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Old 06-30-2008, 08:23 PM
 
Location: Pennsylvania, USA
5,217 posts, read 4,111,192 times
Reputation: 908

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I've seen so many posts about foreclosure etc.. of course .. in this mortgage forum.

Going through this myself.. I've done my research.

While it's true that the difference between what the bank sells the house for when you do a deed in lieu or you are in foreclosure or even do a shortsale is reported on a 1099 which becomes "taxable income" (which is completely ridiculous to begine with.. I mean kick someone while they are down why don't you!!) in December of 2007 the Bush Administration passed the Mortgage Debt Relief forgiveness act which does away with having to report that as income for the years 2007, 2008 and 2009.

So.. I think it is smarter, IMO , to do a short sale rather than foreclose.. it's better on your credit and you will not have to pay the difference in taxes.

(and I am double checking with my attorney to make sure that it does also apply for short sale.. as in the wording it says foreclosure or restructuring..but I'ms ure it does.. after all selling it to prevent foreclosure is doing the best possible thing in a bad situation.)
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Old 06-30-2008, 09:58 PM
 
Location: Charlotte, North Carolina
5,137 posts, read 15,093,116 times
Reputation: 1007
I would highly recommend that you look into a loan modification.

I had a friend who owed about 300k..and the home was worth 240k.
The lender lowered the loan amount to 240k, and gave them a 30yr fixed loan at 4.25%.
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Old 06-30-2008, 11:40 PM
 
Location: Full time RV"er
2,403 posts, read 5,618,432 times
Reputation: 1459
Quote:
Originally Posted by TristansMommy View Post
I've seen so many posts about foreclosure etc.. of course .. in this mortgage forum.

Going through this myself.. I've done my research.

While it's true that the difference between what the bank sells the house for when you do a deed in lieu or you are in foreclosure or even do a shortsale is reported on a 1099 which becomes "taxable income" (which is completely ridiculous to begine with.. I mean kick someone while they are down why don't you!!) in December of 2007 the Bush Administration passed the Mortgage Debt Relief forgiveness act which does away with having to report that as income for the years 2007, 2008 and 2009.

So.. I think it is smarter, IMO , to do a short sale rather than foreclose.. it's better on your credit and you will not have to pay the difference in taxes.

(and I am double checking with my attorney to make sure that it does also apply for short sale.. as in the wording it says foreclosure or restructuring..but I'ms ure it does.. after all selling it to prevent foreclosure is doing the best possible thing in a bad situation.)
Just 1 question, did you do the filing we talked about ? haven't heard from you. 32 people still in their homes , not paying , just waiting for the banks to decide how low they are going to go with their new loans . it is working !
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Old 07-01-2008, 04:43 AM
 
Location: Gainesville, VA
1,259 posts, read 4,954,944 times
Reputation: 718
Quote:
Originally Posted by renriq02 View Post
I would highly recommend that you look into a loan modification.

I had a friend who owed about 300k..and the home was worth 240k.
The lender lowered the loan amount to 240k, and gave them a 30yr fixed loan at 4.25%.
I don't get how you can talk your lender into writing off part of a loan and lowering the interest rate? Is there something I'm missing here? I pay my mortage on time each month. Where's my reward for doing that?
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Old 07-01-2008, 05:04 AM
 
Location: Cold Frozen North
1,928 posts, read 4,521,272 times
Reputation: 1266
Quote:
Originally Posted by renriq02 View Post
I would highly recommend that you look into a loan modification.

I had a friend who owed about 300k..and the home was worth 240k.
The lender lowered the loan amount to 240k, and gave them a 30yr fixed loan at 4.25%.
I've heard of this type of thing before. It's kind of like a short sale without the sale.

Some banks do this if they believe that the alternative is foreclosure. Everyone loses then.

Interesting thing about short sales. I've recently heard that a friend of a friend did a short sale where the deficiency balance of $200,000 was written off by the second mortgage company. Both mortgage companies released their respective leins on the property and the seller was forgiven for the deficiency - WOW!
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Old 07-01-2008, 05:55 AM
 
Location: Pennsylvania, USA
5,217 posts, read 4,111,192 times
Reputation: 908
Quote:
Originally Posted by renriq02 View Post
I would highly recommend that you look into a loan modification.

I had a friend who owed about 300k..and the home was worth 240k.
The lender lowered the loan amount to 240k, and gave them a 30yr fixed loan at 4.25%.

I've already triedthat route.. Have been since 3 months BEFORE my rate change. The problem with my mortgage is that I'm NOT a subprime.. but an ALT=A. In addition the "group o f investors on wall street" that own my mortgage that is service by HSBC and then by Midland do not have a "code" for that type of modification. In other words, they have not yet developed a policy to deal with the new mortgage woes.

So.. because I had the unfortunate luck of having my mortgage sold to a group that isn't truly adressing the problem AND I'm also NOT a subprime (if I had an exotic mortgage I probably would have it all taken care of by now) there is nothing else left to do but do a short sale. I've been very aggresively trying to save my home to no avail. I was motivated too because I a) put money down and b) put money in in repairs and I'm loosing my life savings.. upwards of $80K (all that I've put in). It's sad and it sucks.

And FYI.. the reason they gave me a ARM only was because i am self employede adn went stated and my score was okay but not stellar because I had NO CREDIT CARDS (go figure.. whothought no credit cards could hurt you!). Had the industry NOT locked up and value gone down I could have refi'd into a fixed and all would be good.

