Q: My condominium association is foreclosing on delinquent property owners and then renting out the units while the banks take their merry time foreclosing on the association. I have wanted to rent out my unit for awhile, but our rules say the units can’t be rented. How come I can’t rent my unit, but the association can rent its units? – Esther

A: Because the law says so. While it may seem unfair, Florida lawmakers granted this relief to condo associations in an effort to help them stay afloat amid the housing crisis. Many other states also have passed similar laws. There are other things that an association can do to raise revenue that might surprise you. For example, if a delinquent unit owner is renting out the unit, the association can collect the rent directly from the tenants. Also, an association can block the delinquent owner from using the common facilities, such as the gym and pool. The association also can make the owner use the guest entrance by shutting off the delinquent owner’s gate-access device. As I have said before repeatedly in this column: If at all possible, pay your community dues even if you are not paying the mortgage.

Q: I heard that you could give up on your second mortgage if you are current with your first mortgage? My wife and I are current with both of our loans and have good credit scores, but this sounds attractive. Is it a good idea? – Matt

A: No. A second mortgage, just like a first mortgage or a third mortgage, can be foreclosed by your lender, causing your house to be repossessed. The first mortgage holder will get paid from the sale proceeds before the second mortgage holder does, but the end result is the same – you lose your house. However, in a Chapter 13 bankruptcy, it is possible to strip or remove your second or third mortgage, if those mortgages are wholly unsecured. This mean that if the amount owed on your first mortgage is greater than how much your house is worth, the bankruptcy court can, in effect, make your other mortgages go away. Outside of bankruptcy, it may be possible to negotiate with your second mortgage lender to allow you to pay off the mortgage for a reduced amount, sometimes even as low as 10 cents on the dollar. All of these methods will hurt your credit.

Q: I am a senior citizen and need to downsize now. My mortgage payments are up to date. Can I do a short sale without being in foreclosure? – Dorothy

A: Absolutely. Despite almost everything you hear, it is possible to short sell your property or obtain a mortgage modification while you are current on your payments. The key in either case is that you need to show that you have had a change in circumstances, making the short sale or loan mod necessary. I have repeatedly heard that borrowers are told by their lenders that they need to be behind on their payments in order to get relief, but this is rarely true. Usually the lender’s representative will say this just to get you off the phone. If that happens to you, hang up and call back and get a rep who is willing to take the time to give you correct answers. If you still have trouble, as is sometimes the case, then you can stop making payments with the knowledge that you tried your best.

The information and materials on this blog are provided for general informational purposes only and are not intended to be legal advice. No attorney-client relationship is formed, nor should any such relationship be implied. Nothing on this blog is intended to substitute for the advice of an attorney, especially an attorney licensed in your jurisdiction.

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