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Michael Schmidt

Michael Schmidt’s Answers

2 total

  • Do I need an attorney to give my keys over to a bank and walk away from our house

    We had to relocated after being unemployed for 12 months. Our house has been on the market for over 120 days as a short sale. The bank is now saying that we need to raise the price on the house 20,000. We haven't gotten an offer at the rate that ...

    Michael’s Answer

    The presence of additional liens on the property complicates this process because you own the home, but five others have an interest in it -- an interest that they may not yet be ready to give up without some payment. Therefore, even if you negotiate a short sale with the lender holding the first position deed of trust, the other four lenders will need to sign off on it and release their interest. The first-position lender will likely want to foreclose to eliminate the other liens.

    If you want to give possession of the property to the bank, you certainly can do that. However, I'd suggest that you work out the terms of that agreement with an attorney. Lenders are not typically interested in taking ownership of residential real estate prior to completing a foreclosure sale to avoid liability. For example, if the house burns down after you turn over possession, you and four other lenders may blame them.

    Maintain insurance on the property, and contact a debtor's bankruptcy attorney about how to address this matter. The scenario you describe suggests bankruptcy may be an excellent option.

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  • 80/20 Original Purchase Loan in Idaho

    I had an 80/20 loan through the same lender -- no HELOC, no refinance, both loans were original purchase funds. I've researched a lot but cannot find an answer specific to Idaho law. My home was foreclosed via non-judicial settlement in 2011, a...

    Michael’s Answer

    If a first position deed of trust has completed is foreclosure, and the bid was insufficient to satisfy both the first and second position deeds of trust, then the lender may pursue the liability on the second loan that was secured by the second position deed of trust. This is because the second position deed of trust was eliminated in the foreclosure, thus leaving the second note (the 20%, presumably) unsecured. See Idaho Code Sections 45-1503(1)(c) and 45-1508. Knowing that the lender can pursue liability in the circumstances as I understand them may help you to answer the portion of your question that seeks personal advice on how to proceed. However, it would be inappropriate to provide personal advice without establishing a lawyer-client relationship and getting all of the facts. You should contact a debtor's attorney to consider all the options available to you. This response is not legal advice.

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