My grandfather (82yrs old) co-signed for my uncle. Uncle is filing for bankruptcy. He is selling the property he bought with the SBA loan but it will be a short sell. Grandparents are concerned the SBA will take their mobile home and take their social security checks. What can they do?
For loan applicants whose business doesn't have sufficient collateral to cover the commercial loan they are seeking, it's not unusual for the agency to require borrowers to guarantee repayment of their SBA-backed loan by posting their home as collateral. Your grandfather and your uncle should talk to SBA about what can be done Every situation is different and in cases of true hardship, SBA often has the flexibility to avoid a foreclosure. Generally speaking, the agency forecloses on peoples's homes only as a last resort, especially in cases in which there are significant assets and a lack of cooperation.
ngoriel | Community Moderator |
6/3/2011 - 4:24 pm
Hi, we are working on finding additional information about what to do in this type of situation, but in the meantime, you should contact your SBA local office about your situation. Click http://www.sba.gov/content/find-local-sba-office for a list of SBA offices.
Get the loan documents that were signed - these will tell you exactly what the lender can do and can't do.
I would also suggest you call the lender and ask them - maybe there is some type of work out that can be done for the difference between the short sale and the amount owned - might help them save their mobile home.
Lastly, depending on your state - it is very hard to kick someone out of their home - you might call you local attorney general's office for advice - but, read the document first to better understand what you are facing.
My advice in these situations is to always try to manage and take control of the situation - that means understanding what you are up against and contact the lender to see what they are willing to do.
Your grandfather needs to see an attorney ASAP. I doubt that his Social Security checks can be taken, but the mobile home is another matter.
If he personally guaranteed the loan (most guarantees are unlimited), then he will be personally liable for any deficiencies. Depending the state, it may be possible to put a judgment lien on the home, but my understanding is that judgement liens can not be foreclosed on. In practical terms, this means the lien would sit there, but the SBA (or the lender) could not foreclose on the judgement lien.
Overall, he should reach out to the SBA or their lender (whoever is currently servicing the loan), and ask for the paperworked needed to submit an Offer In Compromise. Age is a factor in settlement decisions, so the fact that he is in his 80's should be taken into account.
Jason Milleisen, Founder, Distressed Loan Advisors
Davidh | Community Moderator | 6/6/2011 - 2:09 pm
ngoriel | Community Moderator | 6/3/2011 - 4:24 pm
phanio | Contributor | 6/1/2011 - 12:58 pm
BizResearcher | Window Shopper | 5/31/2011 - 12:03 pm
DLA | Performer | 7/29/2011 - 11:09 am
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