Tax ramifications of deed in lieu of foreclosure

My Mom passed away with out a will, she owned 1/2 of a house and another person owns 1/2 of the same house. The owner who still resides in the home he co-owned with my Mom has since decided not to pay the mortgage and is about to go into foreclosure, my question is can the Bank go after the Estate of My Mom or since she is deceased it would then be the sole responsibility of the 1/2 owner who is now the whole owner of the property?

To Jena,

The deceased borrowes estate can be used to pay off the deceased debts. Thus, if the value of the home is not enough to pay off the mortgage, the lender can come after your mother-in-law's assets. However, since she is deceased now, it is the responsibility of her co-owner to pay off the mortgage. If he stops making the payments, the lender will first come after him to satisfy the lien. If the mortgage company cannot recover the loan balance from him, he can go after your mother-in-law's estate.

I am facing foreclousure after only being in my home only 1 1/2y rs. The homes in the subdivision where I live are selling for half the price of mine now. I live in the state of Florida. if i file forclosure what will I be responsible for as far as taxes. can they garnish my wages?

Hi DARLENE,

If your lender forecloses the property and there remains a deficiency, you will be responsible to pay it off. The lender can come after you and garnish your wages if he gets a judgment against you. In case the deficiency is forgiven, it will be seen as your income and you will have to pay taxes on the forgiven debt amount.

i am from florida. my first and second mortgage are held by bac who has agreed to a deed-in-lieu. what happens to the second mortgage and is there a way to discharge it?

Hi Guest,

Though your property goes for a deed in lieu of foreclosure, you will remain liable for the second loan. It will not get discharged. If you do not pay the second mortgage, then the lender will charge off the loan and a collection agency will collect the dues from you.

Take care.

if my home is foreclosed on can my disability income be attached for any monies that the property is sold for short of the payoff amount

Hi marilyn!

Welcome to forums!

As far as I know, the lender will not be able to come after your disability income in order to recover the balance dues resulting from foreclosure.

Feel free to ask if you've further queries.

Sussane

Since laws about much of this vary widely from state to state, I would encourage you to find a qualified attorney and get advice specific to both your situation and your location.

If you choose to call the IRS and discuss this with them, be sure to place at least 5 phone calls. The IRS doesn't guarantee their answers and stating that you called the IRS isn't a defense against tax proceedings. Oh, and bankruptcy doesn't wipe out tax debt either :/

I have already moved out of my house. It was going through foreclosure; but I put the house on the market for sale. We had a buyer. The lender approved everything; thing the buyer backed out. I was told that I needed to fill out the papers for deed i lieu. Because I am trying to sell the house, can they deny me the deed in lieu?

Hi Sherry,

The lender will not deny you a deed in lieu of foreclosure just because you're planning to sell off the property. You should fill out the required documents as asked by the lender and apply for a deed in lieu of foreclosure.

Thanks

I have noticed that all Short Sales, Deed in Lieu of Foreclosures and Foreclosures have three things in common:

1) You need to get out of the banks contract and give back the property.

2) You lose anywhere around 250 to 350 points on your credit report for up to 10 years.

3) If you have a house note of $500,000.00 and its worth only $250,000.00 now and the balance is not all recouped to pay off the note $250,000.00 isn't it usually recouped by the lien holder(bank), via legal means.

What is the difference of going bankrupt with a home?

Is it true that the lien holders (banks) that own your home are really forgiving the balance owed?

Somebody, please advise as to let me know if these items stated above are true or is there something I am missing as a whole.

Thank you,
MeMe

if i do not want the house is it better to take the modification and rent out the house or go ahead and take the hit of a deed in lieu, if lieu what are the ramifications in the state of Florida

To Guest,

A short sale will lower your score by 80-100 points, bankruptcy will lower your score by 200 points and deed in lieu of foreclosure will lower your scores by 250 points. In case of deed in lieu of foreclosure, you won't be liable for paying the deficient balance whereas in case of short sale, you'll be liable for paying the deficient balance. You should file bankruptcy only when you've various other debts apart from mortgage.

To gosia,

You can go for a deed in lieu of foreclosure in order to get rid of the property.

What happens when you are a personal representaive of a deceased person estate (real property) there is no personal assets. The property is given back to the mortgage co, as a deed in lieu of foreclosure. There is not enough in the short sale of the property to cover the balance.?

Also due to heirs of which one can not be located. the mortgae company has ask the rep to file a petition with probate court for deed in lieu of foreclosure, can this be done?