DIL - Need advice

[JusticeForAll]

Okay, so my house is in BK foreclosure. I was going to let the lender go all the way to sheriff's sale, however, with the town on my butt about every little thing, I've GOT TO STOP THE BLEEDING.

We are having our pool demolished on Friday because my old neighbors called the town about it. It's costing $1000's of dollars to have the pool demolished, but I will avoid prosecution for having a pool without a CO.

We have been fined $500 for not cutting the grass, and the list continues.

Anyway, back to the point: I have called the Lender to discuss a DIL. At this point the Lender is thanking me for calling and not going to make me prove hardship, etc etc. At this point the Mortgage has been discharged. The Lender is taking a big hit on this property. 12 months ago, the property was valued at $550,000. 7 months ago it had dropped to $515,000 and he told me that they had it appraised 4 weeks ago at $486,000. (still less than owed, but getting close)

So, they want to stop the bleeding too! It's win win for everyone.

HOWEVER, can someone please give me advice on what to watch out for. For example, right now I owe nothing. Will their agreement have some clause in it that tries to trick me into being responsible for a deficit balance, removal of property left behind or the cost to get the house market ready? Could signing a DIL be construed as a re-affirmation?

We should hire an attorney to review the DIL agreement, however, even though we have been discharged we are living paycheck to paycheck because while my husband has found job, I am still unemployed. We have NO DISPOSABLE INCOME right now to hire an attorney. (my mother is actually paying for the pool demolition because we simply don't have the money!)

Hubby and I will sit down with the agreement and go over it word for word, but I'm just wondering if anyone here has any experience with this and can give me some red flags, warnings, scams, or the like to look out for?

Thanks, in advance

[SinkingFast]

Have the attny that filed your BK go over the DIL. BK attnys are familiar with DIL's. They handle them every day. They'll know just what to look for. Chances are, your attny that filed your BK won't charge more than one billable hour, if that.

[JusticeForAll]

Ugh!

Thanks SinkingFast, that is what I was afraid of!

His hourly rate is $350 per hour, and he has not responded to any calls I've made to him since our discharge.

Perhaps I'll find someone else. $350 right now is just out of the question! That is my entire food budget for a whole month. Right now, there is just nothing left over and I don't wanna ask my Mom for any more money.

UGH!

Have the attny that filed your BK go over the DIL. BK attnys are familiar with DIL's. They handle them every day. They'll know just what to look for. Chances are, your attny that filed your BK won't charge more than one billable hour, if that.

[SinkingFast]

I hear ya, JFA!!

Sounds like a DIL is the best way to go. Get rid of that sinking ship before it takes you down even further.

When looking at signing a legal agreement of this proportion, I guess a few hundred $$$'s for some expert legal advice is much better than the alternative.

Maybe another attny would do it?? Maybe not charge as much??

[HHM]

Just an FYI,

Generally, mortgages are not subject to deficiency balances, so you don't have to worry about that. Strictly speaking, the mortgage was NOT discharged in BK (if that were true, you wouldn't need to do a DIL and there would be no ongoing foreclosure, Secured debt is not discharged in BK) you still owe on the mortgage note until it is satisfied in some manner. Mortgages are satisfied in 3 ways: (1) paid off under the terms of the mortgage note, i.e. paid in full (2) foreclosure (3) DIL.

Think about what a mortgage is for a second...the bank lends you money to buy a house, and in order to secure the your repayment of the loan, the bank gets the right to take your home (repayment of the loan is "secured" by the real estate). Thus, if you stop paying the monthly payments, foreclosure is how the bank lawfully reaquires "FULL" title to the property (when the bank loans the money, what they get is a Lien secured by a Deed of Trust, but I won't go into all the technicalities here). A DIL is essentially a voluntary foreclosure in the sense that you, as the delinquent debtor, are agreeing to sign over "FULL" title...thus, it short circuits the lengthy foreclosure process.

If you're worried about your credit report, it's too late, if the foreclosure is already started, the foreclosure is going to be on your credit report and stay on your credit report...so a DIL at this stage does nothing to fix that little issue.

Just as a bankruptcy, the fact that your "filed" bankruptcy is what gets reported on your credit report regardless of whether the BK was ever discharged, so, in foreclosure, its the fact that foreclosure was startet that gets reported, regardless of whether it was ever finished.

[JusticeForAll]

Thanks for the reply HHM. Actually, my credit is the least of my worries. I just don't want the responsiblity of the house anymore.

Credit is already shot, foreclosure reported months ago, I don't care if it stays on there forever.

As far as the debt being discharged, well both the Lender even said "you're respsonsibility to the debt has been extinquished". So they cannot try to collect the money from me, they have to foreclose on the property to get the deed back. (or do a DIL)

So technically speaking, right now there is a balance on the mortgage, but I'm not legally obligated to pay it. But of course, I can't keep the house either as it is collateral for the Mortgage.

I think we're saying the same thing, just in a different way. In the end, I just want to cut bait and be done. In 9 days it will be one year since I filed BK and I just want the entire thing to be over so I can move on with my life!

SinkingFast, I am going to try to find another attorney to look at the DIL agreement! Thanks.

[HHM]

Your right, we are essentially saying the same thing...so I won't go into the boring details of who the debt is actually dealt with under the law, the net result is the same, you are not responsible for the debt, but you never really were in the first place because it was a Lien secured by a deed of trust...contractually, you had the responsibility to make the payments, and so long as you did, you had the right to use the underlying property, but that is different than being liable on a debt (i.e. like an unsecured debt that does get discharged)

Have you seen the DIL...they tend to be pretty straight forward documents, I doubt you have anything to worry about...but if you have any questions, you should seek the advice of an attorney.

[JusticeForAll]

Thanks again HHM, your advice is much appreciated

I have not seen the document yet as the Lender is still trying to "buy out" the 2nd Mortgage so they will release their lien.

AHHHHHHHH, the plot thickens LOL

I'll look over the doc and if I feel I need to, I'll try to find someone locally. I moved 400 miles away from the house since the BK. Maybe lawyer's are less expensive here in the "country" LOL

[JusticeForAll]

Actually HHM, I don't think I'd find it boring at all. I'd love to hear it. I need to understand this better so I an deal with my situation in an educated and informed manner! So, if it's not too much trouble, I'd love to hear it.

I re-read your messages several times, and I think I'm starting to "get it".

thanks :-)

so I won't go into the boring details of who the debt is actually dealt with under the law,

[JusticeForAll]

Ackkk! Forget the DIL. Spoke with the mortgage company today, they were EXTREMELY RUDE and uncooperative (my loan has been assigned to someone new in the loan resolution department).

The new "lady" started to lecture me about "responsiblity", to which I told her I didn't need her lecture. The conversation took a bad turn and started to escalate. Finally she was YELLING at me and wouldn't let me speak, so I hung up on her.

I guess they'd rather go the full process. And that is okay by me.

Excavation is happening today to remove the pool and fill the backyard. I will hire someone to cut the grass and clear the snow until the sheriff's sale and just be done with the whole thing.

Thanks to both of you that tried to give me advice, however, it seems the Lender would rather foreclose than DIL.

I hope thier attorney charges $350 per hour, I can't think of anyone that deserves to spend more in legal fees

PS: This is my SECOND attempt to work with them, and my last.