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.
We have one house (Palm Harbor mobile)in Galveston County which is only 3 years empty sitting due to relocation and we can not sell it. It is listed with a Realtor which had not even one showing in over three months…anyhow where we live now we have a house. We are current on both mortgages but we are not longer able to afford paying the one in Galveston – we rather pay the one for the house we are living in.
Question what can/should we do? Call the mortgage company (Countrywide) for the mobile home and let them know that they won’t be getting any payments anymore and hope they offer us the short sale package? In case we wind up with a foreclosure will we be loosing the house we live in also? Even we are always current with the payments (it is financed with a different company)?
Thank you for any help and advice in this matter.
Hey,
I can give you a few pointers,
I don’t know if the bank will do a short sale with the home owner directly — but you can always ask the bank.
There are other exit strategies you can use but they are very case by case specific, For example, ask yourself – how much equity do I have in the property, how much am I willing to discount, is owner financing an option I’m willing to explore;
This option works best if the current loan doesn’t have a “due on sale clause” — which in essence gives the lender the right to call the loan due if the property is sold, but if it doesn’t have it, then this is one of the fastest ways to move the property, then as the payments trickle in, you pay down the mortgage, as you come up with a permanent solution.
Your typical buyer would be a person who has a reasonable down payment and a source of income but who doesn’t have the AAA credit that conventional lenders need to give him/her a loan. You in essence become the bank. You save a lot because you don’t have to pay the realtor’s commission etc, and you have a wider market.
After a year or so, you can turn around and do as banks do, sell the “note” to a secondary party, this means that the payments that your buyer makes now go to an investor that will give you a lump sum for the note, this lump sum should just about wipe out your old debt with Countrywide mortgage and leave you with some extra cash.
Alternatively you can do a lease-option, lease the property to someone, and give them the option to buy at some time in the future — usually they have to sign a one year lease that renews every year for up to 3years after which they may opt out the lease option contract.
This is a good way because they usually give you a set amount of money at the beginning of the lease that they lose if they opt out early — this ensures your payments– which you need to pay down the mortgage, are coming in — as this happens you can be finding another solution, but at least your mortgage payments are current with Countrywide at no extra cost to you.
I hope this helps.
P/S if you ever need to sell your note, or currently have notes you wish to convert to cash, don’t hesitate to contact me. I, and a groups of investors I work with actively buy Notes secured by real estate as well as invest in pre-foreclosures.
Regards, Michael
I own two properties, and I’m in trouble on both. I’ve used up all my savings, have built up credit card debt trying to meet the mortgage payments, and don’t have the money to make this month’s payment on either property. I haven’t yet spoken to the lenders, but wanted to ask your advise before doing so.
My personal residence has been on the market nine months with little interest. I’ve dropped the asking price by $80,000 to $445,000, but still no bites. I owe $410,000 to the lender. QUESTION 1: If I have my agent release the listing, reduce the rate, and go for a short sale, who handles the sale? The lender? QUESTION 2: Property taxes are currently due on my house. if I don’t pay and I do a short sale or foreclosure, who has the tax liability?
My condo is an investment property. I’ve dropped the asking price by $76,000 to $389,000. I owe $328,000 on the 1st, and $38,300 on the 2nd, which is a HELOC. QUESTION 1: What are the tax liabilities of a short sale on my condo? QUESTION 2: Will the HELOC be negated if I foreclose?
Also, I refinanced both properties with cash out, so I assume I’m going to have a tax liability on both, regardless.
The lender ultimately has the final say in whether they accept the discounted offer. They will handle the sale of the property. If taxes are not paid, they will be factored into the purchase price. One way or another they always get paid, more than likely by the end buyer.
For your investment property condo, most likely if you just “let it go” you will be 1099’d by the lender. Worst case they will slap you with a deficiency judgment for the amount not collected. Very rarely if ever does it “just go away”.
My young lady friend and I, (unmarried) purchased a townhome 3 years ago assuming we could buy it, live there and sell it two years later with a decent profit. How wrong we were. Now we have a home mortgage of $155,000, and our last assessment was $147,000. There are several similar homes around us attempting to sell for $135,000 and they’re not selling.
We have a 5 year arm and our rate will adjust in August. We’re barely able to keep up with payments now, but won’t be able to with the added adjustments.
Question 1: If two unmarried people purchase a home together, is it possible for one to sign the loans over to the other?
Question 2: What is the best way to escape our situation with at least one of us relatively unscathed credit wise?
Question 3: Does anyone have a time machine?
Thanks
Question 1. If both of you signed on the dotted lines for the loans, you both are liable to pay the obligation and therefore will show up on credit reports. The only way is to re-finance in one of your names and hopefully get a better interest rate and smaller payments.
Question 2. Whomever name(s) are on the loans will have negative marks on their credit. Even if you deed the property to someone else, doesn’t matter. The property is only collateral for the loan. The best way is “escape” is to rent it out, lease it, or let someone take over payments “subject to”.
Question 3. I think they sells those on Ebay…but be careful I’ve seen them in action on Napoleon Dynamite.
We have been trying to sell our home for over a year. Bank would not do a short sale because we haven’t been delinquent. We filed a hardship but we don’t qualify under that aspect either. We have two mortgages both with same lender. We called 995 hope for help but were told to do a deed in leu of foreclosure. We can not make any payments at this point since our temporary living with the new job has ended. We have no equity in home since we used that over the past year to make ends meet. Creditors are calling and are charging off on our credit cards. What do we do? Bankruptcy, foreclosure??
Its looks like you tried to negotiate with the bank before you were late on your payments. Many lenders do not want to help homeowners until after a homeowner is delinquent. Now that you’re late, you possibly have a “qualifying hardship”, therefore you can now pick up the phone and try for a loan modification. If you do not have a job or any income than a loan modification is probably an impossibility and than I would pursue a short sale.
God bless.
This is a sad and common situation. You did what you were supposed to do, contacted your lenders and tried to work things out before you became delinquent. Unfortunately, there are so many people in your situation that banks must prioritize by biggest risk first. While you were making the payments you posed little risk to them that you would end up in foreclosure and thus they didn’t pay much attention to your requests.
Now you are in a very different position. You are behind in your payments and as such pose a risk to the lender for loss. Now you are better positioned to either modify your loan or short sale your property. In other words, you lender is now in a position to listen.
Deciding whether you want to keep the property will help make the choice on which direction to pursue with your lender.
Should you choose to sell, you might also consider modifying the loan while you have the property for sale. This would allow more time for a buyer to show up.
Best of luck to you Remember, you are not alone there are many resources to aid you in your process. From the DIY approach that my company takes to full blown (and pricey) advocates and attorney’s that can help you, as well.