I obtained 100% financing, 80% first, 20% equity loan, all towards purchase. Can second file defiency on deficit on shortsale/foreclosure?
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I obtained 100% financing, 80% first, 20% equity loan, all towards purchase. Can second file defiency on deficit on shortsale/foreclosure?
The same bank holds both loans, the second wants me to pay a large defiency to agree to shortsale amount the first has agreed. We do not have the money they are asking for. Will we have to file BK to protect ourselves fromowing them for years to come? If I have total proof( which we do) that equity loan was nothing more than a loan to purchase our primary home, do they have anything?
Asked on July 1, 2009 under Real Estate Law, Oregon
Answers:
J.M.A., Member in Good Standing of the Connecticut Bar / FreeAdvice Contributing Attorney
Answered 15 years ago | Contributor
I am a lawyer in CT and practice in this area of the law. This seems outrageous that the same bank owns both loans and they are not letting you do the short sale unless you pay a substantial amount towards the 2nd. However, the bank gets to decide whether or not to allow a short sale, not you. As such, the bank can make this demand on you and force you to come up with the money or not do the deal. You do not want a deficiency judgment as that will allow the bank to come after you for the next 20 years. I suggest hiring a lawyer to try to negotiate with the bank to let you out and if that doesnt work, then i would see a BK lawyer about filing.
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