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 mykidsmom
Joined: 14 Mar 2008
Posts: 2
2.91 Dollars($)
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 Posted: Fri Mar 14, 2008 3:57 pm Post subject: Trapped In California |
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| My husband left my son and I almost 3 yrs ago. Prior to leaving (or knowing he was going to leave) we re-financed a 300K mortgage, paid off 150K of debt at escrow resulting in new mortgage balance of 450K. I'm left with a house payment of $2800 per month (interest only). He does not help pay at all. I have never been late on payment but I am drowning. It takes 3 out of 4 paychecks to make the house payment. At the time of the re-fi the house appraised at 585K. Now it's down to approx 385K. The loan will re-amortize in less then 2 years with the payment going up approx. $800 per month. I am told that if I foreclose they will come after me for a deficiency judgment, forcing me into bankruptcy which is not something I want to consider. I have perfect credit and no other debt but the mortgage. I can't short sale and Deed in lieu of is not an option because the house needs too many repairs and is in bad shape. I have been treading water since my now ex-husband left but I'm losing my stength. My son is Autistic and has severe behavioral issues; he needs me to be healthy and strong. Ise I am all he has. I'm trapped in this house. I'm tired. Is there any way out? FYI: The loan is with Homecomings Financial and my house is in Tracy, California which is approx. 20 miles away from Stockton... foreclosure capital of the U.S. |
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larry
Joined: 27 Jun 2007
Posts: 3328
473.40 Dollars($)
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| Posted: Fri Mar 14, 2008 6:17 pm Post subject: |
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Hi,
I am really sorry to hear your situation but Foreclosure is not a option.
I shall rather suggest you to avoid foreclosure. Foreclosure is the worst thing that may occur to someone. Filing BK is rather better option for you.
Now I shall suggest you to first of all talk with your lender ASAP and request him for deed in lieu of foreclosure. If he accepts the DIL then you will have not to pay the deficiency judgment and even you will also get Tax Break for Mortgage Debt Forgiveness if the lender forgives the due amount after the sale. Know more about it at - http://www.mortgagefit.com/tax/debtforgiveness-reliefact.html
Feel free to ask if you have any further questions
Best of luck,
Larry |
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Jessica
Community Mentor
Joined: 08 Jun 2004
Posts: 673
Location: OHIO
117.33 Dollars($)
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| Posted: Sat Mar 15, 2008 4:41 am Post subject: RE: mortgage trouble |
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Hi,
First of all the Mortgage forgiveness Act does not apply to those in California. Now, if you're in mortgage trouble, first and foremost explain your situation to the lender. It's best to begin by writing him a hardship letter stating why it won't be easy for you to continue payments. Check out a sample hardship letter .
Since you can't go for short sale (you'll have to pay deficiency) or deed-in-lieu (most probably lender won't ask for deficiency) because the home needs repairs , therefore, what I suggest is, file chapter 13 and clear your dues on the mortgage. It will help you restructure your debts within 3-5 years and after that if there is any remaining balance, you will have to continue paying it so that you don't lose the home. But I think this is the best option for you as it implies that you are willing to pay. At least it will not have such a negative effect as foreclosure.
Regards,
Jessica.
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mykidsmom
Joined: 14 Mar 2008
Posts: 2
2.91 Dollars($)
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| Posted: Sat Mar 15, 2008 2:57 pm Post subject: |
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Thank you for responding so quick. I just have a few more questions.
1) Can you tell me why the Mortgage Forgiveness Act does not apply to California? Do you think that may change. Surely that doesn't seem acceptable that the rest of the country get help but not California.
2) The only debt I have is the house. Do you still think a BK is the best option?
Thank you again.
Vicki |
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Jessica
Community Mentor
Joined: 08 Jun 2004
Posts: 673
Location: OHIO
117.33 Dollars($)
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| Posted: Mon Mar 17, 2008 3:59 am Post subject: RE: tax on canceled debt california |
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Hi Vicki,
| Quote: | | Do you still think a BK is the best option? |
Yes I still feel it's the option for you at least when the short sale will give you nothing considering the home value has fallen and there are so much of repairs to be done.
Had there been no repair work or if you could afford it, then I would have asked you to do a short sale and then request the lender for a charge-off or cancellation of your unpaid balance. Yes, there are taxes but if you can estimate them and arrange for the cash, then I wouldn't have suggested bankruptcy Chapter 13. Again, first of all you need to find out if you qualify for Chapter 13 . Approach your nearest bankruptcy court and they'll help you on how to proceed.
As the FTB, California informs at http://www.ftb.ca.gov/forms/mortgage.shtml , the state is yet to enforce the the Mortgage Forgiveness Act.
It is expected that the state of California will also implement this rule but it may take some time.
Regards,
Jessica.
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Vicki
Guest
0.10 Dollars($)
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| Posted: Mon Mar 17, 2008 12:38 pm Post subject: |
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Jessica,
Did I post this in the wrong place? I think I should have posted under mortgage problems. I'm new to this site and really don't know my way around.
Thank you for taking the time to explain all that to me.
Vicki |
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Jessica
Community Mentor
Joined: 08 Jun 2004
Posts: 673
Location: OHIO
117.33 Dollars($)
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| Posted: Mon Mar 17, 2008 10:29 pm Post subject: RE: |
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Well yeah you could have posted it there but no problem. It's just fine. I hope i have been able to guide you to some extent at least.
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