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by tecwmn on May 7th, 2007

tecwmn

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My fiance owns a house that he can't refinance and he can't sell it without a huge loss (many foreclosures in his area). He wants to buy a new house and then let his old property foreclose. If we buy a house together can the bank put a lien on new home?

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Answers. 9 helpful answers below.

  • by moondawgie on May 7th, 2007

    moondawgie

    DO NOT buy property with this man. If he is seriously considering letting his house go into foreclosure, that shows extremely bad judgement. That foreclosure will haunt his credit rating (and you, if you're involved) for years and years.

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  • by Anonymous D on August 28th, 2008

    Anonymous D

    Has he thought about renting out his current house?

    My husband and I wanted to take advantage of the foreclosure prices out there to get a bigger house while we could afford it. We already owned our house though and knew it'd be hard to sell it for what we owe on it in the current market. (especially since the house next door is about to go into foreclosure).

    We spread the word with friends, family, coworkers and neighbors that we wanted to sell or rent our house. Without even getting an agent involved, we were able to find a couple my husband works with that wants to lease to own our house.

    They'll be paying enough rent to cover our mortgage and will have the option to buy at a preset price in two years. Now we are free to buy our bigger house and only have our new mortgage to worry about without loosing any money on our old house.

    Maybe something like this could work for your fiance? He could always put the word out and see if anyone is interested before taking such a drastic step as allowing the home to go into foreclosure. That should be a last resort for all the reasons already stated.

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  • by Kenny B on February 21st, 2008

    Kenny B

    Probably not but he will destroy your credit along with his. If he can do it on his own (without your name on the loan) and actually makes the payments on the new house, then fine. Don't be dragged into a sinking ship.

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  • by keithold is a prodigal bagger on May 7th, 2007

    keithold is a prodigal bagger

    G'day Teowmn,

    Thank you for your question.

    If they foreclose on the old property, they may seek to recover money from your fiance to pay the debt if they do not recover what they owe from the property. This will mean that you would probably have to sell the house together. As well he and you would have bad credit records for 7 years even if they do recover. His inability to refinance shows that he already has a bad credit record so they are unlikely to give you a loan in any case.

    Your fiance would be well advised to speak with his bank and see what he can work out.

    If it was me, I would take advice from a lawyer.

    I have attached sources for your reference.

    Regards

    Reference
    Wikipedia Foreclosure
    http://en.wikipedia.org/wiki/Foreclosure
    WikiAnswers
    http://wiki.answers.com/Q/Can_a_foreclosure_be_removed_from_your_credit_report_after_the_property_has_been_taken_back
    How to save your home from foreclosure
    http://www.credit.com/r/tidbits-save-your-home
    Foreclosures
    http://iparenting.com/resources/articles/foreclosures.htm

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  • by Morg the Army wife on May 7th, 2007

    Morg the Army wife

    Wouldn't you lose more money foreclosing than just selling?

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  • by lilspoon on August 31st, 2008

    lilspoon

    I work for a giant FC firm (for the bank side no less). I am no lawyer and this isnt legal info but my opionio is DONT DO IT. It will be awful for your credit. And the new bank will look at the fact he owns another house at the moment and make sure his income can pay for BOTH houses at the same time before they will give him a loan. And they will add a ton of points to the new mortgage for a second home. If he is in default on the first loan (since he is letting it go to FC) he will most likely not be able to get a new loan. Dumb idea.

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  • by Yarnlady is happy every day on February 27th, 2008

    Yarnlady is happy every day

    It might be possible to arrange a 1031 exchange. He needs to see a foreclosure recovery specialist immediately. There is help, but you have to ask for it, the sooner the better.

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  • by Cyanotic Wasp on August 31st, 2008

    Cyanotic Wasp

    I don't really understand the basis of this Q. If he can afford to sell at a loss, and absorb that loss without damaging his finances, then he should do so. That won't hurt his credit. If he allows the bank to foreclose on the house, then he not only loses all of the equity he has in it (assuming the value has dropped below what is owed on the mortgage), but his credit will be ruined, too. And this is important because in the current lending environment even good credit risks are finding it difficult to obtain financing until housing prices settle and find a bottom.

    If he attempts to buy a new property now, then he will still have to disclose the existing mortgage. Even if he is current on his payments, unless he has enough income to realistically support two mortgage payments -- and the first house is realistically still worth the value of the current mortgage -- no lender will extend a new first mortgage on another house. And don't think that lenders won't scrutinize the facts of the first mortgage and property, too.

    As far as your actual question: "can the bank put a lien on new home?", well, that's what a mortgage *is*, after all. A mortgage is a lien (a debt-based claim) based on the value of the property.

    I think that with the misunderstandings that you both seem to have about mortgages, foreclosures and finance in general, you should be looking for some good professional advice in your area.

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  • by dr james on August 6th, 2008

    dr james

    no, they cant.

    you would have to put the house up for sale and buy the new house before foreclosure appears on your credit report.
    im not advising this, but it can be done.

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