Are you potentially liable under the note?
You might want to ask the following questions when you meet an attorney.
- Did I sign the note? There is a difference between the note and the mortgage. Sometimes other documents such as a personal guarantee or similar document might make you personally liable for the note.
- Have I been or am I likely to be discharged in bankruptcy?
- Is the house upside down or underwater? These are terms used to describe a property whose debt is larger than its value. If this is true, a deficiency is established for the values at the time the foreclosure process conveys title in a separate proceeding commonly called a deficiency hearing.
- Are you a likely deficiency target? Not all foreclosures end in a deficiency hearing, even if the property was upside down at the time the title was conveyed by the court. The following are factors which might weigh on whether or not a deficiency will be sought by the lender.
- The lender. Different lenders seem to have different methods of deciding which deficiencies to pursue.
- Your income.
- Your assets.
- The nature of your hardship.
- Type of loan.
- Your exemptions
Deciding what’s best for you
The factors that may affect your decision regarding what is best for you include but are not limited to the following:
- Do you owe more than it is worth?
- Is there a second mortgage?
- Does the house need a lot of repairs?
- Do you want the house?
- Do you need to relocate?
- Is it a bad loan?
- Are you filing for bankruptcy?
- Do you have other debts?
- Can you afford the house?
- Would you keep it if the loan was adjusted to the value, or if the interest rate was adjusted to make the payments reasonable?
- Do you see yourself in the house long-term?
Providing the Documents
If you are asking the bank to work with you to either:
- modify the loan
- waive the deficiency
- accept a deed in lieu of foreclosure
- accept a short sale offer
you most likely will be asked to provide documentation that will include some if not all of the following:
- A hardship letter
- A RMA or some sort of income/expense/asset statement
- Tax returns
- Pay stubs
- Profit and loss statements
- Dodd-Frank form
- 4506-T form
- Utility bills
- Bank statements