Foreclosure question.?

Question

My fiance and I want to buy a home in NC where we currently live but I have a home in FL that has been on the market for just under 2 years and will not sell. My mortgage company refuses to let me do a short sale/deed in lieu of foreclosure because I am not in default.

My question is this. If WE buy a home in NC and I foreclose on MY home in FL after we have purchased the home in NC, can the mortgage company that holds the deed to the home in FL put a lien on the new house in NC? I know that SC law allows that. I own the home in FL by myself and we would buy the home in NC together.

Please, only Real Estate professionals, lawyers, etc. No guessing by random people.

Answer 1

I'm not a lawyer, so this isn't legal advice. For legal advice, you need to talk to a lawyer. (However, I am a licensed Realtor, so this is more than a guess.)

The mortgage company that holds the deed to your home in Florida can't put a lien on the new house in North Carolina. The mortgage is secured by the Florida property, not by your possible North Carolina property.

However, you could still run into all sorts of problems. Lenders generally (and particularly in the credit card field) have started including provisions that say that if you're delinquent on ANY payment from ANY lender, they have the right to raise your interest rate, reduce your credit, etc. I don't know your lender, so I don't know if the mortgage you hope to get in North Carolina might contain any such provision.

Further, though it may not matter, the Florida lender might become even more difficult to deal with if you purchase the North Carolina property. Lenders are more flexible when dealing with owner-occupants. Your Florida property, however, would be considered a second home when you buy the North Carolina one. I've heard of lenders requiring investors to pay money in order to get the lender of one property to permit a short sale.

Have you asked the Florida lender for forebearance? Or for a restructuring of the loan conditions. That's not a short sale or foreclosure, just a modification of the terms of the loan.

One technique you might consider for the North Carolina property, if you buy it. Immediately move it into a land trust. You and your wife would be beneficiaries of the land trust with power of direction. However, to help shield the trust, add another beneficiary with at least 10% ownership. Someone unrelated to you or your wife. The trust can be structured so that, when you sell the property, the 10% owner doesn't receive any profit or benefit. But putting it into a land trust will shield the property from suits, liens, and judgments. More info at http://www.landtrust.net

However, your best bet is to check with a real estate lawyer licensed in North Carolina.

Answer 2

Good luck trying to get lender to write a note on the NC property while you still have the FL outstanding, a bridge loan is the way it’s usually done but it would not work in your case since the bridge loan is tied into both properties