Legal Question in Real Estate Law in Georgia

Our situation: We were renting a second property here in the state of GA before the renters moved out. We tried a deed-in-lieu as well as a short sale, but the bank quickly foreclose the property. The bank then sold the property for $70.000 less than what was owed. Aside from reselling the property for less than half the payoff ($117.000) we still have a second mortgage with another bank for $20.000. Will the bank come after us for the difference? I've read OCGA § 44-14-161, which states; (in Georgia, the lender must file for a deficiency within thirty (30) days of the foreclosure sale and follow the procedures outlined in OCGA � 44-14-161, or the claim for a deficiency is barred) With the bank taking the property back are we still obligated to payoff the second mortgage on a property we no longer own? Wish the bank would have given us time to short-sale or deed-in-lieu.


Asked on 4/27/11, 1:55 am

2 Answers from Attorneys
Scott Riddle Law Office of Scott B. Riddle, LLC

Yes, and possibly the first mortgage lender as well since you did not actually tell us if a confirmation action was filed. If the lender does not pursue the deficiency, expect a 1099 for the forgiven debt - it is taxable income.

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Answered on 4/27/11, 3:37 am
Glen Ashman Ashman Law Office also dba Glen Ashman Attorney

You made an mistake in not seeing a lawyer long ago.

The second mortgage lender can sue you and then grab your wages, bank account, cars and other assets. You have no defense to that now. If you had seen a lawyer earlier you might have had other options (such as a lien strip in a Chapter 13).

The first mortgage lender MAY have similar rights depending on information you did not give us. You also may be hit with a form 1099 where you will owe taxes on fogiven income (in some cases).

(Banks almost never allow short sales or deeds in lieu, and with two mortgages that never was a likely option).

Meet IMMEDIATELY with a bankruptcy lawyer to see if you might qualify to discharge these debts now.

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Answered on 4/27/11, 5:14 am


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