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I need advice on where to go with this...

my mother in law was divorced and had no credit, so several years ago, my wife applied for a mortgage(my wife had great credit) with her mom paying the monthly mortgage and her name was on the deed.

fast forward several years, we partnered on a condo in Fla and split the mortgage/maintence fees equally

we had a fight with her mom that caused us to be on non talking terms - from this, her mom stopped paying her portion of the condo leaving us with all the bills.

a few years ago, I lost my job and since have taken a job making about 28k less due to this job market(sys admin) - I have trouble keep my head above water with my own house/bills and now have maintenance fees and assessment fees backed up, and have been receving letters from lawyers putting a lien on the condo...

on top of this, we recently found out the house my moth-in-law lives in under my wife's name... HASN'T BEEN PAID in 22 MONTHS and is about to go into foreclosure!

I am at a loss of what to do here - she is an evil person and because of the blowout we had some time ago, she is ruining her daughter's credit and name in spite!

My main question is, since this is a 2nd property, could the bank that owns the loan, go after our house after it forecloses?

this is a mess I'm in, and haven't spoken to an attorney yet, and was hoping for some sound advice.

thanks in advance.

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have you tried creditboards? you'll get a more BK friendly crowd there.

FWF = PYDBDB

CB = why pay your bills when you can... (more)

MDfive21 (Jun. 29, 2012 @ 9:39a) |

You are an idiot OP. Cash for keys the MIL, and make a deal with the lender to do a HARP refi and rent the place out. BK... (more)

alamo11 (Jun. 29, 2012 @ 9:39a) |

im not an idiot, I'm just in a really difficult situation and you're a moron for saying that

the house my MIL lives in th... (more)

1yardaway (Jun. 29, 2012 @ 11:34a) |

thread summary:

OP: Here's my situation, should I BK?
FW crowd: Don't BK
FW crowd: Don't BK
FW crowd: Don't BK
OP: I BK'd. Got any other advice I can ignore?
  • Also categorized in:

Hmm....all I can say is

Since the other house is under water, I doubt it. They can and probably will go after your Salary to pay them back for the house.

should I consider bankruptcy?

Read the many good FatWallet threads on foreclosure and credit repair.

Your wife cosigned, so the debt is yours. Quit thinking of it as anything but your debt, and make decisions accordingly.

Where is your mother-in-law living? If it's in the home that's in your wife's name, evict her unless she starts paying again.

Can the home pending foreclosure be rented? Is it eligible for loan modification? If you want to keep the home, the bank may be willing to work with you to avoid foreclosure, but at this stage you need to be smart about your negotiation. Again, read the existing foreclosure threads, which cover this extensively.

Right, swim upstream for the old biddy.

I would BK so fast their heads would spin.

BitemeIamtoxic said:   Right, swim upstream for the old biddy.

I would BK so fast their heads would spin.


I agree that bankruptcy is highly likely.

Some things are more important than a credit score. I hope you can learn from some of your missteps and avoid similar problems in the future.

And, I hope you enjoy the look on your mother-in-laws face when you flat refuse to help her with anything in the future. I think she earned that one.

You did say Florida, which is a recourse state. I would think you are stuck with a BK unless you want them coming after your house.

If I read this right you have three properties.... your house, a condo, and a third house that your in-law is/was living in. Unless you have equity in one of the three houses I would at least talk to a BK lawyer about your options specific to FL. If you have equity in any of them then you may have options.. if you are underwater in all three then you really need to rethink your position. BK would affect all three, and it may be a good idea to consider leasing a house and letting all three go.

Normally I am not a big fan of this sort of maneuver but with a big decrease in income (both direct wage and all of the one house and half the condo if I read it right) The MIL may have been paying it but in essence its your note so you were renting it to her for the costs. And you can't even evict her since the deed is in her name. (the bank can file on their lien and take possession -- but with her as the registered owner legally you are stuck)

And last, your MIL most likely is willing to ruin her daughters credit because if you two break up over it then where is her daughter going to have left to go? (hint: the one who has been living rent free for 2 years) She can't really 'lose', but you can't 'win' either. And its not costing her anything.

