Community Forums

K5EAG · 10-06-2010, 09:52 AM

Has anyone ever had to let their motor home loan default and have the motor home be repossed by the lending institution?
I have a friend who is unemployed, lost his job and can not afford to make payments now on his motor home.

Questions:
1. What can the bank do to the owner?
2. Can the bank put a lein on their home?
3. Can the bank reposess any other items owned by the person?

Any comments or experiences you know of would help.

FlyingDiver · 10-06-2010, 10:04 AM

The only way to have a definitive answer any of those questions is to (1) read the original loan agreement, and (2) know the laws of the state of residence of the borrower. That said, I would expect that the bank can repossess the RV, and possibly sue the buyer for the difference between what they can get for it and the loan amount. I would not expect that they can repossess any other property, or put a lien on their home.

joe

RustyJC · 10-06-2010, 10:13 AM

Quote:

Originally Posted by FlyingDiver

I would not expect that they can repossess any other property, or put a lien on their home.

Unless, of course, they used a home equity loan to purchase the MH or used the home and/or other property for collateral on the MH loan. Another reason one would have to examine the original loan document as well as refer to applicable state law to know for certain.

Rusty

FlyingDiver · 10-06-2010, 10:18 AM

Quote:

Originally Posted by RustyJC

Unless, of course, they used a home equity loan to purchase the MH or used the home and/or other property for collateral on the MH loan. Another reason one would have to examine the original loan document as well as refer to applicable state law to know for certain.

Rusty

Quite right. The devil is in the details.

joe

HD4Mark · 10-06-2010, 10:29 AM

He must contact the bank to try to work out something or turn it over to them. If it gets repoed he will owe the repo companies charges and any storage fees. Plus to redeem it, in my state anyway it was all of the repo fees, adds up to hundreds, back payments owed, current payment and one in advance. Tough to do. It will get sold at auction for whatever they can get and guess who still owes the rest?

The bank does not want to repo it because they will likely lose money in the long run, but they will. They sometimes offer interest only payments.

I only know this from working as a "lot manager" for a repo company over 20 years ago. I was on the guy you got your personal belongings back from or gave you the keys if you made it right with the bank. I was on strike from my real job so I took what I could get. Not a pretty business.

Izzyblueye · 10-06-2010, 03:30 PM

It has already been said. Unless the owner in default used an equity loan on his house, or used his house as collateral, the bank has no recourse on his personal home. Yes, when it is sold the person in default legally will owe the difference between sold price and owed price. Bank probably will probably file a lien on his other property for the difference if it great enough. The advice to work it out with the bank and not go into Repo is sound advice.

adlerx · 10-06-2010, 04:22 PM

Has he tried to sell it to avoid ruining what's left of his credit? How much more does he owe on it than it's really worth?(not what he thinks/hopes its worth)

He should try to work something out with the bank if he owes much more than it's worth

TXiceman · 10-06-2010, 07:44 PM

Even if the motorhome is repo'ed and sold at auction or what ever means the bank uses to dispose of it, the original loan holder will still be responsible for the difference in the sale price and the loan balance plus any fees such as legal fees, repo fees, clean up fees etc. If the bank "forgives" the remaining balance, you will receive a 1099 at the end of the year reporting the amount as income.

The bank has no real incentive to maximize the sale price. So they would be better off selling it on their own and taking a smaller loss.

Ken

paz · 10-07-2010, 05:08 AM

I agree with HD4Mike - tell your friend to contact the bank to try to work something out. Tell him not to just stop making payments. Maybe they will let him just pay the interest to buy time while he tries to sell it.

And even if he sells the motorhome for less than he owes, he will still probably get more than the bank will get if he allows the bank to repossess it. As TXiceman says, the bank has no incentive to maximize the price. If the bank sells the motorhome for less than he owes, he will still be responsible for the difference.