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sara
Moderator
Joined: 05 Jul 2006
Posts: 1651
Location: New Brunswick, New Jersey
308.83 Dollars($)
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Post subject: RE: what if home value less than what you owe |
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Hi Jeri,
You will still owe money even if the home sale through deed-in-lieu does not give the lender a price enough to cover your outstanding balance. Ideally you should pay off the remaining loan balance but even if you don't, the lender cannot seek a deficiency judgement. He may at best declare the debt as forgiven and as such you may have to pay the IRS a certain amount of tax.
Take Care |
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larry
Joined: 27 Jun 2007
Posts: 3328
474.44 Dollars($)
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Post subject: |
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Hi,
A short sale and a deed-in-lieu - both have a negative impact on the credit report of a borrower. So, even if your friend does a deed-in-lieu or a short sale, it will hamper his credit report.
However, with a short sale, the loan shows up as 'paid' or 'settled for less than originally owed' in the credit report, which I think is better then a deed-in-lieu of foreclosure. |
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Kurtis
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Post subject: Your help, God Bless... |
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| My wife's medical condition ( onset of seizures ) has made it so that we must move out of our home ASAP and get her from California, where we own our home...back to Georgia, where she will be much closer to close family members and friends that can help us out. ( we have 5 children as well, ages 13 down to 6 months old )... We currently owe about 565k on the home here in California, but the most we could expect to "net" on the sale of the home would be about 500k max. I am missing a lot of work now to care for my wife and kids and will soon be unable to make my mortgage payments....We owe 415k on the First Mortgage and 150k on a HELOC....What is going to be the best way to approach the banks ( it is Chase for the 1st Mortgage and Chase Home Equity for the HELOC ) and notify them of our situation and do the least damage to my wife's credit. ( Both of the loans are in her name only, due to her, at the time, having a much better credit score than I did ) I am on the title of the home along with her. Your direction is appreciated more than you know. God Bless you for this website. It has been an answer to my prayers just to be able to ask someone what to do. We have to be out of our California home completely by December 20th and will be in Georgia no later on December 30th ( as we have a flight connecting through there coming back from our Christmas Vacation to New York ) Our plans are to use the return "leg" of that trip to physically get all 7 of us to Georgia. We are having our personal items and 2 vehicles shipped from California to Georgia while we are in NY from Dec. 20-30th. I am praying that whatever solution is provided to us, will include our ability to be rent a home in Georgia while we "weather this storm". Thanks again... |
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Samantha
Community Mentor
Joined: 16 Sep 2005
Posts: 1597
Location: MASSACHUSETTS
148.36 Dollars($)
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Post subject: RE: how to pay off two loans |
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Hi Kurtis,
Welcome to forums.
I can understand what you're going through right now and indeed it's very disheartening.
Renting in Georgia will be a good option as far as your situation is concerned. Now regarding the two mortgages, I should say you can try out with the sale of the home whereby you'll be able to pay off at least 500K of the loan balance. But I'm not sure whether you have the funds to pay off the remaining balance. Do you have any savings or investments as such?? If not, well then you may try for paying off at least the first mortgage through the sale, a part of the Heloc also with the sale proceeds and then the rest can be forgiven by the lender provided you can prove that you're in financial hardship. I guess you're in a hurry to shift to Georgia or else I would have asked you to opt for an alternative payment plan.
Hope this helps. If you have further queries, please feel free to come up with it.
God bless you.
Samantha
_________________
Know how to compare lenders with mortgage booklet |
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Kurtis
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Post subject: Paying off the 2nd Loan ( Chase HELOC ) |
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| How am I going to have to show the Chase HELOC "people" that I am in financial hardship ? If I can't do that to their satisfaction, would I be able to negotiate paying them all but appx 50k and then agree to set up a repayment plan to pay them back ? How would that work regarding title ? If Chase 1st Mortgage is paid in full, I understand that they would release their "hold" on title, but how would Chase HELOC do the same ? Thanks again and God Bless... |
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sara
Moderator
Joined: 05 Jul 2006
Posts: 1651
Location: New Brunswick, New Jersey
308.83 Dollars($)
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Post subject: RE: repayment plan to pay off debt |
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Hi Kurtis,
Welcome back to the forums.
I guess what Samantha meant was that, if you're having problems in paying off both the loans in full, then explain it to the company. Tell them that there are certain liabilities for which you have to pay additionally and perhaps which weren't there initially when you opted for the loan, right? I guess a letter properly explaining your problems in paying off the loan would do. And, if you feel that's not a convincing one or if it does not work, then do try to negotiate with the company.
If they are willing to co-operate with you, they might agree to the 50K or else they might just want to raise it a bit and then allow you to follow a repayment plan for the rest of the balance. Regarding title, you will hold the title until and unless you pay off the debt using the repayment plan. But I guess, you can stay in some other property although legally this property will have your name on the title till the pay off is over.
