Hello Adonis,
I disagree with your statement here.
I do have a short sale acceptance approval letter from my bank that states"Subject to the following conditions, INGDirect will accept a payment in the amount of 325,212 in full satisfaction of the above referenced mortgage". Which means that I am not liable for the difference.
This will be the same case for DIL as well. Bank will issue 1099 for the difference amount, for which will be forgiven due to mortgage forgiveness act which is valid until 2009.
My question was not related to the financial implications. I wanted to knoe my credit implications and is paying 10K from my pocket worth going for short sale vs letting DIL. BTW, my bank agree to work with me on the difference amount of 15K. They will let me know either monday or tuesday. I looked at their assessment worksheet on my mortgage. And their numbers shows an approximation of 9 months to sell the property in case of DIL along with agent fee which comes to 45K. Clearly, 15K is better than 45K and the hassle. So, I am hoping for them to accept it. Worst case, I did talk to my buyer already and we agree to share the difference by coming in between. So, hoping for the best and lesson learned.
My earlier query was my credit implications with SS vs DIL. If I want to buy a home down the road with say, 20% downpayment, what would be the time I am looking at before banks start lending me with decent rates?
Also, I hear that some companies are proposing to ignore the forclosures and house related stuff in future in credit reports...How accurate is that info?
Thanks..and good luck to all of us.
A Deed in lieu foreclosure will remain in your credit score for 4 years from completion date. And as far as I know, you will also have to give the lender at least 10% down payment if you are buying a property within 4 to 7 years of a deed in lieu. As far as Short sale is concerned, it will remain on your credit report for 2 years from completion date. The FICO score will drop down by 75-100 points if you are doing a short sale whereas in case of deed in lieu foreclosure, the credit score will drop by 250 points.
So in case of a deed in lieu foreclosure, you will have to wait for 3-4 years for getting a mortgage with good terms and rates. However, you can get mortgage within 2 years of a deed in lieu but you will have to pay high interest rates. Keeping in mind all these things, its better to go for a short sale.
Well, I haven't heard anything about proposal to ignore the foreclosures and house related stuff in future in credit reports. Where did you hear it from?
Thanks Jerry, for the explanation.
My bank just approved this morning with lowered price of 321K and 5K buyer credit with a 1 day turnaround. Now, time to go back and close this within 1 week. Will update you guys on how it goes.
Thanks for all the suggestions and information.
Posted: Tue Dec 30, 2008 11:00 pm Post subject: Update
Hello,
I completed the short sale of my property last week with purchase price of 321K with 5K credit to the buyer. The deal is done, Escrow closed and deed recorded on 24th Dec. Out of 321K paid by the buyer, Bank got 305K, property taxes are 8.5K and buyer credit of 5K.
Thanks for all the help, support and information provided here. Its of great help in guiding me on where I am.
I have a question.... The property tax amt is considered as paid by me or buyer or the bank? Can I claim this deduction when I file taxes next year?
As far as I can understand, the property taxes were paid from the escrow. I think you will be able to claim this deduction while you file taxes next year. However, I would suggest you to consult a tax adviser who will be able to help you in a better way in this regard.
Hi James,
Yes, the property taxes were paid as part of the escrow as they were past due. I am guessing that that I can claim the taxes since they were paid through escrow as part of closing.
Anyone else with similar experience and definitive answer, please?
Thank you.
Thanks for sharing the information. If you have further questions regarding mortgage and related issues, you can post your query in the forum and the experts here will try to answer them. _________________ Procrastination is the enemy of your financial success
bugger Guest
Posted: Fri Jan 16, 2009 6:18 pm Post subject: Deed in lieu
I have recently been accepted for a deed in lieu. It was an investment property in Florida. Will the lender come after me for a deficiency and am I going to get killed on the 1099. My negotiator said that the lender will not come after me but it seems like he never knows for sure what he is talking about. I am paying $2000. towards the deed in lieu. I have not received the paper work yet. I am a nervous wreck. Also can I file bankruptcy if I get hit with a 1099.
In case of a deed in lieu, the lender will not come after you for the deficient amount. As he forgives the deficient amount, it would be considered as your income and thus IRS will charge taxes on that amount. To know more about deed in lieu, check out the following link:
http://www.mortgagefit.com/deed-lieu.html
As far as bankruptcy is concerned, you will be able to file it after you go for a deed in lieu.
Hello In regards to my short sale, i just got a letter from my lender saying that my account is paid in full and closed. Thanks to all the people who contributed their knowledge towards my case.
You are most welcome. And in case you have further issues regarding mortgage and related issues, you can post your query in the forum and experts here may help you with a solution. _________________ Procrastination is the enemy of your financial success
Bugger Guest
Posted: Mon Jan 19, 2009 5:07 am Post subject: Deed in Lieu
Thank-you for the information. Can you negotiate them not filing a 1099 on a Deed in Lieu. Maybe offer them a cash settlement not to file a 1099.
Guest
Posted: Mon Jan 19, 2009 10:29 am Post subject:
I guess by law they need to issue 1099 for the difference. Well, at the same time they need to write it off on their books as well. So, we cant escape 1099, for the difference no matter what. As for the taxes on 1099, it is the IRS that is getting the money, not the bank by itself. Maybe you can use that cash settlement money you are talking towards the taxes, if it is not substantial.
kingno1
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