Posted on: 16th Jun, 2009 11:02 pm
We bought our house on a conventional loan at the end of June 2007, We bought it for 242,000 and still owe about 237,000. We have absolutely no income coming in as my husband lost his job in the oil and gas industry. There is no unemployment for him as he was a subcontractor and we must relocate to find substantial employment. We have nearly emptied our savings on this last house payment. We can not afford a real estate agents fees, our house could possibly sell close to what we owe now, but I am not for sure. We need out now! Should we do a deed in lieu or try a short-sale? If we do a short-sale what are Colorado laws on the deficient amount after the sale? The mortgage company did sell the loan to a company somewhere on the east coast, will this change the anti-deficiency law? And since we have lived in our home 2 years at the end of this month will the tax relief act apply to us if we do a deed in lieu?
Thanks so much
Thanks so much
first come out from crisis. deed in lieu is the best option as you will not be answerable for difference of amount.
following are the criteria for qualification:
1) you are in default and don't qualify for any of the other options;
2) your attempts at selling the house before foreclosure were unsuccessful;
3) you don't have another FHA mortgage in default.
When you go for deed in lieu, you may have to pay 2 types of taxes. These are:
Deed tax: Since deed in lieu foreclosure involves transfer of property, the borrower needs to pay state deed tax upon conveyance of property to the lender. The deed tax is $1.65 for no consideration or when consideration is $500 or less.
The tax is calculated on the difference between the fair market value of your property and your mortgage balance plus liens removed from the property due to deed in lieu. It may vary from one county to another.
Income tax on canceled debt: As per Mortgage Debt Forgiveness Tax Relief Act (applicable till the end of 2009), one need not pay tax on canceled debt (unpaid loan balance which is forgiven by lender) resulting from deed in lieu. However, a borrower needs to satisfy certain conditions for mortgage tax relief.
following are the criteria for qualification:
1) you are in default and don't qualify for any of the other options;
2) your attempts at selling the house before foreclosure were unsuccessful;
3) you don't have another FHA mortgage in default.
When you go for deed in lieu, you may have to pay 2 types of taxes. These are:
Deed tax: Since deed in lieu foreclosure involves transfer of property, the borrower needs to pay state deed tax upon conveyance of property to the lender. The deed tax is $1.65 for no consideration or when consideration is $500 or less.
The tax is calculated on the difference between the fair market value of your property and your mortgage balance plus liens removed from the property due to deed in lieu. It may vary from one county to another.
Income tax on canceled debt: As per Mortgage Debt Forgiveness Tax Relief Act (applicable till the end of 2009), one need not pay tax on canceled debt (unpaid loan balance which is forgiven by lender) resulting from deed in lieu. However, a borrower needs to satisfy certain conditions for mortgage tax relief.