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Foreclosures and such

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Anyone know what usually happens with foreclosures and deficency's or foreclosures and 2nd mortgages?

I did an 80/20 investment purchase that is going down hill fast.

It doesn't help that the seller lied and gave me fake leases, which inflated my income (lenders count 75% of the rental income as my income, with the property full, I was golden, with 3 vacancies, I wouldn't have gotten the loan)

Could I disupte this loan as fraud, which it was? Keep in mind, the seller gave me the leases. His signature is at the bottom, not mine, and I had no idea there were vacancies until the deal closed, and yes the vacancies happened before it closed, and I wasn't notified until after.

I don't want a 1099, as that would result in quite a hefty tax bill, and I don't want a deficency judgement either.


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You probably aren't fully explaining your situation.

You obtained a purchase money mortgage for the rental property, did you not?

You signed the mortgage over to the lender, did you not?

It wasn't this 'seller' that incurred the debt, correct?

If you fail to make the payments on the mortgage, the lender can foreclose on the note and mortgage.

And in Texas, it's non-judicial foreclosure, which is the worst kind for the debtor.

If the seller advanced false information to convince you to buy and the lender to lend the purchase money mortgage, you can sue the seller for fraudulent inducement for your damages. You should try to talk to attorney. If there is a deficiency judgment, the lender can sue you for it OR they could go after this seller too because he was the source of the fraudulent information.

See if you can work out a forebearance arrangement with the lender to try to slow down or stop the foreclosure. Try to get the vacancies rented to have enough cash flow to pay the mortgage. Word to the wise, you don't buy rental property unless you have sufficient cash flow to pay the mortgage in bad times when you have no rental income.

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I don't know what I am leaving out.

I did get purchase money for a rental. I did sign the mortgage. The seller didn't incur the debt.

My question relates to mortgage fruad. Putting false info on a mortgage application. The entire basis for the loan were the leases, which contain the seller's signature, not mine.

I never would have qualified for the loan had the seller not said they were fully rented and provided documentation to support that. After the deal closes, surprise, surprise, the properties aren't fully rented.

I told one lender and they simply transferred the loan.

I have now contacted the mortgage originator. If none of the lenders care about mortgage fraud, the I guess I'll have to deal with that, but it seems if someone lies (inflated appraisal, inflated income, etc...) a lender *should* be concerned about that.

They can foreclose on the property. I have 0 equity in it, and really only care about my credit rating at this point and preventing future liabilities.

I have talked to several atty's and they passed on the situation. I settled with the seller/agent for 3k.

One property is pretty much wasted with mold damage and such. The other has 2 units on the market, 1 rented, and 1 that needs repairs.

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That's too bad that no attorney wants to help you. I am surprised. It's likely you have CoA against this seller.

Fraudulent inducement is a CoA to rescind a contract.

Is it a defense to a foreclosure? It would be if the lender committed fraud.

Keep shopping your case around to attorneys possibly to hire an attorney or just to simply obtain a legal analysis of your case.

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