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My mortage company had suggested we do this, its suppose to be better than a foreclosure or a short sale, its for when you tried to sale your home, but could not, its suppose to be the bank giving you a fair market sale on your home, where both parties benefit, anyone have a good or bad experience with this? We are relocating and have found employment elsewhere cause its so rural here and no jobs are left and most are up and leaving too...its becoming a raher bad place to live, so no one wants to buy here or even rent for that matter...anyhow, we tried and did the best we could here...anyhow know what this is and can you tell me what your experiences were? THank you very much
It will show up on your credit report for the next seven years and if part of your loan is forgiven, you may have to pay taxes on the difference between the amount you owe and the amount your house ultimately sells for. Walking away from a legal obligation, no matter how you do it or for what reason, has consequences. There might be better options. You should talk to an accountant or real estate attorney and not rely on a mortgage company for advice that can have a serious impact on your future.
I understand that..but I really do not see what else we could possibly do, there are no renters in this area that can afford to rent my home..its a very depressed small southern town, almost every major employer has left, so we can't stay here...our jobs will be five hours away, with huge mountains between the home and our new place to start over...there are no buyers, what else is really left? I have no money right now for a attorney, we are living off our savings as of now...but moving soon with a new employer who will pay for the move and expenses incurred, we be foolish not to move here too.
seaharbour
Is it possible they have a relocation package where they will buy your home it you can't sell. A lot of companies have this.
In a deed in lieu of foreclosure, the property is signed over to the bank in exchange for the bank giving up its rights against you. The lender agrees not to pursue you for the balance owed after the sale of the home. This will save them the fees of having to go through the foreclosure process.
It will avoid showing a foreclosure on your credit report however it will show as a "forgiven debt"
As goodbyehollywood said, this process has pretty much the same tax consequences as a foreclosure. Because you are being relieved of the indebtedness on the property, for tax purposes it's still considered sale of the property.
You can probably check the IRS website to see if they have anything regarding the tax issue.
(((thank you)) It is possible his employer will buy it, we find out more details bout the relocation package this week..that would be a answer/prayer to this whole situation..gosh that would be great..I know his last employer offered to buy our last home, but it sold before he actually got hired...
I appreciate your kind feedback, thanks for helping me!
It will avoid showing a foreclosure on your credit report however it will show as a "forgiven debt"
As goodbyehollywood said, this process has pretty much the same tax consequences as a foreclosure. Because you are being relieved of the indebtedness on the property, for tax purposes it's still considered sale of the property.
You can probably check the IRS website to see if they have anything regarding the tax issue.
Seaharbor,
There is talk in Congress of changing the tax treatment of "forgiven debt" from regular income subject to income tax. However, given the slowness and uncertainties involved this isn't much to hang your hat on. You might want to call your local congressional representative's office and ask what is the status of this legislation.
If in your judgment it doesn't look like this tax law change will be enacted, then it might be of some small tax help to choose the year in which you sign over the deed. If your income will be about the same in 2007 as you anticipate it will be in 2008 than postpone signing over your deed until January 2008. If your income in 2008 will be substantially higher than 2007 because of the new job, it might be in your interest to do the transfer before year end.
According to the deed in leiu you must have ur home on the market for three months and have tried to sell it, that means on Dec 31st that is our deadline, not sure they would be able to start that or not...we are going to make bout 25 less a year cause my hubby is taking a cut in pay in order for us to be back where we grew up...but we feel its worth it, famiilar surroundings we missed for over 14 years. thank your helping me!!!
...Are you talking about Mount Airy, NC? If so, your topography is GORGEOUS and would certainly attract senior citizens in a retired mode. So become creative in selling your real estate to retired people.
One possible way is to list your property as short term vacation property on www.vrbo.com (broken link). With the Blue Ridge mountains, you have a valuable ammenity / asset just in the scenry alone.
As an FYI, I lived in Hickory, NC for ten years... and would love to return to NC again. Unfortunately, my wife doesn't have any interest since her 90 year old mother lives within driving distance.
We have two mos. of money left to cover our bank note. My husband are I are living apart and will doubt divorce. The house is now empty..He recently went back to work after a 4 mo, layoff. I work p.t. in another city where I live now, he is also in another area for work.
Don't want to wait until the last minute but hubby thinks a miracle will happen and money will fall from the sky! We have tried in the past to sell but we are upside down with the loan, lack of jobs here doesn't help as most homes that were for sale have become rentals.
Since we are not in the house can we still do a Short Sales or would a Deed-In_leiu be better? I read that in order to do a short sale it must be your primary home. Also our land taxes are due soon and if we can't pay them then what happens?
Since I'm not getting any support with this from hubby I'm trying to do things on my own but it isn't easy.,,
Any answers out there for me
Lindylou in Hawaii
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