You should buy another house. Three isn't enough.

Serious answer: If I were you, I would see about doing everything in my power to evict the MIL.

Too quick to suggest bk guys

Are these two defaulted properties solely on your wifes credit, and not on yours? You may be able to avoid bk and just have your wife bk. Or your wife may not even need to bk, just let the lenders foreclose and trash her credit while yours stays pristine .

Just bc FL is recourse is not a guarantee the bank will pursue the deficiency . Many deficiencies are not being pursued .

SUCKISSTAPLES said:   Too quick to suggest bk guys

Are these two defaulted properties solely on your wifes credit, and not on yours? You may be able to avoid bk and just have your wife bk. Or your wife may not even need to bk, just let the lenders foreclose and trash her credit while yours stays pristine .

Just bc FL is recourse is not a guarantee the bank will pursue the deficiency . Many deficiencies are not being pursued .


That was part of why I suggested talking to a BK lawyer in that state -- I assumed they may be able to separate their finances, or not depending on state law. If he has three houses and one has a comfortable equity then whichever of the other two notes that files first is much more likely to pursue a deficiency.


Soundtechie:
He said that the house was titled in his MILs name, but the note was in his wifes. He would not be able to evict her based on the note unless there is a lease or contract involved. I am sorta surprised that the bank allowed that. (I had to get bank permission to give my stepmother a life estate in the house that she lives in -- which allows me to use her (disabled) Homestead
exemption)

In my case she was never expected to pay anything, and if I had a note in MY name then I control payments.

Personally I think there were two main mistakes made here -- first was titling the house in the MILs name, and second letting her make payments directly to the bank on your wifes behalf. She should have been paying your wife (as a lessee which would also give you tax writeoffs) and then your wife paying the note and taxes.

I did something similar for my parents when my dad was alive, by co-signing for a car loan. But I made the payments and my parents paid me (part) of the amount. I wasn't woried about them making the payments, my dad was the sort that would always pay ME first before anything else when SS came in -- but I could make sure they were never late. At the time I couldn't have afforded paying all of it every month but I had enough spare to buffer their ups and downs of income. Plus my dad would have had issues if I had tried to give them a car even if I could have. (my stepmother is more... pragmatic)

I also gave them a prior car in exchange for a debt I owed my dad. The car was worth a fair bit more than the debt, but they needed it and I was taking a full time travel job. (and I didn't have the cash to pay them so we both "won" that exchange)

ok - here's the details on the 3 properties:

primary residence(NJ) - lived in 10 yrs have equity in home and am considering refinancing as current mortage is 5.5% - current with mortgage (house in me and wife's name)
MIL house - in wifes name only(her mom on deed) about to foreclose (NJ) - 23 months unpaid mortgage - would love to drive my SUV through her house while she's sitting on couch watching Lifetime
Condo (FL) - mortage in me and wife's name - deed and maintenance in all 3 of our names - owe thousands in maintenance fees and taxes - current on mortgage though - considering selling in crappy market , hoping on break even if it sells

Let me just add that I have about 35K in revolving debt but credit score is about 725 - wife has barely any revolving debt and credit WAS around 800(shame huh?)
I would think bankruptcy would be no brainer but with available equity, would I be able to claim BK ?
My main concern is protecting my primary residence when the MIL's house forcloses

thanks again guys

Divorce the wife and remarry after. Or never remarry and profit!

Is you wife also on the deed or just MiL? Why do you allow said MiL to live in your "wifes house"? If shes not paying and the bridge has already been burned show up and tell her to get out then and there.

After that contact the bank and ask for a short sale. Tell the bank you will work with them and because of that they may not come after you.

