Personal Finance

Help.. Possible Foreclosure. Need Advice

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  • Nov 25th, 2013 9:50 am
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[OP]
Newbie
Nov 21, 2013
1 posts

Help.. Possible Foreclosure. Need Advice

First off I would like to say I have never been in a situation such as this. My wife fell ill and our income was affected negatively for a period of time which put us in a poor position financially.

We went over 6yrs before missing a mortgage payment. Now we are in some trouble and have received just awful advise from day 1.

We are $25,000 behind in payments. There is lots of equity in the house so we thought getting a second mortgage to play catchup would be no problem as there was lots of term left in the mortgage.

The bank who holds the mortgage bullied our first mortgage broker and second, telling them that we could not catchup and reinstate the mortgage, rather we had to pay the full amount owing by way of getting a new 1st mortgage.

After a long battle and several lawyers they finally abided by the law and provided us with a payment amount to catchup the mortgage. Up to that point our first mortgage broker was seeking a new first mortgage, they never thought to simply find a new 2nd mortgage, since they bought into the bank's bully tactics and did not push the option of simply paying the arrears with a new 2nd mortgage.

Now the monkey wrench thrown into this whole mess is that only now were we informed that there are a couple personal writs filed against us from credit card companies who were defaulted on during the period where we were unable to make payments.

Now all we are seeking is that the writ holders temporarily lift the writs for the purpose of filing a new 2nd mortgage in to cover the arrears of the first that is behind.

The reality is that if this home foreclosures, the writ holders will receive nothing. So we are just asking them to keep things status quo while we work through these issues. If they allow the mortgage to be executed by lifting their writs, they we will be able to keep our home while we work to properly settle these writs.

So far we have asked the writ holders (Bank credit card holders) to just lift the writ for the purpose of us to insert a second mortgage so we do not lose the house and to their benefit so the house does not go to foreclosure where they will risk losing everything.

We are willing to offer a nominal fee for their services, but if things get whacky, we are also prepared to walk away and file bankruptcy as nothing will be left for anyone.

I do appreciate your help.

I would not wish this process upon anyone.

Thank you for help, feel free to ask for further clarification!


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23 replies
Deal Addict
Apr 4, 2013
1274 posts
404 upvotes
Has your wife returned to work? Is your income level still lowered? Based on the information that is provided, you should be able to get a second mortgage to consolidate your credit cards and bring your first mortgage up to date. If your income level has not returned to normal, you may be looking for a private lender to fund the second mortgage. What province are you in?
Deal Guru
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Jul 7, 2007
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sell the house. pay off the debts, and start over... Only thing you can do.
Deal Addict
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Jan 19, 2005
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kingofwale wrote:
Nov 23rd, 2013 7:44 pm
sell the house. pay off the debts, and start over... Only thing you can do.
+1 If one can't afford the payments, one can't afford the house. No one is entitled to own a house. Sell the house and have a peace of mind. A wise proverb: "The rich rule over the poor, and the borrower is slave to the lender."
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Deal Addict
Jan 3, 2009
1469 posts
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sell the house asap, use contained equity to pay creditors. not that difficult. there is financial freedom in renting while your incomes levels are uncertain. the longer u stay trying to resist creditors, the more stress and the deeper you get into a financial black hole. you are already in trouble from a credit perspective for the next 7 years.

how much equity in the home? and how has property value changed?
Deal Addict
Jul 11, 2010
1142 posts
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Toronto
First do not consider bankruptcy, only as a last, last resort. You need to look at your situation before selling to decide the best way to proceed. Is or has your wife gone back to work and has your income gone back up again? If so then getting a second mortgage might make sense. If you can get a long term second , great, as long as it is not interest only. If the only second you could get is from a private lender you need to think it over. They are usually interest only and for only 1 or 2 years as the lender usually wants their money back. Also there would be several fees with it paid up front from the agreed amount. If you wife is not going to work in the near future and your income level is not going back up then selling might be the better option as you can pay everything back and start to rebuild your credit again. This kind of situations happens all the time so carefully consider your options. If they were to put the home up for sale under foreclosure you have the right to stop it by bringing the mortgage back up to date, as long as an accepted offer is in.
Doug Boswell
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Sr. Member
Aug 29, 2004
871 posts
145 upvotes
Other posters have given really good advice.

You do mention "writs" from CC holders, and say that is stopping a 2nd mortgage. Are those registered on title? I'm going to guess they are, as you mention they won't get anything if a foreclosure occurs, which leads me to beleive there isn't a lot of equity in the house, at least not enough to cover other amounts owing.

