Skip to main content

What is a consent Judgement of foreclosure with no deficiencies?

Brooklyn, NY |
Filed under: Foreclosure

Is it better to accept this rather than sign a modification loan that adds over $200,000 in legal fees and interest in a ballon payment that puts the value of the house under water?

Attorney Answers 3

Posted

That is a complicated question which requires a careful analysis of YOUR facts, and YOUR priorities. For example, do you have a defense to the foreclosure that can hold up? Adding another $200,000 to the mortgage principal, and that too with a balloon payment sounds like a set up for disaster down the road. You need to talk to a competent attorney knowledgeable in foreclosure defense.

If you do not have a signed retainer fee agreement with Chittur & >Associates, P.C., ("the Firm"), then until such retainer agreement is >entered into, neither the Firm nor any of its attorneys will represent you >nor will they be your attorney in any matter and you remain responsible for >any and all deadlines and for any statutes of limitations that may pertain >to potential claims. No attorney-client relationship exists until such >agreement is entered into; however, communications with the Firm by a >prospective client remain confidential and are considered privileged. >This email may contain confidential and/or privileged material for the sole >use of the intended recipient(s). Any review, use, distribution or >disclosure by others is strictly prohibited. If you are not the intended >recipient (or authorized to receive for the recipient), please contact the >sender by reply email and delete all copies of this message.

Mark as helpful

1 lawyer agrees

Posted

I agree with Krishnan that depends on your priorities--if you want to keep the home, then taking the loan modification (assuming the monthly payment works for you) is probably the route you should take. The balloon payment arrangement is to structure the loan mod so that the monthly payments are lower. The balloon contains the accrued interest that you weren't paying during the pendency of the foreclosure and whatever other disbursement the banks made during the pendency of the foreclosure (i.e. insurance payment, tax payments, atty fees etc). The alternative to the balloon is recapitalize the $200k into the principal with the result that you would have a much higher monthly payment--perhaps higher than what you were originally paying. Even though you have a balloon payment, the idea is that by the time the balloon payment becomes due (which is probably very many years), you will have had an opportunity to sell the home, refinance, or improve your economic situation.

A consent judgment without deficiency is just allowing the foreclosure to go forward and letting the bank take the house without contest. By not contesting the foreclosure and making the bank's life easy, the bank is saying they will not sue you again personally if the value of the house happens to be less than the mortgage debt. This is a substantial benefit, as it give you an opportunity to be done with the foreclosure, make a clean break and start from scratch. ***Notwithstanding the foregoing***, you need to discuss the details with a competent attorney, and perhaps an accountant if this is an investment property. The sort of decision you have to make is beyond the scope of a quick question and answer on a website.

Mark as helpful

1 found this helpful

1 lawyer agrees

Posted

I'm not a New York attorney, but yikes, that doesn't sound like a good loan modification. Who is offering it to you? Did you apply for a modification under the Making Home Affordable Program (HAMP)? If not, you should probably look into it. A consent foreclosure is not a bad option if you're not interested in staying the property, especially if you don't have to pay a deficiency. If you agree to a consent foreclosure you may still be able to negotiate more time to stay in the property before having to move, or getting some money to help you move. Consult with an attorney in your area if you are having any problems communicating with the bank.

The information in this answer is not intended as legal advice nor do I intend to create an attorney-client relationship with any reader simply by answering this question or contributing as a member of AVVO.

Mark as helpful

2 comments

Nicholas M. Moccia

Nicholas M. Moccia

Posted

Mara, in NY banks are required to evaluate all residential foreclosure defendants to see if they qualify for HAMP, and it is the practice to evaluate most for non-HAMP "in house" loan mod programs as well if they do not qualify for HAMP. As I mentioned, the balloon payment, which constitutes often years of accrued interest, disbursements and fees, is desirable because the alternative is having all of that recapitalized in the principal balance. If that sum is recapitalized--and the banks always want to do this--it is near impossible to get a lower monthly payment or a payment that conform with HAMP guidelines. That's why so many people not getting loan mods. The balloon structuring is often the only thing that makes a loan mod possible, since banks are not forgiving the accrued interest to make a loan mod work. Obviously, the homeowner has to be aware of the implications of balloon structuring, and the homeowner should have some sort of exit strategy for dealing with it--whether it be saving money, selling the home or refinancing.

Mara Ann Baltabols

Mara Ann Baltabols

Posted

That is all good information. I see a balloon payment like the one described in the question and think it's a bad deal. However, if what you're talking about is going on, I would definitely agree with your outlook on the situation.

Real estate topics

Top tips from attorneys

What others are asking

Can't find what you're looking for?

Post a free question on our public forum.

Ask a Question

- or -

Search for lawyers by reviews and ratings.

Find a Lawyer

Browse all legal topics