I'd certainly refrain from driving your SUV through the MIL's house, that would knock the re-sale value down considerably. On a serious note, I'd try to begin some type of eviction proceedings, or at least begin to remove the MIL from anything that would allow her to lay claim to the house. Do you guys want to keep the condo or is it just a burden that you never use? I understand that is of less importance than keeping your primary residence, I was just wondering

Hindsight now, but why the F is the MIL on the deed for a house your wife is 100% on the hook for? This isn't going to end well with properties in a recourse state--particularly when your deadbeat MIL is on the deed of not one, but two properties (both of which only you and your wife are responsible for paying for). Consult with a competent FL RE attorney ASAP.

my wife questions why she did sign for the mortgage for her mother every day - but she did it when they were on good terms and she did it to help her (it is her mother after all)

I think its just my MIL that is on the deed, but we are not looking to get ownership of her house, we just want to protect our primary residence and assets(I heard they could garnish our wages to repay the debt?)

would a bankruptcy wipe the slate of the other 2 houses and all revolving debt, liens, etc ?

As ravingvt mentioned, you seem to be way over your head on this and need to consult a competent attorney locally.

1yardaway said:   My main concern is protecting my primary residence when the MIL's house forcloses

thanks again guys


Read this: http://www.nolo.com/legal-encyclopedia/new-jersey-bankruptcy-hom...

if the condo sells then I'm just worrying about protecting my primary residence...

I would like to make good on the debt owed from the sale, providing the proceeds from the sale equal or exceed the debt owed...
if not, I don't have means to come up with the extra funds

1yardaway said:   if the condo sells then I'm just worrying about protecting my primary residence...

I would like to make good on the debt owed from the sale, providing the proceeds from the sale equal or exceed the debt owed...
if not, I don't have means to come up with the extra funds



If you arrange in advance to sell the house for less than the amount of the mortgage, that's called a short sale. If you sell for less than the mortgage amount, but pay the difference in cash at closing, that is allowed. Thebank will not let you sell the house for less than the mortgage amount if you haven't already gotten permission to do so. If you owe 100k on a property and the buyer shows up on closing day ready to pay 90k, the bank will just say "no" and you won't be allowed to sell.


ETA: get a lawyer!

And before thinking of bankruptcy, look at the means test at the following site:

http://www.legalconsumer.com/bankruptcy/nolo/

Just to make sure for which one you qualify and how to proceed from there.

MilleniumBuc said:   And before thinking of bankruptcy, look at the means test at the following site:

http://www.legalconsumer.com/bankruptcy/nolo/

Just to make sure for which one you qualify and how to proceed from there.


very cool info - thanks!

kill mother in law
get life insurance
profit

If I refinance my primary mortgage - would I be able to still claim bankruptcy afterwards ?

1yardaway said:   if the condo sells then I'm just worrying about protecting my primary residence...

I would like to make good on the debt owed from the sale, providing the proceeds from the sale equal or exceed the debt owed...
if not, I don't have means to come up with the extra funds


New Jersey is a recourse state too. This means that if the house does not sell for the value of the loan, there may be circumstances where the bank can come after your other assets with a deficiency judgment. However, in practice, many banks aren't doing this, and in some cases the bank may be barred from doing this depending on how they foreclose. You need to consult someone who knows FL and NJ law on these issues.

You also need to have a good talking to with your wife. I know other people whose mothers are mooches like this and have swindled every kid out of something and have even applied for credit cards in their kids' name without their kids knowing. Hopefully your MIL isn't that bad, but there need to be ground rules on this. "She's my mother" doesn't always fly.


1yardaway said:   If I refinance my primary mortgage - would I be able to still claim bankruptcy afterwards ?

If you really want to refi, you better refi before this whole thing affects your own credit. However, I would be careful about how much out of pocket you need to pay to refi, because you don't know yet how bankruptcy might affect your own house and it might be wasted money. You will almost certainly not be able to refi after bankruptcy because your credit will be trashed.

Still, refi should be the least of your concerns right now. You need to figure out what you need to do to get out of this situation with the least scars.

jd2010 said:   kill mother in law
get life insurance
He'll probably find out that someone else is the beneficiary, to spite the daughter.

Don't forget to sue MIL for back rent.

