Posted: Thu Jun 12, 2008 5:00 am Post subject: Salvagable credit after losing investment property to bank
My husband an d I purchased a Florida investment property in our names. For 2 years we had renters, they moved out and we cannot find anyone to rent the place. We cannot make the payments any longer and have property up for sale at 100k less than we paid, 50k less than we owe. We are hoping to find a short sale buyer. If we can't, what is our next best option -- Deed In Lieu, bankruptcy, let it go into foreclosure? Our biggest concern is tax consquences and our credit. We want to be able to move from our primary residence into a bigger primary residence in the coming years.
If your biggest concern is your credit then I think you should go for short sale. In both deed in lieu and bankruptcy, your credit will have a huge negative affected. So if you cannot do short sale then request the lender for DIL. And even after that if the lender doesn't accept the DIL then you can try to file BK chapter 13 to avoid foreclosure.
Feel free to ask if you have any further questions.
how long will it take for our credit to recover if everything else is paid on time? How long with short sale, how long for a DIL, and how long for a bankruptcy? Thanks!
In case of deed in lieu it will be shown on your credit report for 10 years but you can get a mortgage after 2 or 3 years if you can improve your credit.
But if you can do short sale then you can get approved for a new mortgage even after 18 months with affordable rates and terms as short sale doesn't affect your credit much. BTW you can get approve for a mortgage even after a month but the rates and terms will not be suitable.
Feel free to ask if you have any further questions.
Best of luck,
Larry
Guest
Posted: Thu Jun 12, 2008 10:53 am Post subject:
Thank you so much. There is so much conflicting information on line about how these things affect credit. Do you think lenders (especially morgage lenders) will look at DIL and short sales and foreclosures differently after the nationwide crisis. I know I am not alone, and there must be a lot more people out there whose credit is also being ruined by mortgage mistakes... we all have to be able to recover, right? What about bankruptcy.. I heard someone say that, too is an option that may be easier to recover from, credit wise. what do you think?
bankruptcy will stay on your record for at least 7 years, if you have that long to wait for the reward of hard work and rebuilding your credit, that may be an option.
You are right about the seven year time frame for bankruptcy staying on your record, that is a long time to wait for something to come off, you may want to make this a last resort and try to work out other options. Goodluck with this and please keep us updated on what you decide to do.
Recovering from bankrupcy can be a hard long road, you will be turned down for anything and everything, you should only do it as a last resort. It will follow you for a long time, at least seven years.
you got that right, seems as soon as you apply for a loan, one of the first things they ask you, have you filed bankrupcy? If you have they will not or are not likely to loan you the money.
Wallace Guest
Posted: Tue Aug 18, 2009 9:59 am Post subject: Investment properties
So I have the same situation with two rentals. The banks wouldn't extend a line of credit for the homes, they said they were both half of what I owed...I lost my tenants, and couldn't get money to make repairs to get new ones. I put them up for sale, nothing. The banks won't do DIL or short sale, they are going into foreclosure...I think, I haven't gotten anything? Anyone know how to check?
Anyway, what is the tax ramifications of these foreclosures? Would it be wise for me to file bankruptcy, I mean, my primary home is worth less too (underwater).
If the lender forecloses the property, he will sue you for the deficient amount and you will have to pay it off. If the lender forgives the deficient amount, then you may have to pay taxes depending upon your state laws. You can file bankruptcy and surrender these properties to your lender but it would badly affect your credit report. _________________ Procrastination is the enemy of your financial success
tarajorge
