Posted on: 20th May, 2009 06:54 am
Can foreclose on my second home but continue to pay on my primary residence? will they come after that property? Also, I heard that in AZ, if you foreclose, the forgiven debt (i dont know if that's what you call the amount i wont be paying on the mortgages?) will not count as income and they will not come after you. Is this true? Then wouldn't alot more people be foreclosing? Does this mean the only reprocussion is the 250 drop in your credit score? there has to be more right?
oh, i'm finding out some other negatives:
i have a second mortage on that home that was not home improvements...so it looks like if i walk away from the second mortgage, i will have to pay taxes on the amount of the loan (140 thousand :( ).
i have a second mortage on that home that was not home improvements...so it looks like if i walk away from the second mortgage, i will have to pay taxes on the amount of the loan (140 thousand :( ).
Hi
If your second house is foreclosed on and there is a deficiency from the sale of the house, there are chances that the mortgage holder can come after your other properties. But since your primary residence is not a collateral against the loan you've defaulted on, it'll not be foreclosed. The mortgage holder can place a lien on it though. As far as the deficient amount is concerned, it is seen by the IRS as an income and is thus taxable. The state laws don't apply here because you pay this tax to the federal govt and not to your state govt. Nevertheless, you can get tax deductions on the forgiven loan amount under Mortgage Forgiveness Debt Relief Act.
If your second house is foreclosed on and there is a deficiency from the sale of the house, there are chances that the mortgage holder can come after your other properties. But since your primary residence is not a collateral against the loan you've defaulted on, it'll not be foreclosed. The mortgage holder can place a lien on it though. As far as the deficient amount is concerned, it is seen by the IRS as an income and is thus taxable. The state laws don't apply here because you pay this tax to the federal govt and not to your state govt. Nevertheless, you can get tax deductions on the forgiven loan amount under Mortgage Forgiveness Debt Relief Act.
WE are so up side down on our primary residence that we can only pay the interest at this time and are not paying any toward the principal. I have lost my job, and my husband has lost bonuses and income. We are not getting much help from the mortgage company, and are considering walking away from this. Should we do this. We can barely make the payments
To Lorraine,
Even if you walk away from the property, you will still be responsible for the mortgage. The lender will foreclose on the property and sell it to recover the outstanding loan balance. If there's any deficiency from the foreclosure sale of the house, the lender will come after you. They can sue you or can put lien on your other properties. Why don't you request your lender for a loan modification. It can help you reduce the monthly mortgage payments and stay in the property. In case you really want to leave the house, you can request your lender for a deed in lieu.
Even if you walk away from the property, you will still be responsible for the mortgage. The lender will foreclose on the property and sell it to recover the outstanding loan balance. If there's any deficiency from the foreclosure sale of the house, the lender will come after you. They can sue you or can put lien on your other properties. Why don't you request your lender for a loan modification. It can help you reduce the monthly mortgage payments and stay in the property. In case you really want to leave the house, you can request your lender for a deed in lieu.
What savior70 said is not true for AZ homeowners. Per the foreclosure guidelines for banks in Arizona, if you foreclose on your home and it is less than 2.5 acres and valued at under $750,000 and is a regular mortgage, not a second or line of credit, then you cannot be sued for the deficiency balance if the home sells. The only exception to this is if the lender can prove that the home sold for less due to owner neglect. Arizona's laws that prohibit this type of legal action are found in Arizona Revised Statutes Sections 33-814.G and 33-729.A