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Caron
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Joined: 19 Jul 2005
Posts: 1340
Location: florida
222.66 Dollars($)
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 Posted: Tue Mar 04, 2008 12:59 am Post subject: RE: paying off loan after bankruptcy chapter 7 |
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Hi Rich,
As much as I understand, if you have filed chapter7, all your debts are wiped out. Now when you have an unpaid balance on the mortgage, you may or may not pay for it depending upon whether you wish to improve your credit record. Now that you have decided to pay off the loan, the lender may have given you an alternative to the repayment plan you had followed earlier.
However, what I am concerned about is that why do you have to refinance when your debt is already discharged. I feel it should be optional for you as to whether you accept the interest-only ARM or simply don't pay off the loan. Did you sign a reaffirmation agreement with the lender?
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Jessica
Community Mentor
Joined: 08 Jun 2004
Posts: 636
Location: OHIO
106.09 Dollars($)
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| Posted: Tue Mar 04, 2008 1:22 am Post subject: RE: need to get rid of one house and loan on it |
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First of all, talk to your renters and find out if they are willing to buy the property from you as well as assume or take over the mortgage. If they are willing to do so, talk to the lender about it. If he finds them as suitable creditworthy borrowers, he may agree to such a transaction.
I don't know the duration of the lease period. How long is it for? because if you wish to do a simple sale of the property, then the renters have to move out and they may not be willing to because they must have signed a contract. By the way, how is the home sales market in your area?
If the proceeds are worth considering, then you can pay a certain amount to the renters so that they move out but again this is just what I think of. And, whether you go for a simple sale, deed-in-lieu or even a short sale, the first option is not going to affect your credit but the other two will certainly affect and in all these cases you'll have to do something for the renters. Are you thinking of evicting them? that will not be a good thing though and I personally don't support.
Just in case your renters agree to move out, and you go for a short sale or deed-in-lieu (the latter isn't that easy compared to the former as lenders try not to go for the latter just because they can't collect the deficiency), the lender can place a lien on the current house only if you don't pay the deficiency asked for and they don't cancel the unpaid debt.
However, you are not in default, so you need to explain to the lender that you will have problems paying off the loan on the first house. Only then will be agree to some option by which you can get rid of the loan.
Hope I could explain things clearly.
If you have more queries feel free to talk further.
Regards,
Jessica.
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RIch
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| Posted: Wed Mar 05, 2008 7:41 pm Post subject: paying off loan after bankruptcy chapter 7 |
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Caron,
Thank you for getting back to me. I wanted to refinance the loan so that I could drastically lower the monthly payments and keep the house without having to go through the aggravation of moving again. As I mentioned, and you pointed out, the debt was discharged and I did not Re-affirm the Debt with them (so I am no longer personally responsible for repaying it). I simply kept paying the mortgage because we had two incomes and the payment wasn't a problem. That was when I had two incomes. I am down to one now and can't afford the monthly pmnt. If the Lender, Countrywide, would agree to new terms with a much lower payment, I might consider refinancing. If not, I will just hand the keys over to them...One of my major concerns here is that since I claimed Banckruptcy, My credit has rebounded. If I simply hand the Keys back to them now, can they put that on my Credit??? Since I am no longer personally responsible for the repayment of this debt, I am under the assumption that they cannot put anthing more related to this loan on my credit..Is this a correct assumption? |
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Caron
Moderator
Joined: 19 Jul 2005
Posts: 1340
Location: florida
222.66 Dollars($)
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| Posted: Wed Mar 05, 2008 11:18 pm Post subject: RE: after discharge debtor is not personally responsible |
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Rich,
I do agree with you. Since you are no longer responsible for the debt having been discharged from chapter 7, therefore the lender should not report it to the credit bureaus that you have surrendered the property.
You are just paying so that you can clear the debt even though it has been discharged and whatever payment you've been even after being discharged, will add value to your credit report. By the way, when did you last check your score and take out your credit report? If it's been long, then take a look again, may be you'd get some positive changes.
However, after having said that the lender should report if you hand over keys, I would still ask you to ask the lender directly because so many things have been happening in the industry the way they shouldn't.
