HOMES LOST BUT DEBT STILL DUE

SHORT SALES AND FORECLOSURE WON’T PROTECT YOU AGAINST AGAINST DEBT COLLECTION OF SECOND MORTGAGES AND LINES OF CREDIT OBTAINED AFTER THE INITIAL PURCHASE OF YOUR PRIMARY HOME.

FLORIDA IS A RECOURSE STATE AND LOANS MADE AFTER THE INITIAL PURCHASE ARE COLLECTABLE IN FLORIDA.

Debt collectors are starting to hound people who lost their homes to foreclosures or short sales over their second mortgages. Millions of borrowers do have recourse loans that they took out after purchase of the primary residence which means lenders have a legal right to pursue them for unpaid balances. If at the time you purchased your home there was a first and second loan the banks should not come after you. For instants if you had a 80/20 or 90/10 where there is no down payment but there are two mortgages, one for 80% the other for 20%. BUT if after you bought your home you took out a line of credit or second mortgage a lender has the right to come after you for payment even after a short sale or foreclosure.

Borrowers don’t have a defense, they signed a promissory note, borrowed and spent the money. Lenders or collection companies will usually settle the debt for less then owed. This should be handled during the foreclosure or short sale period. If the debts are large and unmanageable the borrower should consider bankruptcy. It is better to address all the issues straight on and reduce the time that your credit will be impacted.