Expert: Dick Dennis - 1/5/2006

Question
I am the Owner of a home in California that went into foreclosure.  During this time I was put on a repayment plan by my mortgage company Country Wide and made all the payments to avoid losing my home.  During this time the IRS, EDD,State of California, Wells Fargo Bank and another misc lien was put on my property.  All of this due to Identity Theift.

So I have a total of six liens on my property.  I just had my loan reinstated and the mortgage company is rasing my monthly amount to $3700.00 for the next 30 years which I don't understand how when they modified my loan it went up so much.

So my question is if I decide to let the house go will the mortgage company have to pay off all the liens before they can take ownership of the home if I decide to let it go back into foreclose and go though a foreclosure sell?

I am so angry because I did everything to save my house and the mortgage company is taking me for everything I have.  When they did a modify on my loan they increased my interest rate and then redid my loan for another 30 years which I don't understand how they could do that.  So I would like an answer to my question in order to determine what I will do with the property.  Right now I can't sell or refi do to the large amount of the liens on the property, I am gaining equity in my home but no one will do the loan in order for me to pull cash out or refin at a lower interest rate.

Answer
Of course, Joelle, I don't know what you did (other than not make your payments) with the lender, but a lender is not permitted to arbitrarily raise the interest rate on a mortgage (trust deed) without your permission (with your signature). They cannot raise the interest rate unless they got you to sign a new trust deed and note. If they did, then they must have shown in the papers that the monthly payments were to be $3700. If not, then I strongly suggest you contact a REAL ESTATE attorney and tell him/her your story.

As for the other liens, if you owed money to the IRS, then they would have put a lien on your property. The same thing goes for the EDD and state of California. If you had a second mortgage or loan to Wells Fargo, then they would also put their lien on the property.

In any case, the first trust deed WIPES OUT all the other liens when they foreclose, except the IRS lien. They have up to 120 days after the foreclosure to decide whether they are going to take possession of the property. They do that if they feel you have enough equity to satisfy their lien. If you don't then they let the first trust deed holder foreclose and their lien against your name remains.

If you feel those other liens are not warranted, that is another reason why you should talk to a REAL ESTATE attorney.

With your credit record and the way interest rates have been slowly rising, I doubt very much you would be able to get a new loan with a lower interest rate.

You have another problem: If you decide to let the house go back to the TD holder, the IRS will demand more from you because you have what they call "mortgage relief" when you no longer have to pay what you originally owed.

Now you see why you should talk to a real estate attorney. I do wish you well.

Dick Dennis      dixiedee13@aol.com