May get trailer repossessed????

[mnrealtormom]

Hello all,
I am looking for more info on what happens if a mobilehome is repoed, I live in Minnesota and I am realtor, I am researching what happens for one of my clients, they already bought a new house and have their doublewide for sale with me, and and are very worried they wont be able to keep up two house payments much longer, as wife cant find a job to help with payments...They currently pay $170 for lot rent plus the utilities on it, and $500 house payments and due to the large APR they charge for trailers they still owe what they paid for it 3 years ago, Total of $53,500 its listed for $57,000 and not worth that... I have read some articles on this, and think they would owe whatever is left after lender sells it, are they responsible for lenders lawyer fees too??? Help can you tell me more about this process, maybe I can scare them into not letting it go back, are they any easier on you if, willingly give it back?????? how long as you notify lender that you wnat to give it back, doe sit take for them to put up for sale or auction it, do they need to miss so many payments first????? I would think getting a trailer repoed is alot like when a car gets repoed sense both are considered personal property and not real estate????? Any advice????? How does it happen?????

[rmurray]

First..every state has different rules..

Second..as a "professional" real estate person...you should have told them to wait to buy until this home was sold..second..giving more bad advice suggesting a repossession might very well add to your liability...I am sure the MN Real Estate Board (or what ever it is called)..frowns on unethical advice from one of its licensees..

Third...Every state has different rules about repossessed homes..and one should get legal advice from their attorneys not you or me....

Generally...A voluntary repossession is nothing more or less than a repossession...except the losses your client will be responsible for will be lower..

Most often lenders will not repossess the home until it is over 30 days late...then there are notification rules that might take another 30 to 60 days...Once repossessed the lender might try to sell the home for a few months (all the while your client is still responsible for the interest which is being added back to the loan)...After a good attempt to get retail price..is the home is not sold they will auction it off to the highest bidder...When the home is sold..retail or wholesale..they will deduct the net proceeds from the balance your client owes...Your client will be responsible for the rest..

What happens next is where it gets to be related to state law...and individual lender policy...The lender can demand payment...the lender can sue for payment and take a judgement..(as you know..most state do not allow the forced sale of the home you sold them..but they can put a lien on it)...The lender might sell the account to a collection specialist firm...they will have all the right of the original lender...Of course the credit files of the consumer will be trashed..and they will pay more of future credit..insurance (their homeowners might not get renewed because of low FICO score)..car insurance will cost more...

With judgements..there are many collection tactics that can be taken..from passive waiting..to aggressive collection..which in some states can even mean garnishee of wages..

The original or any holder of the debt can make the decision to write the debt off of profits as a loss...but in this case they will have to send a 1099 to the IRS for the amount of the loss..The IRS considers forgiven debt as income..the IRS will bill them for the tax obiligation...penalties (because they did not file this "income" on their return) and interest...You client could easily end up owing the IRS over $10,000...And as you know..they can take the home they now live in..

Worse part of all this..is that it can take years..these lender have years to decide what to do..then the process..such as the IRS stuff can take years more..

If I was you..I would be very careful...you may already be liable for bad advice...more could make it much worse..

P.S....You mentioned that the payoff is as much as the original loan because of the rate...NOT TRUE EVER..All loans in the industry in the last 10 years are simple interest long term loans...It is true that all long term loans have very small principle payments at the beginning of the loan (just like the mortgages you are dealing in)...Also..any late charges..late payments (additional interest on the payments that are late)..unpaid insurance..and accrued interest since the last payment will add to the balance..which in three years has little principle paid...BUT..all this would be true of any mortgage..even on stick builts..seldom will anyone have much equity after such a short term on a home..

[Gil Davis]

First, recommending that anyone allow a repossession may make YOU as a realtor liable for the loss, which can be substantial. I am a Realtor in Calif., but the ethics are universal. You should be looking at means of cutting your sellers losses. Can the home be rented? How about a Lease w/option? If the home is only three years old it should have a decent re-sale unless "trashed" by the seller.

Unfortunately, it may be your attitude that adds to the problem. I've not heard a 3-year old Manufactured home called a "trailer" for some time.

I would recommend you consult with your broker about alternatives and what you should and should not do, especially when it comes to "scaring" clients.

In the end, it may be possiblem to do a "Short sale" on this home, with the Mortgage holder's concurrence.

[concerned]

Everything that I've read is correct. One thing your customer needs to keep in mind the LAST thing this lender wants is to Repo this house. They, as a laender, are likely going to have to refurb this house and sit on it for a long time before it sells and they will more than likely take a loss on the home. In most cases the customer will be liable for deficiancy balances. However on a chattel loan they are hard to collect due to the way the security interest is placed on a chattel mortgage. I would suggest that your customer tell the lender what the deal is and they will probably have to let the home go back. The lender will probably bend over backwords to help them on financing. This is your part Mr./Mrs. Realtor... you need to find someone willing to make an offer on the home. Even if the value doesn't add up. You may be surprised at what the lender will except to avoid repo.