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Old 09-02-2010, 01:59 PM
 
Location: Northern Virginia
1 posts, read 3,176 times
Reputation: 12

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I am currently attempting to "short sale" my home. Due to recent medical problems I've had to cut back on my work, and I probably will be forced to medically retire. If I am forced to retire, my income will be approximately half of what it is now. I will not be able to afford my mortgage payment, and any modification would still not be enough to keep me in my home.

My real estate agent told me that my lender (pentagon Federal Credit Union) is inclined to do the short sale because they don't want to have the house go to foreclosure. My agent said that because of H.R. 3648, lenders can't go after you if the bank forecloses on your home.

I have been doing some research and I have not been able to find any literature that says because of H.R. 3648 lenders can not pursue a deficiency judgment if the foreclosure sale results in a deficiency.

My loan is not owned by Freddie or Fannie.

If I am unable to sell my home in a short sale and my lender, PenFed, forecloses on my home, are there any provisions of H.R.3648 that would prohibit them from seeking a deficiency judgement against me?

Are credit unions more open to a Deed in lieu of Foreclosure then banks?

Thanks in advance...
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Old 09-02-2010, 03:03 PM
 
Location: Austin
7,244 posts, read 21,755,019 times
Reputation: 10014
Because of 3648, they cannot go after you for the difference of your short sale and what you owe. It is no longer considered "income" so they can't even tax you on the amount anymore. As for foreclosure, not sure...
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Old 09-02-2010, 06:04 PM
 
Location: Tempe, Arizona
4,511 posts, read 13,554,308 times
Reputation: 2201
Quote:
Originally Posted by JCD1996 View Post
...My agent said that because of H.R. 3648, lenders can't go after you if the bank forecloses on your home....
HR 3648 only applies to relief from income tax on the "gain" you receive from any forgiveness of part of your loan debt.

H.R. 3648 [110th]: Mortgage Forgiveness Debt Relief Act of 2007 (GovTrack.us)
Quote:
To amend the Internal Revenue Code of 1986 to exclude discharges of indebtedness on principal residences from gross income, and for other purposes.
It does not protect you from lenders pursuing a deficiency judgment. You should consult with an attorney regarding any possible relief you may have in your state.
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Old 09-02-2010, 06:20 PM
 
Location: Athens
470 posts, read 1,497,553 times
Reputation: 262
HR3648 is the mortgage relief act of 2007 which has been extended until 2011. Basically, if the lender 1099's you because they are "forgiving" the debt, the IRS will not consider that as income and you will owe no federal taxes on it. However, state is different. It does not prohibit the lender from coming after the debt, however, if they 1099 as forgiven they cannot do both. I am neither a lawyer nor financial adviser so you should contact one for the full ramifications in your situation.

HAMP/HAFA however, might play a role. The guidelines state that a lender complying with HAFA should forgive the debt. Well, OK, the first lien holder. 2nds and 3rds are up for negotiation.

Deed in lieu does not necessarily preclude the lender from seeking restitution of the amount owed. It just doesn't look as bad on your reports.
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Old 09-02-2010, 09:49 PM
Status: "Open for work" (set 9 days ago)
 
Location: Just south of Denver since 1989
11,822 posts, read 34,355,412 times
Reputation: 8950
Are you military?

HAFA could be the way to go.
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Old 09-09-2010, 04:08 AM
 
1 posts, read 3,056 times
Reputation: 11
If you have been approved for the HAFA program, then no, they cannot persue a DJ. Hopefully your agent is experienced in short sales, as it seems that you have not been given all of your information. There are so many factors that affect whether or not you would qualify for HR3648... A DIL will affect you as a Foreclosure would. If the bank Forecloses, you can bet that they WILL come after you for the deficiency, which will be much greater than you face now. (Likely). In most cases, an experienced SS Realtor can negotiate with the bank to have the deficiency forgiven.
I am in Chesapeake, VA and do a lot of short sales. If you are in the military, as my family is....be aware of the consequences for the different options as well. My suggestion is to contact an attorney, or have your Realtor educate you fully.......and if they are not qualified, have no business representing you. I wish you the best of luck. :-)
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