Charges registered on the property won't stop you from getting a second mortgage, but they need to be discharged (by your lawyer) at the time the transaction funds. They will (obviously) reflect poorly from a credit quality standpoint, but once you are at private money credit quality equity is the only thing that matters.

Seems like the best option is to sell, cover off what is owed if you can, and rebuild, as others have stated.

I hope your wife is doing ok now.
Deal Addict
Aug 12, 2004
4116 posts
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Calgary
Credible1 wrote:
Nov 22nd, 2013 9:17 pm
We are willing to offer a nominal fee for their services, but if things get whacky, we are also prepared to walk away and file bankruptcy as nothing will be left for anyone..
I want to point out that in Canada, bankruptcy only eliminates unsecured debt. A mortgage is considered a secured debt and will not magically disappear even if your house is foreclosed on and you declare bankruptcy. Talk to a lawyer before ever considering the B word, which I think in your case is the worst possible option and will not fix anything.

From the sounds of it, to be not only 25k behind in payments but also defaulting on credit cards means you have been living well beyond your means for quite a long time. That doesnt happen in just a month or two. The time to react is well past due.

You need to be realistic. You can no longer afford the house (it is not mentioned if your wife is better now or working again) and you knew this for quite some time. You need to sell, no ifs and buts. You are pretty much at the point where the bank will decide for you, a 2nd mortgage will only help you very temporarily. If you have built a lot of equity, you will come out ahead after selling (your house would surely be higher priced after 6 years). Either buy a smaller place or rent, investing the equity remaining to build back up.

You can still live very comfortably, but you need to eat up your pride, take the hit, rebuild. There is no shame in recognizing current financial limits.
Sr. Member
Jul 19, 2004
903 posts
228 upvotes
Vancouver
Great advice firebot, hope OP can change his attitude and listen to it.

BTW, if OP sells the house and gets cash (after paying out his mortgage) would he not have to pay back his unsecured debt anyways when he files for bankruptcy?
Deal Guru
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Nov 18, 2005
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Kingston
OP, unless your income level has increased significantly from when you got into this problem, getting a second mortgage is not a good idea. If you still can't make the payments on your first mortgage how can you also hope to make payments on the second mortgage? I agree with others that it is time to sell and downsize to something that fits your payment abilities.
Deal Addict
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Jun 26, 2012
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I would sell the house, hide the money then file bankruptcy.
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Jun 2, 2009
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What are your mortgage payments? It sounds like you haven't paid for almost a year, it's mind boggling really that at 6 months of non payment you didn't consider to sell the house and pay your debts. Stop trying to get a second mortgage, because if you haven't paid your bills in a year what is different now that you will be able to pay them? And what's to say some other catastrophe won't happen where you are down to one income and again can't pay your mortgage...very difficult situation I understand but before filing bankruptcy and letting the house for close sell it I'm sure in 6 years it must have gone up in value?
Deal Addict
Sep 23, 2009
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HeavenLeigh wrote:
Nov 24th, 2013 7:51 am
What are your mortgage payments? It sounds like you haven't paid for almost a year, it's mind boggling really that at 6 months of non payment you didn't consider to sell the house and pay your debts. Stop trying to get a second mortgage, because if you haven't paid your bills in a year what is different now that you will be able to pay them? And what's to say some other catastrophe won't happen where you are down to one income and again can't pay your mortgage...very difficult situation I understand but before filing bankruptcy and letting the house for close sell it I'm sure in 6 years it must have gone up in value?
Well, it sounds like they decided to live off of credit cards. And that their current situation of: First Mortgage + Arrears on First Mortgage + Credit Card debt + Other Debt = More than the assets they have (which may just be the house at this point).

It sounds like the strategy at this point is to re-mortgage the house at a higher amount and use the money of a second mortgage to pay off the arrears of the first, and to pay off credit card debt.

As mentioned previously, people in Canada can not simply walk away from Mortgage Debt. This is a big difference when compared to the US and its recent housing collapse.

So, +1 to Firebot's post. But a lot of people won't sell their house and become renters because they don't want to lose face in the circle of friends. It's probably that same stubbornness that lead to the current situation with the credit card debt.
Deal Addict
Nov 1, 2009
2640 posts
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Yeah agreed with the others. Selling the house and paying off the debt is probably smart.

Thankfully for you, the housing market is pretty high right now. Better situation than if it was not.

Perhaps move a bit further away and get a unit that has more upside in the next few years.
Deal Addict
May 2, 2007
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jeremyhalifax88 wrote:
Nov 24th, 2013 7:47 am
I would sell the house, hide the money then file bankruptcy.
Wow. Your a great asset to site. Suggesting an illegal action such as fraud.

There's plenty of court cases where this has happened and the person is worst off than where they were before. The jail time was the least of their worries.

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