Good luck
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lisascherzer
Joined: 04 Jan 2008
Posts: 599
69.56 Dollars($)
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| Posted: Mon Mar 10, 2008 9:16 pm Post subject: |
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I dont think the lender will lower the payments. Even if they do it will be temporary. If they see that you do not have the means to keep up the payments in the long term, most lenders will work with you on a payment plan.
Since you have included the mortgage lender in your BK, then they will liquidate the home through the foreclosure process. You may still be able to deed in lieu instead.
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cannot_make_payment_joe
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| Posted: Tue Mar 11, 2008 10:49 pm Post subject: deed in lieu foreclosure |
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| Need advice and directions. I bought a house with a friend as an investment property and agreed to sell the house after two years. It is two and a half years past, and we can't sell the house. The house has lost its value. It's at 550K and the loan is 690K. We bought the house with 0 down and paying interest only. We are current with the payments but in a couple of months I will not have the money to pay my half of the house. My partner is willing to give up the house cause she can't make the house payment on her own. In this case, I call the lender and they suggested deed in lieu foreclosure. they also ask me for two months bank statement and two check stub and all my bills and expenses. What is this all about and should I just provide them the info they requested....?? One more thing, my name is not on the loan. My name is on the title of the deed. Your help is greatly appreciated. |
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Jessica
Community Mentor
Joined: 08 Jun 2004
Posts: 636
Location: OHIO
106.09 Dollars($)
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| Posted: Thu Mar 13, 2008 3:47 am Post subject: RE: deed in lieu on investment property |
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Hi Joe,
Welcome to our community forums.
Do you mean to say that you have been paying for the loan to cover up the price of your share of the house? But the loan doc does not have your name. So, your friend should have contacted the lender and it is he who needs to submit papers since he's on the loan.
What I can understand is, may be the lender wants his money back and so he has asked you to submit the papers because he wants to examine if at all you cannot pay off the loan. Actually he wants to review your financial situation. Are you sure you're not on the loan doc?
I feel you should have a straight talk with the lender and then even if he's well aware that you aren't on the loan and still asks for deed-in-lieu (dil), then you may ask your friend to go for it.
What i like about the deed-in-lieu is, it doesn't allow lenders to collect the deficiency or unpaid debt as in a short sale or foreclosure. Also, if your friend isn't in California, he need not bother about paying taxes in canceled debt as the law has changed now.
However, prior to accepting a dil, it is better to refer to the information available here and get an idea of how deed-in-lieu works .
Regards,
Jessica.
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Maureen
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| Posted: Thu Mar 13, 2008 11:12 am Post subject: deed in lieu |
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| If there are unpaid property taxes, does a deed in lieu mean that the lender will assume these taxes? |
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Caron
Moderator
Joined: 19 Jul 2005
Posts: 1340
Location: florida
222.66 Dollars($)
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| Posted: Fri Mar 14, 2008 12:24 am Post subject: RE: unpaid property taxes after deed-in-lieu |
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Hi maureen,
The lender sells off property in deed-in-lieu and tries to recover the what you owe to him. Now, if there are unpaid/back taxes involved, the lender might pay them off to prevent any tax lien from being placed on the property. Otherwise, it would be difficult to sell the property. It has to be decided in agreement with the lender as to who will pay off the unpaid taxes.
Good luck
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cannot_make_payment_joe
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| Posted: Tue Mar 18, 2008 3:38 pm Post subject: deed in lieu on investment property |
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| hey Jessica, thank you for your advice. My name is not on the loan but I don't want to abandon my partner. She will have bad credit and I've since spoken with a Realtor lawyer and dil is as bad as foreclosure. Is there any other solutions for me to get out of the house without getting bad credit. She is single and she depends on her credit. Since I'm not on the loan docs, this have no affect on me if i just walk away. I can't have it. |
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larry
Joined: 27 Jun 2007
Posts: 2911
403.68 Dollars($)
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| Posted: Tue Mar 18, 2008 3:49 pm Post subject: |
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Hi,
If you do not want to go for DIL then you can try out short sale. Short sale will have less negative effects on your credit but in that case you will have to pay the difference between the sale price and the due mortgage. But in DIL the lender cannot ask you for deficiency judgment as Jessica has also mentioned.
Feel free to ask if you have any further questions.
