Legal Question in Real Estate Law in Maryland

I�m in a unique situation here. I bought my new house in 2005, & there is a 1st and 2nd mortgage. About a year afterwards, I needed money to pay a large tax bill, & my credit was not strong enough for a loan. My friend took a loan out for me using the second mortgage. I paid him, and he paid the loan. Of course, that meant he would be on the deed. He only lived here for a very short time, & he has no interest in the house. He just did this for me. The loan has now matured, & my credit is still not strong enough to refinance the loan in my name. The loan was not assumable & the bank won�t rewrite the loan in my name. We�re trying to work this out. He�s in finance himself & believes the bank will most likely negotiate for a settlement. The current balance of the loan is about 125,400. The original balance was 127,000. I purchased my home for 391,000. The house is only worth 240,000. There is no equity. The 2nd mortgage note was 740.00 a month. The loan was primarily interest only. My 1st mortgage is great, no problems. We�re afraid the 2nd mortgage bank will foreclose on the loan & his credit will be destroyed & I�ll lose my house. Do you think they�ll negotiate first? Do I need an attorney to help me save my home?


Asked on 1/17/17, 8:16 am

1 Answer from Attorneys
Daniel Press Chung & Press, P.C.

Well, to answer the last question first, yes, you need a lawyer. The bank may negotiate - probably will - but as far as credit goes, it will hurt the credit of whoever is on the loan as borrower or guarantor if it is not timely paid. As for foreclosing, it sounds like the first mortgage may be for more than the home is worth, in which case a foreclosure is unlikely. They will more likely sue. But this is all speculation - you both need to retain counsel to get this resolved -- probably separate counsel, since your interests are not necessarily the same.

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Answered on 1/18/17, 5:00 am


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