Stop payments for short sale - Should I go for this option?

Sorry the for type -o, my property has not done well. The area is full of foreclosure and a very high crime area. I cant keep quality tenants in the area, and we are sinking quick. Will a deed in lieu hurt us tax time????

Hi Lionell,

If you are going for a deed in lieu, the lender will forgive the deficient amount resulting from the sale of the property. This forgiven amount will be considered as an income by the IRS and you will be charged taxes on it. However, depending upon your state laws, you can be relieved of paying this tax. In order to know whether you qualify for a tax relief, consult an attorney.

can i keep my home if a judge says thet idon"t have to pay the mortgage anymore. And awards me a grant deed to the property and punitive damages???

the judge gave me a $225,000.00 judgement and the judgement debtor has a property that's worth $800,000.oo i put a lien on the property can i get my judgement if it has a mortgage??????

Hi oicupikin,

Let me answer your second post first. You can definitely place a lien against a person's property if you owe money from him/her. But as there is a mortgage on the property, your lien will be considered as a subordinate lien.

As far as your first post is concerned, I did not understand your query. It would be better if you could explain your question in details.

Thanks.

i own a condo that i paid 180k on a few years back. i am able to make the payments but it is tight. the 1 bedroom condo is only worth 100k now. if i walk away, what can happen to me. can they take my cars, and 401k, my savings, etc. and will i owe taxes on the loan until the mortgage company sells the place. i have talked to the mortgage company about refinancing to a 40 year loan so i could possibly rent it out, but won't let me refinance. i can' seem to get any help. with the knew laws and help of the obama administration, and the mortgage debt forgiveness act, is their any help for me at all. i am trying to be a responsible adult, but with everyone getting help, and others walking away, why am i trying to be responsible! all i hear is that it will effect your credit score, if that is the only problem, i would much rather rent a house with more than one bedroom, save money because my rent will be lower and be able to do fun things that mortgage payment takes away from me.
your advice is greatly appreciated

Hello, I'm in the midst of a short sale offer and waiting for the mortgage's response to the offer. I'm getting conflicting answers on the # of points from the internet. I hear 75-100 and 250-300 points are taken away from a short sell. If the points are like a foreclosure and deed in lieu why would I do a short sell? Also, I heard in a deed in lieu the lendors come after our assets. Can they take our retirement (401k, pension or IRAs), cars etc.? I have paid all of my payments on time and up to date on everything, excellant credit to date (840).

Welcome,

To Pete,

If you walk away from the property, then the lender will have the right to foreclose the property. A foreclosure will definitely affect your credit score and lower it by 250 points. In a foreclosure, the lender can demand the deficient amount from you. If the deficient amount is forgiven, depending upon your state laws, the taxes on the forgiven deficient amount can be forgiven.

To PLee,

In case of a short sale, your credit score will be lowered by 75-100 points. However, if your property is foreclosed or if you want to go for a deed in lieu, then your score will be lowered by 250 points. In case of a deed in lieu, the lenders may garnish your wages or savings account. But as far as I know, they do not garnish retirement accounts.