Best of luck,
Larry |
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Guest
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| Posted: Wed Mar 19, 2008 4:58 pm Post subject: Is DIL the right option for me? |
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Hello,
I am in the middle of a stressful situation that perhaps you can help me sort out. My wife and I bought a house 2 years ago with only 5% down. 1 year later, I lost my job and we needed to move out of state in order to find new jobs. We were not in a position to put our house on the market because we wouldn't have been able to afford our mortgage payments during the "for sale" process. We decided to rent out the home short term (12 months) in hopes that our situation would improve and the market would correct itself so we could sell the property.
Our tenants are moving out next month and we will barely be able to afford our rent and other expenses where we live now AND our mortgage payments and associated expenses there as well. We are putting the home on the market in a few days, but the market is really bad in this area and we hardly have any (if any) equity in the home. We fear that even if we find a buyer, we won't be able to afford to come to closing with enough cash to pay the difference between the sale price and our payoff amount, the real estate commission and other associated fees.
Each month the home is on the market without a buyer we will be losing $1300. If we have the home on the market for 90 days and don't receive an offer that we can "afford" to accept, should we offer our lender DIL? Also, would we be eligible under the Mortgage Debt Forgiveness Tax Relief Act? We rented our home for the last 12 months, but at no point did we intend to use the house as an "investment" property. We simply rented it for a few months in hopes the market would turn around so we could "afford" to sell the house and be done with it. Any suggestion? Does DIL sound like a good fit for me? |
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Jessica
Community Mentor
Joined: 08 Jun 2004
Posts: 636
Location: OHIO
106.09 Dollars($)
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| Posted: Thu Mar 20, 2008 3:08 am Post subject: RE: DIL may be an option for you |
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Hi Guest,
Welcome to our community forums.
After reading through your situation, I shall suggest that you offer the lender a DIL and then see what he has to say. Considering the market and your financial situation, it's better to rent for a few months and have better control over your finances with a new job before you think of buying a new home again. So, you may hand over the keys to your lender. Also, lenders don't ask for the deficiency in a deed-in-lieu because that's how the law goes. So, there's no question of paying taxes on any deficiency.
Moreover, the tax payment on forgiven debt is applicable only in California unlike in other states where one need not pay the taxes as per the mortgage debt forgiveness debt relief act. Also, there are different criteria which one has to satisfy before he gets a tax break on forgiven debt .
Regards,
Jessica.
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HoHum
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| Posted: Fri Mar 21, 2008 6:33 pm Post subject: Short Sale/DIL/Foreclosure |
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| My ex just moved out of a house we were trying to sell. I am thinking about moving in. Our real estate agent is in the process of doing a short sale on it. My attorney advised against doing the short sale (credit affected with any option on table), saying I should do a Deed in Lieu (bank cannot collect deficiency - 2nd mortgage with different lender will be owed $50,000.00). I have been by 2nd morgage lender they will charge off what is owed and come after me via wage garnishment, etc. Attorneys here say they cannot do that. 1st morgage co will not do a short sale. Attorneys tell me to do a deed in lieu. 1st morgage co say they will not go for it. I think I should do a deed in lieu anyway, and if they forclose, they foreclose. I would like to live in the house until all of this settles to save $. 1) should I do it (and how long will it be before I am extracated - notice of foreclosure just came to me). 2) what are the tax implications for short sale vs. deed in lieu vs. foreclosure? |
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larry
Joined: 27 Jun 2007
Posts: 2911
403.68 Dollars($)
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| Posted: Fri Mar 21, 2008 6:51 pm Post subject: |
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Hi HoHum,
Welcome to the forum.
Lenders do not always approve DIL. So if you cannot be able to short sale then I think filing chapter 13 will be far better option than foreclosure. In most cases if you file chapter 13 you will retain the ownership of the house and the lender cannot be able to pressurize you to sell the house. The court will make an affordable chapter 13 plan for you and you can make the payments to the lender.
If you want to know more about "Which is right for you - bankruptcy or foreclosure?" check out this article at http://www.mortgagefit.com/bankruptcy/foreclosure-chapter13.html
Hope this helps you.
Feel free to ask if you have any further questions.
Best of luck,
Larry |
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