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In Florida. Purchased another home. Foreclosing on 1st home.

Jarad — Fri, 14 Oct 2011 16:29:05 +0000

Question: In Florida. Lots of stuff going on and now the MI says today they need a take it or leave it answer with no negotiation by close of business Friday. Son no longer lives in house that has mortgage insurance on it that the lender has accepted a short sale contract on and forwarded to the MI. He has purchased another house and just stopped making payments on the other in September. The MI says that they want 42000 over ten years 0% interest starting 2/12 or they will foreclose. (Doesn’t the lender do that?) He has some cash but has a baby due at Christmas that requires 20000 out of pocket at least, assuming no emegencies, because of crappy insurance. He made less this year than last but more last year than in 2009. The short sale contract and the appraisal are 89000 and the mortgage is in the high 150s give or take a few thousand. Not sure what the least expensive thing is to do but 42k is a lot more than he will have in the bank after the baby comes and no one wants to pay an extra $350 a month for 10 years to compensate them for a mutually bad investment. I am thinking ask the lender to do a deed in lieu so there is no deficiency and then file a 982 I think it’s called to get around that. If they don’t take the deed in lieu, then file for bankruptcy to get out of the deficiency but since I have little experience with this I need some advice that may help resolve this better than my solutions.

Answer: - The least expensive thing to do is file bankruptcy. It will cost him $1500 and he can start over from scratch. A lot of lenders, when you tell them you are going to file, will work with you to find a solution. A better option might be to get an attorney or good real estate agent / short sale negotiator to help you push the short sale through with a full satisfaction meaning they can’t ask for any money to be paid back. The loan would be paid in full. Your son would receive a 1099 which would be negated with form 982 as mentioned. Don’t let the bank push you around… unfortunately they deal with homeowners a lot differently than an attorney or 3rd party negotiator because they automatically assume the homeowner doesn’t know what they are doing.

line of credit in first position. What happens after a foreclosure by the second lender (in California)?

Jarad — Mon, 12 Sep 2011 16:01:00 +0000

Question: This question is about a line of credit in first position and what happens after a foreclosure by the second lender(in California). The loans are in an unusual order. I provided a second loan for an owner of a rental house (meaning I am a lender, somewhat like a bank). The owner/borrower already had a Wells Fargo line of credit secured by that rental house. Since the homeowner (now the previous owner) failed to make payments to me I caused the foreclosure and am the present owner. I want to ask “What happens with regard to the line of credit?”. The LOC is for $75,000 which is slightly more than the current value of the house. For that reason I think Wells Fargo will not want to foreclose on me. Will Wells Fargo in fact pursue me at all rather than the original borrower? If so, will they want instant repayment? If I can’t repay immediately how will Wells Fargo determine the rate of interest and repayment schedule?

Answer: - No, they won’t pursue you if I am reading this correctly. Same thing happens as with any 1st and 2nd lien holder. If the first lien holder forecloses and the 2nd lien holder doesn’t protect their position, they are wiped out. Any surplus from the auction would go to them. The home then goes back to the 1st lien holder. The 2nd who was wiped out has options. They can either write off the amount lost in the form of a 1099, or the can pursue the homeowner to try and collect the amount lost. So no, they won’t come after you, they will come after the person who originated the mortgage with them.

Investment properties – foreclosed and received a 1099 C

Jarad — Sun, 17 Apr 2011 16:30:12 +0000

Question: We had 2 investment properties – 1 foreclosed in 2009 and we just got a 1099 C for the second (which was part of the 80/20 purchase money. We also got a 1099 C for the second on the second property that foreclosed in March of 2010 again purchase money. How do we report this? Is this income? If so and we owe a crazy amount to the IRS what can we do when we have little reserve?

Answer: - This is reported as income on your taxes. Your accountant will help you through all this. In many cases, you can claim insolvent which means your liabilities exceed your assets or if it was a personal residence because of the new laws you won’t have to pay taxes on this amount. Have your accountant help you with all this, it makes it much easier.

If I stop making payments now do they have to go thru foreclosure all over again?

Jarad — Sun, 16 Jan 2011 21:09:45 +0000

Question: I had rented my house out and thought I could never save it but about 8 months of no payments they said lets do a loan mod. Took another year before I got it. In the meantime they knew I did not live in it and had rented it (told them) and I was working 100 miles away. They insisted that it be owner occupied and told them I would have to quite…no cares here so I did hoping I get could work here. So now I am not making enough to pay the mortgage with the modification. With the terms I will never pay this house off. the mortgage is $200 more than its worth.
If I stop making payments now do they have to go thru
foreclosure all over again. Read my mod agreement and nothing has addressed that question. HELP…thank you

Answer: - Yes they will start the foreclosure process all over again.

My mortgage company, PNC, has accepted a shortsale offer on my house.

