Question about Consequences of letting a MH go back to Lender.

[Betsie]

My daughter shares ownership of a mobile home with her former husband. They were divorced 6 years ago, and both have been remarried about that long. The former husband kept it rented all this time as he didn't know what else to do. Now my daughter has taken over this responsibility. The MH is only about 7 years old, but due to my daughter and her now husband owning another home, plus just had a very premature baby (2 lbs.) they can't continue to maintain the MH. The renters are hit and miss with their payment so my daughter is having them evicted. But now, she thinks she just wants to let the Loan company take the MH back. It is in Alabama, and our question is..... we know this will most likely go against their credit for several years, but we have heard that the financial institution could ask them to repay part of the loan. Does anyone know how this works?
Thank you
Betsie

[Dan Auito]

With that length of ownership it should have enough equity to sell outright, and heaven forbid there may even be a profit.

Foreclosure is a last resort and it does do a number on ones credit for a couple years.

Have your daughter at the very least see what the property would realistically sell for on the open market before doing anything else.

[Jeffery (LCLA)]

Hey, Betsie, welcome to Magic Bullets. There was a whole paragraph before your question that I'd like to comment on. I'll answer your question first.

we know this will most likely go against their credit for several years, but we have heard that the financial institution could ask them to repay part of the loan. Does anyone know how this works?

It will hurt their credit for 7 years, unless, their is a judgement against them, in which case it can stay on their credit for even longer. A 7 year old mobile home will bring in about $5K at auction, maybe a little more in your area. Your daughter and her former husband are responsible for the difference of what they owe on the home and what it sells for.

Now, on the the rest of the post that you didn't ask for asdvice on, but are getting it anyway.

My daughter shares ownership of a mobile home with her former husband. They were divorced 6 years ago, and both have been remarried about that long. The former husband kept it rented all this time as he didn't know what else to do. That's about the best thing that he could have done with it Now my daughter has taken over this responsibility. Why not give it back to the former husband? The MH is only about 7 years old, (At 7 years, the value and loan amount, should be starting to balance out) but due to my daughter and her now husband owning another home, plus just had a very premature baby (2 lbs.) they can't continue to maintain the MH. (then give it back to the former husband) The renters are hit and miss with their payment (that's your daughters fault. Landlords need to train the tenants, not the other way around. Train the tenant to pay when due or you get booted out. When the tenants are late the first time, they should be put out. If your daughter would stick to a policy like that, and let the tenants know as much, they won't have the opportunity to hit and miss with their payments) so my daughter is having them evicted. But now, she thinks she just wants to let the Loan company take the MH back. Is that what we're teaching our kids now? Perhaps that's the same mentality that the hit and miss tenants had when they wouldn't pay rent. "I don't want it no more so I won't pay" or "it's too hard paying rent AND buying beer and cigs".

If my words seemed harsh, well, I hope my tenants read this board. I'm not trying to offend you, but foreclosure should be the absolute last resort. I know, your daughter has another life, a new baby, etc. but that doesn't relieve her of her moral obligation to repay that loan.

If you post additonal information about the home and location, the payoff of theh load, the amount of the note, and if the home is in a MH park, or on it's own land, perhaps someone could give your more advice, or even offer to help your daughter out. I suggest, if the former husband was taking care of business, give the home back to him and let him deal with it. The proper thing to do, would be for them both to deal with it jointly.