Posted on: 08th Nov, 2007 07:03 am
my wife is facing foreclosure on the house that she used to live in with another person (joint mortgage).
the other person has been living with there for the past year but has been unable to refinance the loan in her own name, nor sale the house. she is now 90+ days behind on the payments. ok, my wife and i have our own responsibilities and can not afford to take financial responsibility for that house.
what is going to happen to us? the foreclosure process is already beginning, but they are going to look at the only offer that has been made on the house since its been on the market for the past 4 months. the offer is $43k below what is due or the loan!!! is this the best way to go? a short sale? or should we do a deed in lieu? the offer is from an investor that has been told to much by the realtor and is trying to get a steal.
the loan is only for $183k and the house was supposedly appraised at 220k before it went on the market. its been reduced in price to 195k for the past month now and no offers except this one.
how would they split up the responsibility from any losses on the house since there are two names on the loan? 50/50? what about taxes ?
this is so stressful and unexpected for my wife and me. we are both financially responsible and were looking forward to doing a lot of things in the near future, but this is going to set us way back.
the other person has been living with there for the past year but has been unable to refinance the loan in her own name, nor sale the house. she is now 90+ days behind on the payments. ok, my wife and i have our own responsibilities and can not afford to take financial responsibility for that house.
what is going to happen to us? the foreclosure process is already beginning, but they are going to look at the only offer that has been made on the house since its been on the market for the past 4 months. the offer is $43k below what is due or the loan!!! is this the best way to go? a short sale? or should we do a deed in lieu? the offer is from an investor that has been told to much by the realtor and is trying to get a steal.
the loan is only for $183k and the house was supposedly appraised at 220k before it went on the market. its been reduced in price to 195k for the past month now and no offers except this one.
how would they split up the responsibility from any losses on the house since there are two names on the loan? 50/50? what about taxes ?
this is so stressful and unexpected for my wife and me. we are both financially responsible and were looking forward to doing a lot of things in the near future, but this is going to set us way back.
Hello Taylor,
Lenders generally do not agree to accept a deed in lieu because he won't be able to seek deficiency judgement in that case.
He will probably ask for a short sale even if it is $43k below the mortgage, as he will try to get that back by filing a judgement.
In that case, both the owners are equally responsible for the deficit amount as well as the taxes. If one defaults, the other has to pay it completely.
You can talk to the lender for a charge-off where the debt will be forgiven and you have to pay IRS tax on this forgiven amount.
Otherwise the only other option might be filing a bankruptcy ch 13, if they qualify for it. This will stop the foreclosure immediately and they will get some more time to consider it for selling, till the stay period is over.
Lenders generally do not agree to accept a deed in lieu because he won't be able to seek deficiency judgement in that case.
He will probably ask for a short sale even if it is $43k below the mortgage, as he will try to get that back by filing a judgement.
In that case, both the owners are equally responsible for the deficit amount as well as the taxes. If one defaults, the other has to pay it completely.
You can talk to the lender for a charge-off where the debt will be forgiven and you have to pay IRS tax on this forgiven amount.
Otherwise the only other option might be filing a bankruptcy ch 13, if they qualify for it. This will stop the foreclosure immediately and they will get some more time to consider it for selling, till the stay period is over.
hi taylor,
welcome to our community forums.
the short sale price is too less...so i think it's better if you consider filing chapter 13 bankruptcy. this is because even if you go for deed-in-lieu, you will get a price close to the short sale price itself because that's how the market is probably in your area. so i would agree with jenkin here. going for a chapter 13 bankruptcy is much better here, though bankruptcy is the last thing i recommend to people who are in financial trouble. but in your situation, compared to a foreclosure where you might have to pay the deficiency and then the tax, a bankruptcy that too chapter 13 is much better.
however, you need to check out whether you'll be qualifying for chapter 13 or not. other than that, i don't find any option except a short sale.
if you have any related query, please feel free to ask. :)
regards,
jessica
welcome to our community forums.
the short sale price is too less...so i think it's better if you consider filing chapter 13 bankruptcy. this is because even if you go for deed-in-lieu, you will get a price close to the short sale price itself because that's how the market is probably in your area. so i would agree with jenkin here. going for a chapter 13 bankruptcy is much better here, though bankruptcy is the last thing i recommend to people who are in financial trouble. but in your situation, compared to a foreclosure where you might have to pay the deficiency and then the tax, a bankruptcy that too chapter 13 is much better.
however, you need to check out whether you'll be qualifying for chapter 13 or not. other than that, i don't find any option except a short sale.
if you have any related query, please feel free to ask. :)
regards,
jessica
The lender did offer my wife the option to sign the house over to them, but, there was an offer made on the house later that day which the other person on the loan told the lender. Now they want to see the offer.
