What happens?

[wildbil]

I have a question that sounds really dumb. If you own a piece of land free and clear and you lose your job and you cannot pay your mortgage or student loans. (land is vacant, separate from house). I know they would foreclose on your home, but would they take you land? what happens in a situation like this? (starting to happen to some friends of mine)

[muldoon]

Is the land collateral on the house loan? (or any loan)  That's pretty common for the "build on your lot" builders where the house is built on the land you own free and clear.  In that case yes they would take the house and the land that backed the loan.  (I know thats not exactly the question you asked but the relevant part is to determine if the land is used as collateral in any way).  For student loans, they never go away; even in bankruptcy the government backed student loans never go away.  They will take your tax refunds to cover it but I don't believe they can seize assets over non-payment. 

property taxes also must be paid or they will seize the land and auction it off. 

credit cards debt is considered "unsecured" debt because again they cannot seize any assets to collect the balance. 

[peternap]

In addition to what Muldoon said...if the land is indeed separate and not encumbered by your mortgage, and the mortgage goes into default, the mortgage can file suit for a deficiency balance. (They didn't get enough at auction to cover themselves) This doesn't happen often because the mortgage company will bid on the property at their cost.

If they did get a judgment for a deficiency balance, they could go after all your assets including the other land.

It is not a bad idea when you purchase land to get away from it all, to form an LLC and put it in that name. There are some other perks also like reduced liability, etc.

[harry51]

I hope this question doesn't amount to hijacking the thread, but since the subject of asset protection has come up, there's another method called the land trust or Illinois land trust out there. Does anyone here know the pros (if any) and cons of such an arrangement to hold real property?

[wildbil]

If what you guys say is true, Banks are going to own this entire country after a while.

If the Econ gets any worse, I may decide to not buy any land; just move onto my parents 40 acres and help them pay it off. I've known so many people in the area who are completely out of jobs right now.


I read an article about how the US could "Forgive" all debts and that it would completely revive a lot of the world's economy. Are they talking about individual debts or just for the wall street and banking industry?

Oh and another question...What if these financial institutions fail? do we still owe them?

[peternap]

Oh and another question...What if these financial institutions fail? do we still owe them?

You do! Their assets, including your mortgage will be sold to someone else. The simple fact is, the place you got your mortgage, probably doesn't own it anymore anyway. They get bought and sold like assault rifles at a swap meet.

[glenn kangiser]

Some banks had bought and sold so recklessly they lost track of and were unable to prove that they owned property, causing some to refuse payment and get away with it, I heard or read somewhere.

[Homegrown Tomatoes]

After the dealings I've had with Wells Fargo in the past week, or more specifically in the past few days, that doesn't surprise me one bit.  Their appraiser didn't even have an accurate description of the town or the property that we're buying, though he did have the address correct.  He said the place was southwest of town, when it is due east.  Not only that, their loan broker "missed" the fact that though it is not a "declining market" that it is a rural property in an area that is less that 25% developed, and therefore "high risk" and the DP has to be doubled.  We also had something that came up in our credit report for a bank that we haven't had an account with in more than 4 years.  According to it, we owe them $12 on something.  We called.  We even called their regional managment.  They have no record of us owing them anything.  In fact, they have no record of us at all.  So we told them to get it off our credit report.  They told us that they couldn't do that, so we called the credit reporting agency, and they said we had to get the bank to take it off.  The bank says it is not there, and that we don't exist.  So we asked them to take off the $12 that isn't there from the account we don't and never had.

[considerations]

After the dealings I've had with Wells Fargo in the past week, or more specifically in the past few days, that doesn't surprise me one bit.  Their appraiser didn't even have an accurate description of the town or the property that we're buying, though he did have the address correct.  He said the place was southwest of town, when it is due east.  Not only that, their loan broker "missed" the fact that though it is not a "declining market" that it is a rural property in an area that is less that 25% developed, and therefore "high risk" and the DP has to be doubled.  We also had something that came up in our credit report for a bank that we haven't had an account with in more than 4 years.  According to it, we owe them $12 on something.  We called.  We even called their regional managment.  They have no record of us owing them anything.  In fact, they have no record of us at all.  So we told them to get it off our credit report.  They told us that they couldn't do that, so we called the credit reporting agency, and they said we had to get the bank to take it off.  The bank says it is not there, and that we don't exist.  So we asked them to take off the $12 that isn't there from the account we don't and never had.

That is pathetic. The whole consumer credit reporting scheme is such a racket, and fundamentally flawed. They probably get kickbacks from lending instutitions if stupid detritous like the $12 stay on a credit report so that the lenders interest rates can be higher.  And then, the salesman's salute  , when they get caught at it.   Yuk.

[MountainDon]

Have you checked on what's in your credit report lately? One check per year from each of the three main firms is free to everyone once a year.

https://www.annualcreditreport.com/cra/index.jsp

This is the one that is truly free as mandated by our federal government. You will receive countless offers to purcahse extended deluxe services but are within your rights to turn them down. I do it every January and save the documents.

[bayview]

Have you checked on what's in your credit report lately? One check per year from each of the three main firms is free to everyone once a year.

https://www.annualcreditreport.com/cra/index.jsp

This is the one that is truly free as mandated by our federal government. You will receive countless offers to purcahse extended deluxe services but are within your rights to turn them down. I do it every January and save the documents.

Thanks, for the info . . .