Pre-Foreclosure and Neighbors' Feelings

[EngGirl]

I assume the neighbor was not paying taxes so who is going to get paid after this auction - lender or county?

[franniejacks]

Originally Posted by EngGirl

I assume the neighbor was not paying taxes so who is going to get paid after this auction - lender or county?

The Judicial Order shows that the Loan Company paid both taxes and insurance after owner stopped his mortgage payment; they are shown as line items as part of what is due the lender (principal, interest, taxes, insurance, lawyer fees, property inspection fee, property appraisal, lawyer fees, stuff like that).

[davebarnes]

[quote=franniejacks;37255146]They are out of state and would incur costs to fly down/QUOTE]

Telephonic communication.

[franniejacks]

Thanks all. I decided to send the Zillow listing to my friends who are house-hunting and let them sort it out themselves. I'm not comfortable approaching neighbor, do not want to embarrass him. My guess is he will try to save the house via bankruptcy or renegotiation of loan as it gets down to the wire. My friends can follow the auction schedule to see if it falls by the wayside. In checking the past few days, it appears about 50% of the auctions are cancelled, many in the last day or two.

[Meraki]

It's quite possible your neighbor is planning to file bankruptcy, and then reaffirm to keep the house. I'm not sure how the system works there in Florida, but it would be a way to keep the home.

Something else regarding short sales are the tax burdens after doing so. I believe it is called the Mortgage Forgiveness Debt Relief Tax Act and was not extended into 2014. Overall, if the home is underwater but sells via short sale, your neighbor could still be responsible for all the tax on that sale. In addition, that lender can choose to allow a short sale, but can still go after the homeowner (your neighbor) for up to seven/nine (?) years after the sale to recover the shorted amount of money. This can also mean garnishment of wages, and according to our real estate agent, is happening much more frequently than it used to. In a situation like that, bankruptcy would offer your neighbor that protection. I think it's called a short sale deficiency judgement.

[volk2k]

Originally Posted by Kelklos

In addition, that lender can choose to allow a short sale, but can still go after the homeowner (your neighbor) for up to seven/nine (?) years after the sale to recover the shorted amount of money. This can also mean garnishment of wages, and according to our real estate agent, is happening much more frequently than it used to. In a situation like that, bankruptcy would offer your neighbor that protection. I think it's called a short sale deficiency judgement.

As of July 1, 2013, I believe they only have ONE year to come after the deficiency.
Florida Deficiency Judgments – New Law As of July 1, 2013 | LoanSafe.org

[Meraki]

^^^^That's a lot better than 7-9 years!