What should I do with my investment home mortgages????

[jman]

I live in NY and rent right now and im about to file next week but i have no decided on one thing yet and need advise. I have a house in NC that has a renter in it. We were hoping for it to be a good invesment for us but now i just want to get rid of it as we are starting completely over. I am current on the mortgage but i am out of pocket $450.00 per month. The house is worth 150k and owe 207k on it. SHould i put it in the bankruptcy when i file or reaffirm it and just short sale it once i am hopefully discharged? My attorney said wait and sell it but im not thinking thats a good idea. Can someone help me understand the pros and cons of this better please?????

[despritfreya]

Dump the albatross. Absolutely DO NOT reaffirm. And DO NOT collect rents once you have filed the Chapter 7.

Des.

[jman]

Des,

Please elaborate a little bit. Why should I not reaffirm it and why should i not collect rent every month???

[jman]

so if i do not reaffirm the property what will happen to my current renter who is living there? what do i do or say to her?

[despritfreya]

Please elaborate a little bit. Why should I not reaffirm it and why should i not collect rent every month???

Please read:

http://www.bkforum.com/showthread.ph...-very-bad-idea.

So unless NC is an anti deficiency state, reaffirming is very bad.

See also:

http://www.bkforum.com/showthread.php?68110-Collecting-Rents-After-Filing-A-Chapter-7-A-Must-Read

Hope the links work.

Des

[jman]

now i am freaking out. i thought i could reaffirm it and then once i was hopefully discharged i can then sell the property as a short sale but now you got me scared thinking that i wont be able to sell it as a short sale and instead the banks will come after me for the money. i have no idea what to do now

[despritfreya]

now i am freaking out. i thought i could reaffirm it and then once i was hopefully discharged i can then sell the property as a short sale but now you got me scared thinking that i wont be able to sell it as a short sale and instead the banks will come after me for the money. i have no idea what to do now

Settle down. There is nothing to be scared about. Your best course of action is the one that leaves you least exposed to future liability. That is why you are doing a bk.

1. Keeping property that is "upside down" with the intent to do a short sale is dumb. The time and effort it will take to get the lender to agree is wasted since the debt is discharged in the bk. Once you stop paying, eventually the lender will foreclose.

2. Reaffirming when such is not required, is also dumb. Even if you were able to service the loan, the "stay and pay" tactic makes much more sense since if you are unable to pay the lender gets the property and has no $$ claim against you.

3. Forget the bk for the moment. The property is losing $$ since you are not renting it for the amount of the debt service. Time to stop throwing good $$ after bad.

It is not "rocket science" to realize that you need to cut your losses and move on. Surrender the property and be done with it.

On a side note: Until such time as the lender completes the foreclosure, if you have an HOA, you must service the HOA from the day the bk is filed until the day the lender completes the foreclosure.

Des.

[jman]

Im not not understanding what your saying but what im asking is if i include it in the chapter 7 then what do i do with my current renter? how do i handle that situation. she has been good to me for a long time and i want to do the right thing by her. What actually happens once i put it the 2 mortgages in the bankrupty? what are the procedures they will take?

also i do have a HOA that i pay 68 dollars a month to- so what did you mean i have to service them until the lender completes the foreclosure?

[despritfreya]

what im asking is if i include it in the chapter 7 then what do i do with my current renter?

You inform the tenant about the bk. You do not collect any further rents. Chances are the tenant will have a "free ride" for a very long time. . . but. . . If there is a long term lease there is a possibility that the Trustee will want the payments to be made under the lease to him/her but that is very unlikely.

What actually happens once I put it the 2 mortgages in the bankruptcy? what are the procedures they will take?

While it is not required of the lender, most likely at some point after filing one or both lenders will file a Motion For Relief From the Automatic Stay. This Motion asks the Court to remove the property from the protection of the bk so that the lender, if payments are delinquent, can begin the foreclosure process. If a Motion is not filed the lender(s) will simply wait until the case is "closed" and then, if payments are not current, will begin the process of foreclosure.

I do have a HOA that I pay 68 dollars a month to- so what did you mean I have to service them until the lender completes the foreclosure?

The law basically states that HOA dues/assessments that fall due after the bk is filed are the responsibility of the titled owner of the property (that's you) until the property changes owners (usually when foreclosed). This means you need to continue to service the HOA until the property is out of you name.

Des.

[jman]

des,

Thank you so much for all the insight. It is greatly appreciated. A couple last questions for you. If i do not reaffirm the 2 mortgages and include it when i file next week i now understand becasue of you that the hosue will eventually be forclosed so my question to you is will I be hounded by the mortgages companies? will i be getting forclosure notices? will i have a forclosure on my record on top of the bankruptcy? ORRR once i put them in when i file will that be the end of that and i just wont have to pay anymore?

[jman]

Wait one more question _ please answer. if i do what you say to do which sounds like the right thing to do and add the house in the chapter 7 and let it forclose will my "fresh start" be delayed until the forclosure is final? I mean does the banks report me late every month on my credit report or do the same rules apply in the fact that if i put it in there my credit report will not show late after late after late?

Thank you again for the support

[despritfreya]

jman,

The mortgages would be listed in the bk regardless of your intent to reaffirm as you must list all debts and all assets. If you stop making payments the lenders (once the protection of the bk is lifted) will look to State law as it relates to the foreclosure procedure. I do not know NY foreclosure law therefore, I will have to defer to someone on this board that does, but typically it could takes months and months before a foreclosure is even started, let alone completed. The lenders will not be "hounding" you. They will just follow normal procedures as to written notification and the filing of a foreclosure proceeding. It is very "matter-of-fact".

Will a foreclosure be a 2nd hit on your credit report - I believe so. The banks however, will not report that your payments are late as the $$ obligation was IIB. You get your "fresh start" with the entry of your discharge. Reestablishing credit is a process - something I cannot really comment on as I have very little experience in such matters.

Des.

[jman]

THe house is in North Carolina. I am just concerned that after a hopeful discharge in 3 months from now that i no longer have the proptection of the bankruptcy and therfore the 2 lenders will come after me hard for the debts and also hit me with running lates of 30days 60 days 90 days etc.
have you ever talked to anyone in this situation? what did they say happened?

[despritfreya]

THe house is in North Carolina. I am just concerned that after a hopeful discharge in 3 months from now that i no longer have the proptection of the bankruptcy and therfore the 2 lenders will come after me hard for the debts and also hit me with running lates of 30days 60 days 90 days etc.

Since you ARE NOT going to reaffirm the lenders will have no claim for $$ against you. They get the property and that is all they get.

Des.

[debee]

have you ever talked to anyone in this situation? what did they say happened?

Even though you are getting advice from one of the best posters on the forum, I'll throw in too just to offer some extra reassurance: Every third person on this forum has let a house or two go into foreclosure. It happens just as des described. The lender goes through a series of steps depending on what it required in the particular state. You won't be harassed and you won't be held responsible and you can't be sued or pursued for payment for any debt discharged in bankruptcy. You may get a letter, but only because they are required to send it. It won't be threatening though. It will be "informational". Nothing to worry about at all.