Foreclosed Va Loans
March 11th, 2010
Foreclosed Va Loans
Question: Forclosure Re-capture Assets?
I live in the state if Va and purchased a townhome to live in. After living there for 1.5 years I rented it out b/c I got married and moved into my wife's townhome. I also refinanced her home into both of our names. We are approx. $40k upside down in each property (ouch!)
My first purchase was an interest only ARM that is soon going to expire. Therefore, to refinance it, I's have to put 20% down b/c it would need to be an investor loan. What implications would there be if I foreclosed on my first home, which is currently being rented out. Most importantly, would the bank be able to come after any money I have saved up? Thanks for your help>
Answer: There are two types of foreclosure methods that a state can have. It can be judicial or nonjudicial. Nonjudicial means that they can advertise it for the statutory period and sell it on the courthouse steps. Virginia is a nonjudicial foreclosure state. Your only problem is if the mortgage company sells it for less than what they are owed, they can come after you for a deficiency judgment for the difference. Also, if you have a second mortgage they could come after you for the full amount of that note if the house sells for less than what you owed on the first and the second. The mortgage company would have to sue to get the deficiency judgment. In most states if you have a judgment you can garnish wages and bank accounts. I don't know the specifics of how much they can go after in Virginia at a time. I would suggest you set down with a local real estate attorney and ask them what happens in your state. Are banks even going after deficiency judgments. Laws may have changed even in the last six months that could benefit you more than yahoo chatter.
Foreclosure does really hit your credit. Unless things change you will not be able to get another mortgage for 4 to 5 years at a decent rate.
Tim Cook
www.timcooklaw.com
Home Loan Horror Story Mortgage Meltdown Foreclosed Home
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