So I have a question about equity loans.

Lets say you own a house, it is completely bought and paid for. Let's say it's worth 200K.
You take out an equity loan in order to do remodeling. The loan is 50K.

So lets say you default on the loan and the bank takes the property, and immediately resells it. Would you be entitled to nothing or would you be entitled to say $150K of the sale value?

 

You get nothing. They get it all.

 

First, they will most likely auction it and it will go for less than market value. Then they have "additional costs and fees" that will be deducted. You are entitled to what remains after their expenses and the principle and interest are deducted. Probably not very much.

 

LOL... a bank repo's your property and you expect to get cash back? Maybe in fantasy UC-Land, but that's about it.

Your only chance to recover ANY cash is to sell it dirt cheap ASAP to at least make SOME money (hopefully) and stay away from that nasty repo mark on your record. That hurts.

This is what makes the pre-forclosure real-estate market so profitable, and why you see "we pay cash for houses" signs, that show "Flip this house", etc... one persons pain in another's pleasure.

PS - if your in default on that 50K loan for your 200K home, I'd be happy to purchase the home for 75K. That puts you in the good with 25K in your pocket. Sweet deal, aye?!!!

 

Couldnt have put it any better...


Banks may put up nice signs in thier branches that say "We love you oh Mr. Customer person", but that all changes if you dont pay. Then we pretty much will drill you in to the ground.

 

Laugh it up all you want but this story involves a senior person and could have easily been prevented. It's not funny. But nonetheless, thanks for the information, I have no experience with such loans myself.

 

Its not funny, it happens to a crap load of people each and every day. This whole sub-prime mortgage crisis is some nasty stuff and biting a lot of people in the ****. Sucks to be them, and until the bank actually takes the property its not too late. Well, almost.

 

okay, if by senior the person is older than 62 he can get a reverse mortgage and pay off the equity line. The reverse mortgage would not require he make payments but will acrue interest that makes the mortgage grow. His heirs, or when the house is sold will require paying off the reverse mortgage but this could prevent a foreclosure and losing the property.

There are limits on the amount a house qualifies for on a reverse so this may or may not help.

 

That is where the senior moment comes in. Nobody had a clue anything was wrong until the house was already sold by the bank. Sheriffs already evicted. This is a relative of mine and not a single person in the family knew there was a problem or it would have never been a problem.

 

wow what a shame

unfortunately many people don't realize their house is on the line when they have an equity line

 

I understand where you are coming from, the issue that arises(since I do this for a living) that it takes atleast 90days of delinquency in order to even begin foreclosure legal actions, and another 30 to even have a Mtg. become marked "foreclosure" on a credit report or with the local govt.
It sounds as though someone thought they were getting solicitations and throwing them out and not opening anything.
Thats why no matter what, you really should always open your mail. It takes 4 months to get a home foreclosed on, in the wide spectrum of things.

But yea, its really sad because if they own the home F/C and then only take a 25%ltv loan they could easily have sold the home for 1/2 what its worth and still make $$.

 

Hey, don't sweat it. I'm sure Kobe's (tm) parents would be glad to have him back in the basement....if not, I'm sure Raoul's parent's would take him in as a favor.

 

I worked for TD Bank forever. I also worked in the default loans dept aswell. For an equity loan, they can repo but it is really expensive to repo a house. Plus its the last thing a bank wants to do!! A bank does not want to put you out on the street. But if left with no option then what happens they can repo the house sell the house and recover the $50k, the remainder $150k must be returned to you. Techically the loan was only for $50 not $200K.

Most of the time the bank is very cooperative and will work out arrangements for payments. If this someone is falling into financial hardship they should let their bank know ASAP. A bank can and will most of the time freeze your interest rates and will reduce your payment. The way how a bank sees it is like this, something is better than nothing.