O/T: Letter from FDIC, Am I in Trouble?

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11-24-2008, 01:12 PM

#31

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the 1st loan should not have any recourse, but if original loan, owner occupied, I believe it's more cut and dry. For a 2nd loan or hard money, if not from the same lender, this proves more complex in that they may deny the short sale and/or delay process, even after the 1st lender has approved a modification or action. The 2nd lender may also come back with a deficiency judgement, regardless of what the 1st lender has chosen to do. On the flip side, if the 1st and 2nd were done with the same lender initially (i.e. both used to purchase home), then the lender typically has one action, which would most likely go back to power of sale clause or modification/forgiveness for both loans.

This is exactly right. Note that if you have done a cash out refi or second, the game is different and the lender can usually come after you personally.

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The borrowing was only to spread the risk of being wiped out financially by a major earthquake. The loan to value for the first mortgage was less than 35%

Even with 20% equity you'll still take a massive hit financially in an earthquake. The math here is fairly simple....if you get a 15% deductible earthquake policy (remember that's on the value of the improvements only, not the dirt) and there is about a 1 in 30 (the current odds) chance of a major "event", if the premium times thirty plus the dollar amount of the deductible is less than your equity, you should get the policy - especially since you'll pay the policy premiums out over 30 years. Otherwise you're just assuming you'll always walk away in the event of any major damage which when push comes to shove seldom happens.

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