My husband and I bought our house in June 2007,for $165,000, and our payments are currently $1319.66 per month. We have currently been negotiating with our Mortgage company, who keeps getting things all messed up (i.e., sending us late notices, notices that we don't have insurance, miscommunication within their department,etc). Our hardship agreement with the mortgage company is that we pay $660 per month for six months, as I recently lost my job in December, and we were living on $2100 per month take home pay. We also have approximately $16,000.00 in credit card bills, and a car payment of $167, 2nd mortgage (line of credit, with house as security) of $240 per month. I finally received my unemployment for $1200 per month, but only have three months left. My husband and I threw up our hands in disgust with the mortgage company and decided to catch up the one month of another $660 payment and then stay current on our mortgage. My husband then, a few days later, ended up taking a 15 percent cut in pay, and since his job has to do with the lumber industry, we have no idea if he is going to be able to keep his job. We changed our mind about signing the acceptance letter of the $660 payments, and decided this would be the best way to go for now, with the recent development, and we signed it and sent it in (totally within their required dates). Basically, we're afraid that since I have not been able to find a job in three months, that I may not be able to find another one in the next three months, which is when my unemployment insurance runs out. We don't know if we should stop paying now, or wait until the six months of $660 payments run out, and the nrefigure the situation, whether to file bankruptcy or not, or who to talk to about the situation. We would love to stay in our house, but we have to realize that losing our home, is a good possibility. We also have a line of credit w/our home securing it, as the value of our home went up about $20,000 for the first year, as it was valued at $180,000 and then last year it's value dropped to $145,000. We are at a loss as to what to do here. We have no idea what direction to go. How does foreclosure work? At this point we are current, as we have made full payments to date, but our next payment of $660 is due on 04/20/2009 (04/01/2009-per the mortgage for the full payment-See what I mean?)Do you have any suggestions as to what route we might want to take to help us? If I lose my unemployment, we will only be living on $1600 a month in income, and a $1319.66 house payment in six months. We figure there's no sense in beating a dead horse, as we will need money to move out and rent. Can you help me with some suggestions and directions. I live in the State of Oregon also, and am financed by CitiMortgage.

Thank you sooooooo much! We're so scared and confused.!!!

Welcome anjilzheart,

I can understand that you are facing a tough situation. Foreclosure or bankruptcy should be the last option for you. As you are facing hardship, you can contact the lender and check out if he could accept a deed in lieu. However, you should remember that lenders don't accept a deed in lieu in you are current on your payments.

In the deed in lieu of foreclosure, the lender will sell off the property to recover the debts. The deficient amount resulting from the sale of the property will be forgiven. But it will badly affect your credit score and lower it by 250 points.

Hello,
I currently have a Rental Property ( landlord by default, Condo would not sell after getting married) and I am on the refinanced Mortgage of my wifes Condo. I listed my Rental with a Realtor and now have an offer for $81,000 less than what I owe. The loan is an ARM with Indymac that adjusts next year. I am currently able to make payments and have not missed any. $16000 of the $81000 is an Equity line with Indymac as well. I live in Florida. Will the Bank accept the Cash offer and let me out of the property or will I be responsible for the difference owed. The rent doesn't cover the expenses. Thank You Dan

Hi Again,
In addition to the last post I have also listed my Wifes Condo for sale as it is a 1 bedroom and we have a two year old daughter and need more space. This MTG is with ING and about $90,000 will be the difference if I get an offer close to asking. Is there a way I can short sale both properties? They gave me this ARM in Oct 2007 with Their pencil search appraisal of $230,000 and now I have it listed for $99,000 while I owe $179,000. I really need to get out of these Condos and wondered if these ARMS fall into the BAD loan category.

Thanks for any advise,
Dan

Hi My loan was with ING Direct as well and I was able to short sell my property and they forgave the difference. Good experience with them..understanding..

Hi, kingno1,

Congratulations on your successful short sale! I have a similar situation as you: Only I have a job in my family of four, I bought a house in Florida in 2005, and relocated to Arizona in 2008 because of job change. My mortgage and HELOC are both with INGDirect, never refinanced. My house has been listed for more than 6 months. Now I'm owning 300K, and ING agreed a short sale but said they will not consider offers lower than 250K. So the only offer I received of 220K backed off...

I want to ask you a question: when did you stop your mortgage payment? Before you talked to ING about short sale or after they agreed to short sale? I just stopped my payment for April while they were reviewing the 220K offer. Since now the offer is gone, I don't know if I should resume payment or not. Thanks!

Hi dj,

I believe you can short sale both the properties. If you are facing problems making payments and want to short sell both the properties, I don't think the lender would object to that. However, whether they would come after you for the deficient amount entirely depends on them. Generally they do come after the borrower for the deficiency amount after the short sale.