Jarad — Sun, 31 Oct 2010 05:04:52 +0000

Question: My mortgage company, PNC, has accepted a short sale offer on my house. I owe approximately $149,000 and the accepted offer is for $115,000. Coinciding with my application for short sale, PNC moved forward with foreclosure. The court, in Pennsylvania, granted judgement in foreclosure for the owed mortgage balance plus legal fees. Based on what I have read, because I do not have a second mortgage, HELOC and have not refinanced I am at low risk of being sued for the deficient balance after short sale. My concern is that PNC will, however, pursue me for legal fees involved with the foreclosure even though the short sale was accepted post hoc. Can you provide any insight or advice?

Answer: - Most of the time banks won’t come after you for just legal fees, if they come after you, they will file a judgment for the amount they lost because it costs them a great deal more to pursue someone for a deficiency. So unless they are confident you can pay, they typically will 1099 the homeowner instead. And if you’re like most homeowners, the debt relief act will counteract the 1099 or you could claim insolvency. Best to talk to you accountant if you have specific questions.

Home in Virginia foreclosed!

Jarad — Wed, 28 Apr 2010 04:19:40 +0000

Question: I had a home in Virginia that was foreclosed upon. The second lien holder is trying to collect from me. Can they do this and what options if any do I have?

Answer: - Yes, they can try to collect what they lost. They could file a deficiency judgment against you for the amount they lost which would require you to pay the amount back in full. Most people file bankruptcy. You could work out some sort of re-payment plan over several years or ask them to forgive some of the debt and settle for a smaller amount.

Can a bank which i borrowed money from as an equity line on a property i owned out-right, foreclose?

Jarad — Sun, 18 Apr 2010 05:22:26 +0000

Question: can a bank which i borrowed money from as an equity line on a property i owned out-right, foreclose on the property itself if the equity line payments are not being made?

Answer: – Absolutely… I’m sure if you review your paperwork it will tell you that they have the right to foreclose if payments are not made.

Rental property in WA and am in military in NC presently.

Jarad — Mon, 01 Mar 2010 04:41:04 +0000

Question: I have property in WA, currently it is a rental property since I am in the military and am in NC presently. Being that I cannot come close to renting the house for what I pay in mortgage, I am facing letting the house go. Trying to find out all the ramifications of foreclosure.

Answer: - Well, the bank will either 1099 you for the difference if they are not able to collect what is owed, or they will file a deficiency judgment against you for the amount they lost. Ideally, you are hoping for a 1099-c because in most cases you can counteract the 1099-c if it’s your primary residence or you are insolvent.

short-sale, foreclosure, or bankruptcy… what should I do?

Jarad — Mon, 22 Feb 2010 01:33:27 +0000

Question: Looking at short-sale, foreclosure, or bankruptcy… only is Social Security Disability, VA Disability (100%), and disability insurance monthly payment… what should I do? can they come after any of my income in a deficiency judgement? will they even come after me? how will bankruptcy affect me… I currently have NO assets at all except for about 15,000 dollars in savings. thanks Tom from FLORIDA

Answer: -Tom, I have to make the assumption that you’re planning on or you’ve already stopped making payments on your home or you wouldn’t be asking these questions. A short sale in my opinion is by far the best option if you can’t sell your home for what’s owed, rent it out or can’t work out something with the bank like a forbearance or loan modification. A short sale will affect your credit but will eliminate a foreclosure on it. If done properly will also eliminate the possibility of a deficiency judgment. If a short sale is not accepted an ultimately your home ends up at the foreclosure auction, then you will either receive a 1099 or they will file a deficiency judgment against you. If they file a deficiency judgment and you can’t pay, they can garnish wages. Depending on the amount of the judgment, this forces most people to file bankruptcy to eliminate the judgment.

Buying our first home that is in foreclosure, why is it taking so long?

Jarad — Wed, 17 Feb 2010 05:28:48 +0000

Question: My husband and I are in the process of buying our first home and we are very confused as to what is going on and no one can help us. Here’s the situation…We put in an offer on a house and the offer was accepted after negotiations. Within 2 months the house went into a short sale because the owners did not have the money. Since then (it’s been 6 months) Bank of America has reappraised the home and put it into foreclosure (or so I’m told). Our real estate agent said that they can get the foreclosure postponed…What does this mean? Can they foreclose on a house that has an offer on it? Would this mean that the contract is no longer valid? I would appreciate any help you can give us. Thanks!

Answer: - It sounds like you made an offer to the bank for less than what is owed on the property, which is a short sale. And from what you say, the bank accepted the offer but there may have been some other requirements from the initial seller in order to get everything approved. As a buyer, it’s not uncommon to wait for MONTHS and if you are patient enough it could even be a year or more before you are able to buy a property in foreclosure. This is all because of bankruptcies, settling with 2nd and 3rd lien holders, uncooperative sellers, etc. To answer your question, yes, the bank can foreclose on a property even if there is an offer because they are waiting for certain requirements to be met. Yes, they can postpone the foreclosure auction as long as the bank sees a legitimate reason to postpone. Don’t give up. Keep working close with your agent, I’m sure they are on top of the situation…Just don’t be surprised in you have to wait awhile. Most home buyers get frustrated waiting and move on to another home. Good Luck