If you pay off the entire first mortgage, Chase will have no hold of the first right? But they'll still have an interest in your property as far as the HELOC is concerned and that interest is worth the loan balance on the HELOC only. I don't think they would go for a foreclosure due to the second but they might charge off the loan. That is, they'll forgive it (cancel it actually) if they feel you won't be able to really pay off the second loan.
As a result, you need not pay off the second loan balance - it no longer remains your obligation but within a certain time period you can still pay just to improve your credit. And, if there's a charge-off, there's every possibility that the IRS may impose taxes on the amount forgiven.
Take Care and do feel free to discuss further with us and get clarified. |
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Kurtis
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Post subject: More questions, sorry... |
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| I am confused as to how I would hold title on a home that I sell to someone else ? wouldn't that person NOT be willing to do such a thing ? I would think that anyone buying my house would require that all liens be cleared before agreeing to purchase, right ? So, in my mind, the only option I have is to sell my home for whatever I can get for it, pay off Chase 1st Mortgage of 415k APPX,,,,and as much as the 150k I CAN pay with the balance, get Chase Home Equity to accept and release the title to the new owner, right ? At that point, I either have the "short" payment of the 150k forgiven ( ideal, but will impact my credit ) or arrange a repayment of that money ( which realistically we will not be able to afford ). In either case, again, I don't see how any proposed owner of my home would agree to have me still on title and attached to a debt on the house. Sorry for any repetition. God Bless you all ! |
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sara
Moderator
Joined: 05 Jul 2006
Posts: 1651
Location: New Brunswick, New Jersey
308.83 Dollars($)
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Post subject: RE: |
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Hi Kurtis,
I didn't actually mean that you can hold title once the house is sold off through a short sale. What I meant was, you do a short sale and get the proceeds. Using the proceeds, you can pay off the first mortgage entirely and a part of the second.
Now if you can prove to the lender that you are in financial hardship, then he might forgive the remaining part of the mortgage debt. As you said, you will not be able to afford the heloc, so if you can prove that you are financially not that sound enough to pay for it, then perhaps Chase will be ready to forgive it. Talk to them about it and only then arrange for the short sale. And, also, if you are going for the sale, do contact a real estate agent who can give you the right guidance.
Take Care |
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brad
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Post subject: option |
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| i have a property from a previous marraige and have now remarried. i was leasing the property will the options to buy and my tenat just defaulted on the lease agreement. i can't afford this property and my current one together what are my options of getting rid of it since i don't think i can sell it for what i owe? |
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Bobbie
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Post subject: Options |
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| I have a home which we sold to my brother-in-law under a land contract. However he has not made his payments on time since the first payment and we are starting to fall behind in our own bills. The current mortgage on the property is less then 30 days late but I do not know how much longer we can make two mortgage pays. How would the lender take a request for a deed in lieu of at this point. |
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helping_user
Joined: 31 Mar 2006
Posts: 815
Location: Hawaii
154.76 Dollars($)
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Post subject: RE: cannot afford to keep home |
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Welcome Brad,
Is the difference between what you can sell the property for and what you owe quite large? I suppose you cannot afford to pay the mortgage on this property any more. Is that so? Do you have any insurance policy so that you can pay off the loan? or else, talk to he lender and discuss about possible options. And, be positive, things will work out well if you can explain to the lender everything about your situation.
Thanks. |
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Alex12
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Bobbie, have a talk with the lender and find out what he says. That's the best thing you can do at this stage. For the lender to accept a deed-in-lieu, you should be someone who's in default or else who is in financial hardship and may not be able to pay off the loan. But you aren't in default and it's just that you feel you may not be able to repay.
One more thing is that, if you are not sure whether you will be able to pay off the loan, you can seek help from a financial advisor. He will be able to analyze your finances and help you organize your finances by preparing a budget for you. I think it will help you. |
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sopissedoff65
Joined: 09 Oct 2007
Posts: 1
1.31 Dollars($)
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Post subject: Thank You |
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| Thanks for the advice Alex. I think I am just feeling a little overwhelmed right now. As the go between in this it has been frustrating to say the least. You are correct when you say a budget may help. Usually I plan them but never follow through. Discipline is not my best area. |
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adonis
Joined: 22 Oct 2005
Posts: 3777
Location: ALASKA
109.26 Dollars($)
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Post subject: |
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Welcome Sopissedo,
I think you're right - not everyone is very disciplined but at times, it does help. A budget need not be that accurate, you know if it's a simple listing of my expected expenses and what i have actually spent, i would call it a budget. It's the way we want it to be. I've never tried to prepare a budget as a counselor does but it helps me carry out my daily expenses and save quite a few bucks for the extra things that I do.
_________________
Procrastination is the enemy of your financial sucess |
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Jun
Guest
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Post subject: Deed in Lieu |
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| Due my lower monthly income that I can not pay month mortgage payment of $1668. I have to give this house to lender "deed in lieu'. Could you help me? |
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