My wife hasn't signed it yet, so do we still have options?
How does bankruptcy work? Seeing how we are married, will it affect me as well? Or can my wife file alone since the debt is in her name? Does bankruptcy take away all or some of the debt, or just give you the opportunity to pay it all back?
My wife hasn't signed it yet, so do we still have options?
How does bankruptcy work? Seeing how we are married, will it affect me as well? Or can my wife file alone since the debt is in her name? Does bankruptcy take away all or some of the debt, or just give you the opportunity to pay it all back?
Hello Taylor,
Your wife can alone file the bankruptcy as she is on the mortgage.
If she is planning for a bankruptcy Ch 13, that means she will have to pay the debts off within a period of 3-5 years.
For Ch 7, she has to put all her non-exempt property to the bankruptcy trustee and these will be liquidated to pay off her debts. It mostly eliminates all the unsecured debts.
Your wife can alone file the bankruptcy as she is on the mortgage.
If she is planning for a bankruptcy Ch 13, that means she will have to pay the debts off within a period of 3-5 years.
For Ch 7, she has to put all her non-exempt property to the bankruptcy trustee and these will be liquidated to pay off her debts. It mostly eliminates all the unsecured debts.
Hi Taylor,
I think as the lender has already agreed for deed in lieu your wife should go for it.
See first of all you have to decide whether your wife wants to keep the house or not? Will she be able for the mortgage payments any further? If not then better go for DIL. Otherwise Chapter 13 is another option that she can take as Jenkin and Jessica has already mentioned above.
Feel free to ask if you have any further questions.
Best of luck,
Larry
I think as the lender has already agreed for deed in lieu your wife should go for it.
See first of all you have to decide whether your wife wants to keep the house or not? Will she be able for the mortgage payments any further? If not then better go for DIL. Otherwise Chapter 13 is another option that she can take as Jenkin and Jessica has already mentioned above.
Feel free to ask if you have any further questions.
Best of luck,
Larry
I would at least try for the short sale. It really doesn't hurt to do so. Also, have the person living in the house call the mortgage company to work out a payment solution. Many lenders offer solutions such as tacking the late payments on to the end of the mortgage or spreading them out over then next 12 months. Usually there a few options there.
i am in excellent standing with my mortgage since august 2006. i recently sued the previous owner for breach of contract and won. in my discovery of all paperwork for this closing, i discovered that the mortgage broker frauded the application and violated truth in lending laws. i have been advised to stop paying the mortgage to force the bank to deal with me. i can not continue paying the arm and am contemplating writing the bank to ask for a short sale or deed in lieu of foreclosure. i want out of this property and need to retain my good fico score. what is the ideal way to handle this problem?
Hi miamifrank!
Welcome to forums!
Both short sale and deed in lieu will affect your FICO score. A short sale will lower your credit score by 75-100 points whereas a deed in lieu will lower it by 250 points. If you want to save the property, you can apply for a loan modification. This will also help you in saving your credit.
As far as violation of Truth in Lending laws is concerned, did you contact a lawyer in this regard?
Sussane
Welcome to forums!
Both short sale and deed in lieu will affect your FICO score. A short sale will lower your credit score by 75-100 points whereas a deed in lieu will lower it by 250 points. If you want to save the property, you can apply for a loan modification. This will also help you in saving your credit.
As far as violation of Truth in Lending laws is concerned, did you contact a lawyer in this regard?
Sussane
i recently lost my job, i have moved out and now have renters in paying on the first mortgage. i also have a second mortgage, which i can't pay. now i have received a notice of default in which they want to foreclose in 3mnths. what is the exactly the time line i am looking at? do second mortgages foreclose exactly in the 3mths as stated in the default letter, or is there any leeway of time for me? i want to try and sell the house.
thanks
thanks
Hi sidewinder!
Welcome to forums!
The second mortgage can foreclose the property within the given period of time if they do not receive their payments. However, in most cases, they don't do so as they will have to repay the dues of the first lender. However, they can always charge off the account and assign it to a collection agency.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
The second mortgage can foreclose the property within the given period of time if they do not receive their payments. However, in most cases, they don't do so as they will have to repay the dues of the first lender. However, they can always charge off the account and assign it to a collection agency.
Feel free to ask if you've further queries.
Sussane