wage garnishment after shortsale

I’m working on a shortsale and the 2nd lienholder LM rep told me that she would not accept the offer. I asked her what other means they had to collect? She told me they can garnish their wages. I then told her that the homeowners, one is retired the other one is disabled. The LM rep then told me that if at anypoint they try to buy a house again, they would have to pay the debt because they would put some type of lien?
Has anyone heard that they can do 1) garnish wages or 2)collect when they buy next house?

Yes Joe…if the home goes to foreclosure the second lien holder will get a court ordered deficiency judgement that can be used to attach wages (if any)…in this case the “if any” would certainly come into play.

If the owner’s attempt to buy another home and secure financing, the title closer will not give a clear title policy without judgements and liens of this nature being satisfied as they could be attached to the new property. Therefore preventing the new home from closing.


What bank holds the second note?

citimortgage on one deal and resurgent on a different deal

Check to make sure this is legal in your state. I do believe that it is a state by state law so maybe they are wrong about it being legal to do this in your state.

I’m in California

This site shows state laws regarding garnishment


Here is what it says for California:
California Wage Garnishment

Up to 25% of the debtor’s net disposable earnings. Once the levy has been served on the employer by the sheriff or marshal, it remains in effect until the judgment has been paid in full. Because California is a community property state, the wages of a non-judgment debtor spouse are also subject to levy.

This is basically saying that they can even garnish the wages of a spouse? Wow!
so what’s the benefit of the homeowner doing a short sale? I’m beginning to think that there are other options better out there, such as deed in lieu…

Good Morning Joe,
When the proprty goes to the foreclosure auction…then the second lien evaporates…no longer exists and the 2nd lien holder gets…O…
Continue with your short sale offer, offer no more than a grand to the second position. Generally the first will not accept your low offer if the second gets more than a grand. Find out when the auction is, and keep making the offer to the lien holders right up to the day of the auction. The second will change their mind the day of the auction because the day after they will recieve…O. Assuming the property you are working on is in foreclosure of course. Again who is the lien holder ?? Citi or resurgant ?

What if the wage garnishment process is already being implemented by the lender? Will it still be collectable if the home goes to auction? I have a SS right now that this is happening. The homeowner got his letter to appear in court, but the house is in foreclosure. He is also filing for bankruptcy protection.

The assumption is …that the home owner HAS net disposable earnings. Generally the owner would fill out and send to the lien holder a income statement. Perhaps the lien holder does not believe the homeowners financial statement or is bank policy to file for wage garnishment. The other thing jepordising or at least making your transaction challenging is that he is filing bankruptcy. You will have to petition the court to get the home out of the bankruptcy in order to purchase it. The lien holder will…because they want to foreclose. You will have to beat the bank to it and show on your transaction that the seller is getting nothing. You could wait for the bank to foreclose and do all the ground work to get it out of bankruptcy court and buy from them. Keep the communication open with them, they want to sell it. They may move quicker if they knew you were a qualified buyer.
The wage garnishment issue is between the bank and owner, shouldn’t effect you. The bankruptcy will though. All negotiations will generaly come to and end till it is solved.