Question by Pat: Can a mortgage lender pursue an owner that is not on mortgage for a deficiency balance?
I purchased a residential investment property in Florida with my former boss. The mortgage is in his name only but I am also on the deed. He wants to let it go to foreclosure. Can the lender come after me for the deficiency balance. Will the foreclosure show on my credit?
Best answer:
Answer by Replace
Yes to both.
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I would think that since you are not on the loan paperwork, the foreclosure would not show on your credit. I don’t know if the lender can legally pursue action against you, though. You might be better off asking a real estate attorney or other financial expert.
The house is collateral so they can foreclose on the house. If your name is not on the loan then I do not see a possible way they can put it on your credit or come after the balance. Your boss is the one they had the deal with, not you.
I hope someone better qualified answer this, but it doesn’t sound like they can get you, you didn’t sign for the loan.
No. You lose any equity that there may have been on the property. If you want to keep the property, they would require you to pay them off (either in cash, or refi it into your name)…and fast. Ultimately, if it is just your boss on the loan, he is the only one the lender can go after. They don’t have your SSN, and can’t hit your credit without it. They have you sign the Deed so they have proof that you, as partial owner, are aware that a lien is being put on property you own. They may send you notices (since legally, you are part owner) and may try to get you to foot the bill in a desperate attempt to avoid having another house on their books, but don’t fall for it. They don’t have any recourse against you. You will basically just walk away from the property with no benefit or consequence.
Talk with a lawyer. Usually No. However, . . . talk with a lawyer.
The answer is NO. A mortgage is a “contract” stating that in the event you do not pay the debt, the collateral (the real estate) will be seized by the lender. You were not a party to this contract.
A Deed (normally a Warranty Deed) is a legal document showing ownership. It does not obligate you to any debt.
You were most likely put on Title after the mortgage was already placed on the property. By not signing the mortgage “contract” you did not obligate yourself financially for the debt.
Therefore you will not receive a foreclosure on your credit report, nor will you be liable for a deficiency judgment or 1099-C Cancellation of Debt Income.
Mr. Financial Freedom
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