Posted on: 16th Jul, 2010 11:53 am
I bought my home at the height of the market - a 2 family - with the intent of using the rental income to restore the property. It was a variable rate mortgage that I refinanced 1 year in. I secured a piggy back loan thereafter. In 2008 I moved to NH for a better employment opportunity and listed the house. It was on the market for over 2 years - no bites. I spoke with the bank about short sale options and loan modification after some health issues came up. I was told I didn't qualify. The home is currently rented and the tenants pay 2/3 of the mortgage. The insurance company however, is requiring me to put in $10,000 to $20,000 worth of work to maintain coverage. This I cannot afford. The bank is recommending a Deed in Lieu. I have impeccable credit and am current on my payments. Do I qualify for this? Can they puruse my assests i.e. my home in NH (I've only lived there a year and have no equity). Can they repossess vehicles? Am I tax exempt from the IRS if a settlement is reached because the loan was initiated when this was a primary residence even though now it is a rental property?
hi sharalapointe,
you've mentioned that your bank has recommended a deed in lieu of foreclosure. in that case, if you agree to it, they would pursue the deed in lieu of foreclosure against you. this will help you in getting rid of the property and you won't be liable for paying the deficient balance which results from the sale of the property. it will be forgiven by the lender.
the forgiven balance will be considered as your income but the irs won't charge you taxes due to mortgage debt relief act which is in vogue till 2012. however, you credit score will be reduced by 250 points if you go for this option. also, as a negative item, it'll remain on your credit report for 7 years.
thanks
you've mentioned that your bank has recommended a deed in lieu of foreclosure. in that case, if you agree to it, they would pursue the deed in lieu of foreclosure against you. this will help you in getting rid of the property and you won't be liable for paying the deficient balance which results from the sale of the property. it will be forgiven by the lender.
the forgiven balance will be considered as your income but the irs won't charge you taxes due to mortgage debt relief act which is in vogue till 2012. however, you credit score will be reduced by 250 points if you go for this option. also, as a negative item, it'll remain on your credit report for 7 years.
thanks