Legal Question in Bankruptcy in Nebraska

Home Default

My father died and left my mother very little money to live on. She needs assisted living and is at 98 percent loan/value ratio on her mortgage. There is PMI insurance on the home loan. If we walk away and default on the loan, will the bank or the PMI company sue to recover damages? She is only getting 1200 dollars in SSN benefits and we have applied for VA benefits. That pretty much leaves her with only a small life insurance benefit. My fear is if sued she will lose that and be left with nothing.


Asked on 2/12/08, 7:23 am

1 Answer from Attorneys
Katherine Owen

Re: Home Default

Can your mother be sued for a mortgage deficiency if she is personally liable on the note? Yes. Will the mortgage company do this? Probably not. Unlike car lenders, mortgage companies generally do not seek a personal judgment against the borrower, since the company has already gotten back its collateral (the house) and suspects that there's not much else to recover. The mortgage company also has a much shorter period of time to act on a deficiency judgment than other creditors.

Even if your mother did get sued (which is unlikely) the creditor can't take everything from her. If she has minimal assets and income, she is probably judgment proof.

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Answered on 2/12/08, 9:19 am


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