Shame.. I was paying a 6.95% interest rate to start. i wasn't asking for value write down either. .just modify it to keep the same interest rate.. stubborn stupid bank! They hada good paying on time mortgager in methat they just decided to throw away!
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Old 07-01-2008, 09:13 AM
 
127 posts, read 378,267 times
Reputation: 103
Quote:
Originally Posted by HEATHER72 View Post
I don't get how you can talk your lender into writing off part of a loan and lowering the interest rate? Is there something I'm missing here? I pay my mortgage on time each month. Where's my reward for doing that?
I would like to know the same thing. My house is definitely worth less than what I paid for it. I have no problem making my mortgage payments but maybe I should just stop so I can receive these same concessions.
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Old 07-01-2008, 09:29 AM
 
Location: Pennsylvania, USA
5,217 posts, read 4,111,192 times
Reputation: 908
Quote:
Originally Posted by rtjr View Post
I would like to know the same thing. My house is definitely worth less than what I paid for it. I have no problem making my mortgage payments but maybe I should just stop so I can receive these same concessions.

It's statements like tis one that really irk me.

For one.. I've made my mortgage payments on time for 2 years at a 6.95% rate on a $400K mortgage (adn this is a starter home in one of the cheaper neighborhoods on LI.. FYI). with my escrow my payments were approx $3300. I would say that I'm a good home owner candidate.

However, due to market circumstances and other circumstances I got trapped into a n ARM. I didn't care that my house was worth less.. that's not the problem. BUT I simply can not afford an over $800/month increase in my mortgage payment. I tried everything I could to work with the bank to modify into a fixed.. figuring that paying what i'm paying is far better for both parties than foreclosure.

And my particular company woudln't do it.. so fine. .now I'm short selling. If I could, I would make the payments.. but I simply can't.. and killing myself to do it is just not worth it in the end.

You make it sound as if we've all won some magic prize!! or that we're getting a bigger cookie than you are! Believe me. you dont' want the stress, the heartache that I'm dealing with in this situation.. Be happy you can afford to make your payments ontime.. be happy that you get to stay in your home. Because I"m loosing mine.. AND all the money and hard work I put into renovating it.

And no.. Idid'nt tap into equity. .i didn't buy with nothing down and I'm certainly a responsible person that pays bills on time. .I was just trapped into a bad mortgage product.
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Old 07-01-2008, 10:43 AM
 
Location: Oxygen Ln. AZ
9,321 posts, read 16,131,214 times
Reputation: 5685
I would never wish this on anyone, never in a million years. You took a risk and lost. Some folks we worked with in CA took the same risky loans and managed to flip them and make $$$. Good for them, bad for those who were stuck. There were many ruthless mortgage brokers and assessors out there and have given the decent ones bad names. I am glad to see some of these bad ones going to court. The woman in Nevada with her "strawman" dealings made millions. I hope she goes to jail for a loooooong time.
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Old 07-01-2008, 11:18 AM
 
Location: Pennsylvania, USA
5,217 posts, read 4,111,192 times
Reputation: 908
Quote:
Originally Posted by MotleyCrew View Post
I would never wish this on anyone, never in a million years. You took a risk and lost. Some folks we worked with in CA took the same risky loans and managed to flip them and make $$$. Good for them, bad for those who were stuck. There were many ruthless mortgage brokers and assessors out there and have given the decent ones bad names. I am glad to see some of these bad ones going to court. The woman in Nevada with her "strawman" dealings made millions. I hope she goes to jail for a loooooong time.

Yes.. I know NOW that it was a risk. I don't need people telling me I took a risk and lost That's rubbing salt in the wounds, quite honestly. I'm just as much a victim of the subprime mortgage crisis as you or any "innocent" party.. Why? Because I"m NOT subprime. .. and had those that took out those crazy low initial payment mortgages and if those that hadn't bought a house they really couldn't afford at a "normal" interest rate.. then the mortgage industry wouldn't have locked up.. and the market wouldn't be flooded with foreclosures and tose trying to get out and I wuold have easily been able to refinance. My ONLY mistake, really, was NOT having any credit cards.. thereby not having enough credit history to be offered a fixed interest rate. Meanwhile,I was paying my mortgage at ABOVE PRIME initial rate ..andsince I did pay on time for 2 years at such a rate.. had they given me a FIXED in the first place I would still be a happy paying mortgager and they wouldn't have me a as a write down on their books. But as it is, they refused to modify and I can't squeeze blood from a stone.

I really didn't feel that there was much risk as long as I played by the rules. Lesson learned. Quite frankly my next house purchaes will not be on LI (at such high prices) and I will probably by it all cash.. as I wouldnt' want another mortgage bank to make a dime on me and as far as I'm concerned I woudn't want to give them anymore business. I'm angry. .because I was a good mortgager and feel that we could have worked together to keep me in my home (and I don't care if I overpaid.. it's my home) but I feel that they are cutting off their nose to spite their face.. quite stupid.

And the funny thing is that everyone says " oh you took the risk, you loose" to the homeowners..but what about the banks that took on all this debt and sold bad paper.. yet are getting bailed out by the feds!! Meanwhile most homeowners aren't really getting assistance .. not much, at all! Why should they get rescued .. big corporate banks.. while the little guy suffers? We live in a corporate welfare nation.. have for awhile.
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