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We are loosing our dream home due to the economy. The bank will accept a deed in lieu if we give them $25,000 over the next 5 years. Otherwise they said they will forclose and sue us for $400,000, which we don't have. I have never heard of a bank asking for money to do a deed in lieu. Is this normal? Do we have an alternate choice? Please help!!!
It is perfectly normal. Did you think you would just "walk away"? It sounds like a much better deal than $400K. And even if you dont have $400K now, if they would sue you, the judgment would exist for a long long long time-and they could do things like garnish your wages.
I wrote a check for 24k when I sold my last house. Not to sound harsh, and attempting to have every bit of sympathy here.... but you play the game with the banks money and sometimes you win and sometimes you lose.
It is perfectly normal. Did you think you would just "walk away"? It sounds like a much better deal than $400K. And even if you dont have $400K now, if they would sue you, the judgment would exist for a long long long time-and they could do things like garnish your wages.
What is happening with the people who are just mailing in their keys? Sounds like "walking away" isn't as easy as people think.
What is happening with the people who are just mailing in their keys? Sounds like "walking away" isn't as easy as people think.
altus2006
Well, I hope they're getting sued, and getting their wages garnished. Did you think they could just say "sorry, my bad" and get away without paying for what they promised to pay for? I hope not!
This was moved from the Phoenix forum. If the house was in Arizona, deficiency judgements are unavailable for single-family properties under 2.5 acres and the lender is lying. If the house is not in Arizona, here is a link:
Well, I hope they're getting sued, and getting their wages garnished. Did you think they could just say "sorry, my bad" and get away without paying for what they promised to pay for? I hope not!
I am not in favor of mailing in the keys and letting the rest of us pay for their lack of responsibility. I was just questioning what really happens when people renege on their house obligation. Too people think they are home free if they just walk away.
I am not in favor of mailing in the keys and letting the rest of us pay for their lack of responsibility. I was just questioning what really happens when people renege on their house obligation. Too people think they are home free if they just walk away.
altus2006
There is no one set standard - I think that is one reason there is so much confusion. What has happened on the federal level: a moratorium on issuing 1098's on the written off debt. The was the normal course, then the defaulting homeowner had to deal with the IRS. So, if 100K was lost on the foreclosure, the homeowner was reported to have 100K income.
It is my understanding, the banks use to have two choices, write it off as bad debt and issue the 1098 or go after the deficiency judgment, but not both. The feds took the 1098 option away, many are back to the other course of action.
What I would want to know, does the bank have recourse of any kind? It just does not seem possible there would be no protection of any kind. Otherwise, who would want to lend in AZ?
"It is my understanding, the banks use to have two choices, write it off as bad debt and issue the 1098 or go after the deficiency judgment, but not both. The feds took the 1098 option away, many are back to the other course of action."
Whether state law permits deficiency judgements in full, in part, or not at all for these loans is not a federal matter.
Quote:
"It just does not seem possible there would be no protection of any kind. Otherwise, who would want to lend in AZ?"
Several states do not permit deficiency judgements. Arizona is one of them. They lent money in AZ (at a slightly higher rate than some states) because most people paid the money back and the lenders profited. Most people still pay the money back, but many do not. The only negative would be a black mark on your credit report. For many, unloading six-figures of debt is worth that cost.
Whether state law permits deficiency judgements in full, in part, or not at all for these loans is not a federal matter.
Any regulation pertaining to the IRS most certainly is a Federal problem.
As for the rest, a legal opinion is strongly recommended.
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