Posts Tagged ‘lien’

Question:  My husband and I own a condo in Florida. We paid $163,000 and it is now worth $30,000. It costs us about $20,000 to keep up yearly. We are really struggling to make the payments and are thinking that we just can’t anymore. I am really worried. We own a house in New York and it has some equity (maybe $100,000). Can they come after my house in NY and put a lien or judgement on it if we foreclose? We didn’t use the house or anything from NY for the mortgage in Florida. Thanks. Also, our only income is from SS Disability and a pension.

Answer:  - This is unfortunate. You like many others have had the same thing happen to them. It’s hard to suggest what to do in this case… all you can do is all you can do. If you can’t afford it, then you can’t afford it. Yes, the lender can a file deficiency judgment against you for the loss, but most homeowners will file bankruptcy which wipes out the judgment. In this case where you have equity in your personal residence, it would be in your best interest to work out something with the bank to avoid the judgment altogether. Make sure when you work out your agreement, you settle on a “satisfaction” of the loan, that way the worst they can do is 1099 you for the amount they lost.

Question: If the bank sells my house for less than what was owed on it can they come after me for the balance…

Answer: Yes…The bank has 3 options at this point.  Either they will do nothing or they will 1099 the homeowner or they will file a deficiency judgment for the amount they lost.  In most cases they will 1099 the homeowner and count the loss as income to the homeowner.  If you talk to your accountant, sometimes IRS form 982 will counteract the 1099 and you won’t have to pay a huge amount of taxes.  They could also file a deficiency judgment against the homeowner and require the debt be paid off.  Since most homeowners in this situation can’t pay it off, they file bankruptcy which will get rid of the judgment.  There are some things you can do to ensure that a judgment is not filed and that is by doing a short sale.  If you have someone who knows what they are doing, they can ask for a satisfaction or to satisfy the loan which means the bank can no longer come after the borrower for the deficient amount.  The loan is considered paid in full.  Plus with a short sale, the home is sold and foreclosure stays off your credit.