I live in Broward County, Florida and defaulted on my modified mortgage from both the 1st and the 3 rd mortgage companies. The US SBA holds a 2nd mortgage and has not acted yet. Also, my HOA has not sued me but I am in arrears. What happens if my 3rd mortgage company gets a judgement when the property is underwater? Can this loan be secured by negative value? They are being very aggressive.
There are several possibilities. One is that while it is a lawsuit, it is not a foreclosure lawsuit. That is usually what happens when underwater junior lienholders want to pursue collection. Foreclosure makes little sense to a heavily underwater lienholder, since it is unlikely to get paid from the foreclosure proceeds, yet has to pay to file and litigate the foreclosure.
The other possibility is that, if the third lienholder really is foreclosing, it is betting that you will pay rather than lose your house.
Depending on the details and the numbers, you might want to look into a Chapter 13 case. Under some circumstances, it is possible to strip off unsecured junior liens in a Chapter 13 proceeding. While there is also a brand new case that allows for lien strips in Chapter 7 cases, that is an issue that is still open to debate in the Southern district for Florida.
Please note that the above is not intended as legal advice, it is for educational purposes only. No attorney-client relationship is created or is intended to be created hereby. You should contact a local attorney to discuss and to obtain legal advice.
While you can fight a foreclosure for quite a while with a good defense attorney, you will lose pretty quickly if the HOA forecloses. At the very least, if you don't file bankruptcy, contact the HOA for a payment plan. It's cheaper than rent.
This communication is not intended to create an attorney/client relationship. It is always recommended you consult an attorney in person to discuss your case. The Law Offices of Stage & Associates practices state-wide and represents homeowners and community associations. Please visit our website at www.stagelaw.com.
And remember, banks sometimes work in mysterious ways. I have had some cases where the 2nd position lender has filed foreclosure, knowing that they would not benefit from the sale of the house. I am not sure why they do it, but I have seen it done. I had a case like this about 2 years ago, and no matter how I tried, their lawyers and the bank would not listen. We had to eventually file bankruptcy for the client to save the house from foreclosure. As for the HOA, they have become very aggressive. Lately, many so called investors are buying HOA foreclosures and renting them out to make a quick buck. They are hoping to buy the home at low prices (amount owed to HOA) and to rent the home out before the lender comes in and forecloses on the first lien.
DISCLAIMER NOTICE-- The above is a general response to the questions posed. This is in no way intended to create an attorney-client relationship, and should not be relied upon as legal advice. You are advised to seek the assistance of legal counsel for a complete review of your case and specific answers to your questions.
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