Posted on: 02nd Aug, 2007 10:04 am
so if we have a second mortgage by the same lender and since they won't accept a deed in lieu of foreclosure, i guess the only option is a short sale even though we wil take a huge loss on the property. we can no longer afford to make our mortgage payments and are moving and renting a place so we can try and get our heads above water. what will happen in the meantime? also what if the house doesn't sell because the market here is very bad? we are just trying to ove on with our lives as best we can. thank you.
Hi Kerry,
If the market is bad then lender would prefer to go for foreclosure instead of a short sale. After foreclosure sale lender would attempt to get a deficiency judgment against you to recover the deficit balance.
Miller
If the market is bad then lender would prefer to go for foreclosure instead of a short sale. After foreclosure sale lender would attempt to get a deficiency judgment against you to recover the deficit balance.
Miller
Have you tried leasing out it out to someone? In such down markets this option can be sometimes used.
Hi Kerry,
As you are aware of the current bad market, then going for a short sale won't be the best solution for you. In this situation, you may opt for a lease-to-purchase agreement.
A lease-to-purchase is essentially a rental agreement by way of which a person will lease your property for a specific period of time and then he has the option to purchase the property before the end of the lease agreement. The rental payments will help you to make payments fore the loan.
There are many buyers in the market who looks for home. Once you are able to find any such person, you can set up a lease-to-purchase agreement for a period of 2 to 3 years.
Thus, instead of going for a foreclosure or a short sale which may affect your credit score negatively, going for a lease-to-purchase option will be better.
As you are aware of the current bad market, then going for a short sale won't be the best solution for you. In this situation, you may opt for a lease-to-purchase agreement.
A lease-to-purchase is essentially a rental agreement by way of which a person will lease your property for a specific period of time and then he has the option to purchase the property before the end of the lease agreement. The rental payments will help you to make payments fore the loan.
There are many buyers in the market who looks for home. Once you are able to find any such person, you can set up a lease-to-purchase agreement for a period of 2 to 3 years.
Thus, instead of going for a foreclosure or a short sale which may affect your credit score negatively, going for a lease-to-purchase option will be better.
In our case our 1st mortgage is adjustable and will go up in Dec and the 2nd is fixed. I don't think a lease-to-purchase option will be good. We don't have a choice but to try a short sale. I know even if that happens we will owe the IRS. If it did sell would we still be hit with a defiency judgement by the lender?. How about if it is just a foreclosure? Would we still owe the IRS money? Thanks
At the time you talk about short sale you will have to negotiate with the company and get a written understanding that they will not attempt to get a deficiency judgment against you. As far as I know many companies do agree to such an agreement with the borrower.
Miller
Miller
Hi Kerry,
Welcome back to the Forum.
When you go for a short sale, you will get less amount of money to cover the the payments of your two loans. In that case, the lender will file a deficiency judgment against you to cover the deficit balance of the loans in the court. This will be reported to the IRS and inturn will require you to pay the applicable tax.
In case of foreclosure also, if the procedure does not cover the payments of the two loans, then the lender may ask for the deficiency judgment and you may have to owe to the IRS.
So, for both the cases, you will have to pay to the IRS.
Welcome back to the Forum.
When you go for a short sale, you will get less amount of money to cover the the payments of your two loans. In that case, the lender will file a deficiency judgment against you to cover the deficit balance of the loans in the court. This will be reported to the IRS and inturn will require you to pay the applicable tax.
In case of foreclosure also, if the procedure does not cover the payments of the two loans, then the lender may ask for the deficiency judgment and you may have to owe to the IRS.
So, for both the cases, you will have to pay to the IRS.