If your wife was a 50% partner on this condo, why did it take 22 months before you discovered that the mortgage wasn't paid? Wasn't your wife seeing the bill every month when she paid her share?

the house being foreclosed is the house the MIL lives in , not the FL condo

the MIL pays the bank directly as if it was her own loan, and she decided to just not pay anymore to be a "you know what"

So if I have the facts straight:

1. Mother-in-law House in NJ. Mother-in-law is the sole name on the deed. Wife is the sole signature on the mortgage of the house. House is being foreclosed.
2. Primary residence in NJ, current on mortgage. In both your name and wife's name on deed and mortgage.
3. Condo in FL. Deed is in your name, wife's name, and Mother-in-law's name. Mortgage is only in your name and wife's name.

So in summary, your Mother-in-law has her name on the Condo (1/3 ownership with no mortgage responsibility) and her name on the Mother-in-law house (100% ownership with no mortgage responsibility).

1. How did the bank give your wife a loan for the NJ mother-in-law house if she's not on the deed?
2. How do you plan to sell the FL condo without involving your MIL? She does have 1/3 ownership with her name on the deed. You won't be able to sell it without her cooperation.

NotSoHard said:   So if I have the facts straight:

1. Mother-in-law House in NJ. Mother-in-law is the sole name on the deed. Wife is the sole signature on the mortgage of the house. House is being foreclosed.
2. Primary residence in NJ, current on mortgage. In both your name and wife's name on deed and mortgage.
3. Condo in FL. Deed is in your name, wife's name, and Mother-in-law's name. Mortgage is only in your name and wife's name.

So in summary, your Mother-in-law has her name on the Condo (1/3 ownership with no mortgage responsibility) and her name on the Mother-in-law house (100% ownership with no mortgage responsibility).

1. How did the bank give your wife a loan for the NJ mother-in-law house if she's not on the deed?
2. How do you plan to sell the FL condo without involving your MIL? She does have 1/3 ownership with her name on the deed. You won't be able to sell it without her cooperation.


She is extremely difficult but the entire reason for the sale is to clear this debt from our names, believe me, I would love to keep it and buy my MIL out, but there's just no funds to do so.

I plan on speaking with an attorney next week, but I'm getting conflicting answers on when my MIL's house forecloses and my wife's credit is trashed, can they pursue my wife's assets(our house)?

They can do whatever they want. And most likely it will maybe be legal. Consult with a legal beagle in your locale.

talk to a lawyer now, you need serious legal advice

tried for refi - was told debt to income ratio too high - FML! I'm trying to consolidate debt !!! WTF!!!???

OP, if the bank won't allow you to do a traditional refi, find out if you qualify for any modification or hardship based refi programs as a result of your significant reduction in income, both from your change in employment and from the loss of your "tenant" income from one of your "investment" properties (MIL's house).

And I don't know if Adamsmart78 was serious or not, but don't discount this advice.

It looks I will be able to get an FHA loan but they need me to close out the cc accts after they write the payoff checks for them before the loan closes though - I would be able to keep(for the most) part, my credit intact... but my wife's will still be destroyed.... wondering if I should just go BK and the heck with it...american way, right ;^O

do the right thing-file bk and stiff everyone.
Hopefully lightning will strike the MIL and take that issue off the table.

Yikes OP - do not envy your situation. Good luck and keep us posted on what happens.

1yardaway said:   It looks I will be able to get an FHA loan but they need me to close out the cc accts after they write the payoff checks for them before the loan closes though - I would be able to keep(for the most) part, my credit intact... but my wife's will still be destroyed.... wondering if I should just go BK and the heck with it...american way, right ;^O

which lender, and can they force you to refrain from opening new accounts?

i know you're joking about it, but bk is still not a good option. you'll still have good history, and starting over with no open accounts is better that 7 years of purgatory.

Skipping 12 Messages...
alamo11 said:   You are an idiot OP. Cash for keys the MIL, and make a deal with the lender to do a HARP refi and rent the place out. BK is a last resort.

im not an idiot, I'm just in a really difficult situation and you're a moron for saying that

the house my MIL lives in that is in my wife's name hasn't been paid in 2 years, therefore my wife's credit is already screwed. I have 35k+ in CC debt on top of that...

BK is not a logical choice?

thanks for your helpful advise



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