30 days past due on the mortgage obligation and experiencing a significant reduction in income or some other hardship that will prevent him or her from making the next required mortgage payment. A forbearance agreement allows the loan servicer to postpone, reduce or suspend payments due on a loan for a limited and specific time period. FHA-HAMP allows qualified FHA insured borrowers to reduce their monthly mortgage payment to an affordable level by permanently reducing the payment through the use of a partial claim combined with a loan modification. The partial claim defers the repayment of a portion of the mortgage principal through an interest free subordinate mortgage that is not due until the first mortgage is paid off. The remaining balance is then modified through re-amortization and, in some cases, an interest rate reduction.