Comments for Easy Home Equity Loan

Comment on what can i do about a second mortgage that has been sent to collections after house was foreclosed upon? by Mr Placid

Mr Placid — Sat, 04 Sep 2010 18:48:17 +0000

Actually, that’s Code of Civil Procedure 580b. And that only applies to purchase money mortgages. If your 2nd mortgage was in the form of one of those 80/20 finances, where the 2nd was used as part of the purchase monies, then 580b is applicable. If it was a HELOC, then 580b does not apply. But, either way, if they want to collect, then at a minimum they must sue you in court and obtain a judgment first, as you apparently already know.

Comment on what can i do about a second mortgage that has been sent to collections after house was foreclosed upon? by Mrs HarleyBrat

Mrs HarleyBrat — Sat, 04 Sep 2010 18:48:17 +0000

you should have done a short sale (rather than let it go to foreclosure) because then you might have been able to get the balance forgiven – but since you didn’t – your last option is bankruptcy (good luck since you have to qualify) or having that debt on your credit for a long time affecting all your future buying power

Comment on what can i do about a second mortgage that has been sent to collections after house was foreclosed upon? by chatsplas@sbcglobal.net

chatsplas@sbcglobal.net — Sat, 04 Sep 2010 18:48:17 +0000

The security interest (lien) in the house of the second mortgage was wiped out, but not your underlying debt. You got the money, now you gotta pay it back.

See if you can work out a deal, not with collections but with lender. Otherwise it’s bankruptcy.

Comment on what can i do about a second mortgage that has been sent to collections after house was foreclosed upon? by Expert Realtor

Expert Realtor — Sat, 04 Sep 2010 18:48:17 +0000

Welcome to the world of deficiency judgments (it’s not a judgment yet..but it will be very soon).

I’m very, very glad you posted this question–it will serve as an excellent example to those that think if they just simply walk away–that’s the end of it.

Well, unfortunately, you have discovered, it’s not.

All you can do at this point is see if the federal bankruptcy court will allow you to bankrupt the $100K and this is getting harder and harder to do.

If you just walked away from the house because it was declining in value, fully expect for your request for bankruptcy protection to be denied.

Comment on what can i do about a second mortgage that has been sent to collections after house was foreclosed upon? by GUS

GUS — Sat, 04 Sep 2010 18:48:17 +0000

You should probably speak to an attorney about it. The creditor probably has the right to go after you. The fact that the house has already been foreclosed upon is not relevant.

Comment on what can i do about a second mortgage that has been sent to collections after house was foreclosed upon? by Landlord

Landlord — Sat, 04 Sep 2010 18:48:17 +0000

This was a second mortgage, cash they gave you, and apparently you spent.

Yes, they can collect this, you owe the money.

They can seize your assets and garnish you wages until you have repaid them.

The CA code is for people who only bought a house, never took any cash out of it, it does not cover second mortgages. You can not take that kind of money, stick it in an account and expect it to be treated as a gift.

Comment on If buying a home under appraised value,would seller need to state in contract that equity was given as a gift? by boston857

boston857 — Sat, 04 Sep 2010 15:39:09 +0000

I think "Real Estate Dawn" has done a good job of answering this qtn.

Look! There is a misconception on how loan amounts or LTV ratios are determined. When the transaction is a straight purchase (as in many cases) the lender will always advance based on the lesser of cost (i.e. purchase price) or appraised value. So, if the purchase price is $100k and the appraised value is $150k, the lender will advance based on the purchase of $100k which is the lesser of the two values. So, for example, the applicable LTV ratio would be 80% of the cost of $100k, which would yield a lower loan amount to the borrower as compared to 80% of value of $150k.

For the lender to advance based on the value in this case, the equity has to be gifted to the borrower. This gift of equity in effect acts as the borrower’s down payment, which allows the lender to advance a higher loan amount since there is a higher "equity injection" from the borrower.

In regard to the interest rate, it may be that your debt to income ratios exceed the lender’s policy WHEN the higher loan amount (i.e one based on value and not cost) is used. As such, the lender has to penalize you with a higher rate since you are present a greater borrowing risk as a result.

Comment on If buying a home under appraised value,would seller need to state in contract that equity was given as a gift? by tianaramal

tianaramal — Sat, 04 Sep 2010 15:39:09 +0000

The lender is correct you will not get 100% financing on a traditional 30 yr mortgage without a high interest rate. They calculate your ltv using the sales price or appraised value whichever is lower. You still have to put down 20% to avoid pmi. You can start pulling equity out of the property after a year of making payments. I still would speak to other lenders regarding the gift of equity contract.

Comment on If buying a home under appraised value,would seller need to state in contract that equity was given as a gift? by Margaret K

Margaret K — Sat, 04 Sep 2010 15:39:09 +0000

It would depend on the terms that the original loan application was approved for and the understanding of the lender. How was the sales contract between you and the family member drawn up prior to the appraisal? There are some lenders that are cautious when a purchase transaction is between family members and at a large percentage below fair market value(FMV). Gift of Equity is often used with family transactions and can carry Federal Gift Tax issues as well as state tax issues depending on state laws. The lender is not going to be put in a position where someone is allowed to walk around the gift tax laws.

In the case you show the equity you are getting is almost 50% of the FMV. What is the ratio of debt to income and housing to income that you will have taking on this mortgage? The lender is going to be reviewing your ratios and cash in the game with this kind of FMV. Talk to your Loan Officer and find out the facts as to why the lender requires this and what options you have available.

Good Luck.

Comment on If buying a home under appraised value,would seller need to state in contract that equity was given as a gift? by Gr8 F8

Gr8 F8 — Sat, 04 Sep 2010 15:39:09 +0000

That is nuts, go to a different lender.