Mortgage Forum

Mike

In a nutshell here is our story. My husband is a real estate agent in Washington state. He has had a good business for the past 5 years...that is until last 1/2 of 2007 - no surprise. We had purchased a home almost 2 years ago and had a huge pre-payment penalty (2 year time frame just now over). So, we did not feel we could sell prior to that time frame. My husband looked for work here locally last year to go back to his previous profession, but no luck. In January he took a job that was offered out of state. The kids and I are still in the house, because we had to wait until now to try to sell. In the meantime, 5 months ago we took out a HELOC at a credit union to help us pay the mortgage, and also paid for his cheap vehicle in other state, etc. The thought at the time, was we would be listing the house in May and hopefully selling in the summer....and we would sell with no $$$ in our pocket...but no hit on credit since we have not been late. (ONLY because we used our HELOC to pay bills). Now, for the past 3 months prices in our area have dropped significantly and we are pretty certain that we will not be able to sell our home for what we owe.....although we are trying. Unfortunatley, we still do not make enough $$$ to pay our mortgages. Although we have until this next month. We have used all of our HELOC funds (used the last to pay a huge tax bill). Next month we will likely not be able to make our payments. My question is this: In Washington state, what happens between the two mortgage holders? Our first is CW and the HELOC with a credit union. If we do go into foreclosure, CW should not have any trouble getting paid with the eventual sale of our home (we put down 20% at the time). HOWEVER, the credit union may be short some funds eventually. So, when we are late on both CW and Credit union, who will file the foreclosure papers? In my state, it appears we would not have a deficiency judgement if the home forecloses. Of course, we are praying for a quick sale to save our credit and have peace at heart that we did not short the credit union! This has been very stressful, as I know you all know. This is even tougher because kids and I are away from Dad. Thanks to all of you for any education.