Mortgage in trouble - how to avoid foreclosure?

Guest 0.10 Dollars($)

We are on the second month of no payment on mortgage. We can no longer afford the house and don't know exactly hat is good for us at this moment. We do have savings, that's around $25K but we don't want to take out it out all. We are in an interest-only mortgage and cannot refinance even as the house is going for $45K less than what we owe. The only person who's on the loan is me. Can the mortgage company come after me when it forecloses as I am expecting a call any moment due to my delinquency? Can we avoid the lender coming after our savings? I thought I would put my savings into my husband's account but now that CA is community property, I doubt whether they'll go after my husband's account to take my money. If they do foreclose, how do I get to avoid it, I there any way I can save my credit from going down drastically?how long will I be able to stay in the property if they foreclose? Can they report the $25K savings to the IRS? What are the other implication of facing a foreclosure? Should I request for deed in lieu then/ will that be a better option or do you think there are other alternatives as well??

larry · Joined: 27 Jun 2007 Posts: 3328 473.40 Dollars($)

Hi Barbara,

I think in this situation you should first talk to the lender regarding this situation. If you do not talk to the lender, your only option will be foreclosure. So talk to the lender and see what are the options available for you. If the lender allow you forbearance or Loan Modification, then it will be better for you.

If your lender does not allow this you can even go for Short Sale or Deed in lieu of foreclosure. This is far better than foreclosure because foreclosure will be shown on your credit report for 7 to 10 years and drop your points from 200 to 300 points where in short sale or Deed in lieu of foreclosure it will be 80 to 100 points.

You can also go through the page-
http://www.mortgagefit.com/foreclosure.html

If you have any farther questions feel free to ask Smile

Thanks,
Larry

Guest 0.10 Dollars($)

Hi,

It will be better if you avoid foreclosure. Go for Short Sale or Deed in lieu of Foreclosure because it will be beneficial for you as it is mentioned by Larry. Deed in lieu of foreclosure or short sale will hurt your report less than normal foreclosure.

Other options are also may open for you like Forbearance, Repayment plan, Reinstatement, Mortgage Modification etc. So discuss with the lender and find out what are the options available for you because this varies from lender to lender.

Jeanette · Posted: Tue Nov 06, 2007 6:26 am Post subject:

I strongly suggest you talk to your lender and see what the available options are except foreclosure. They can fully explain the options to you. As Larry mentioned, Forebearance or loan modification are a couple options. Call them right away because time is being wasted.

Guest 0.10 Dollars($)

Hello Barbara,

"Can the mortgage company come after me when it forecloses as I am expecting a call any moment due to my delinquency?'
Now before the mortgage company comes to you, it is better you contact with them. Tell them clearly about your situation. The sooner you contact them, better it will be for you. If you have only one or two late payments, then you can have the options like forbearance, reinstatement, mortgage modifications, mortgage assumption etc.

"how do I get to avoid it, I there any way I can save my credit from going down drastically?"
The only way to save your credit is to avoid foreclosure. And that is why, if forbearance, reinstatement, mortgage modifications, mortgage assumption etc. are not available for you; still you should request your lender for deed in lieu of foreclosure or short sale as Larry has mentioned above that foreclosure will affect your credit much more than Deed in lieu or short sale.

"What are the other implication of facing a foreclosure?"
If you face foreclosure your credit will drop 200 to 300 points and it will be shown on your credit report for 7 to 10 years.

0.10 Dollars($)

Hi

"Can we avoid the lender coming after our savings?"
After the foreclosure, it is you responsibility to pay off the remaining portion of the loan. The mortgage lender can attach a lien to your savings. So if you can pay the remaining loan on a monthly basis; your lender may not come after your savings. For that you have to be active and need to co-operate with the mortgage lender.

"I thought I would put my savings into my husband's account but now that CA is community property, I doubt whether they'll go after my husband's account to take my money."
If your husband's name is there on the loan, the lender might go after your husband's account also.

"how long will I be able to stay in the property if they foreclose?"
The law varies from state to state. In states where there is no redemption period, the eviction will proceed from one week to one month. And in states with redemption period the eviction period will start within one month to one year

Can they report the $25K savings to the IRS?
Your lender can report for the deficiency judgment to the IRS and also about your $25K saving.

larry · Joined: 27 Jun 2007 Posts: 3328 473.40 Dollars($)

Hi Barbara,

"Can they report the $25K savings to the IRS?"
I think your lender can report IRS for the deficiency amount if it is charged off as it will be counted as your income. But your savings may not be reported to the IRS.

"I thought I would put my savings into my husband's account but now that CA is community property, I doubt whether they'll go after my husband's account to take my money."
As you have said that your property is a community property, the lender may take out money from your husband's account for the remaining debt amount.

Thanks,
Larry

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