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When I attended my mediation session, I was told by the mediator that if a person does a short sale the bank has up to 6 years to come after the original homeowner for the bank’s loss between the original loan amount and what they were able to get from the short sale. Same holds true for a “deed in lieu of.”
However, with a foreclosure, the Lenders only have 6 months, which does not give them enough time to come after the home owner.
Currently most banks have decided not to go after the original homeowner for the difference in a short sale, but who knows what their position may be 5-6 years from now?
With that in mind, wouldn’t it be better to just allow the foreclosure with the assurance that after 6 months you are safe, rather then to do a short sale and have that threat hanging over you for the next 6 years? I know some will argue that a foreclosure does more damage to your credit report than a short sale does, but is there any proof of that either?
When I attended my mediation session, I was told by the mediator that if a person does a short sale the bank has up to 6 years to come after the original homeowner for the bank’s loss between the original loan amount and what they were able to get from the short sale. Same holds true for a “deed in lieu of.”
However, with a foreclosure, the Lenders only have 6 months, which does not give them enough time to come after the home owner.
Currently most banks have decided not to go after the original homeowner for the difference in a short sale, but who knows what their position may be 5-6 years from now?
With that in mind, wouldn’t it be better to just allow the foreclosure with the assurance that after 6 months you are safe, rather then to do a short sale and have that threat hanging over you for the next 6 years? I know some will argue that a foreclosure does more damage to your credit report than a short sale does, but is there any proof of that either?
Virtually all shorts resolve the economic questions with the first mortgage holder. Mostly the lender settles for the sale price. Sometimes a further note is taken by the seller.
Classically the first mortgage holder will allow offering the second a payment. The new standard is 6% to $6,000. Other numbers may be negotiated. Sometimes the seller makes a further payment to the second holder.
The seller has a standard threat...no short we go foreclosed and then bankrupt. The BK is normally needed only for dealing with a second. It is very, very rare for a first holder to go for a deficiency judgement. And if the first holder does it can be cut off by a BK.
So you do a short and if it does not work you get foreclosed. Depending on the outcome of all that you may need to go bankrupt.
This is great news for home owners that are underwater that want to stay in there homes. You may want to look into this before you let your home go. Especially if you don't want to move.
[SIZE=4]TG-757: Obama Administration Approves State Plans for Use of $1.5 ...[/SIZE] Jun 23, 2010 ...Today marks an important milestone for delivering relief to homeowners... The state will also target funds to address delinquent loan arrearages. ... The state will assist homeowners with negative equity through ...Nevada will create a mortgage modification program using a ... White House · Treasury.
www.ustreas.gov/press/releases/tg757.htm
This is great news for home owners that are underwater that want to stay in there homes. You may want to look into this before you let your home go. Especially if you don't want to move.
[SIZE=4]TG-757: Obama Administration Approves State Plans for Use of $1.5 ...[/SIZE] Jun 23, 2010 ...Today marks an important milestone for delivering relief to homeowners... The state will also target funds to address delinquent loan arrearages. ... The state will assist homeowners with negative equity through ...Nevada will create a mortgage modification program using a ... White House · Treasury.
www.ustreas.gov/press/releases/tg757.htm
You might want to consider the tax implications of a short over a walk away too. If you short sale, and the bank forgives the balance on the first mortgage you may be on the hook with the IRS for the tax on the amount forgiven.
Whether to proceed with a foreclosure, short sale or deed in lieu of foreclosure depends on your personal individual situation. There is no one right answer.
You cannot give the lender the title to the house if there is a second lien.
If there are a lot of liens and judgments, than maybe foreclosure is your best option.
If you have an FHA, VA, Freddie or Fannie loan it may be easier to go the short sale route.
If you have a Conventional other loan it may be good to explore the HAFA program.
If you do a loan modification or a short sale, there are lots of financial and tax documents that will be scrutinized.
Currently there is a tax forgiveness on phantom income due to a short sale if the property is your primary residence. See irs.gov for more information.
I'm not sure about that time frame for delinquincy. In my opinion a short sale is better for a number of reasons but check with an attorney for the 6 mo vs. 6 years. I really don't know but that just doesn't sound right.
I'm not sure about that time frame for delinquincy. In my opinion a short sale is better for a number of reasons but check with an attorney for the 6 mo vs. 6 years. I really don't know but that just doesn't sound right.
It is right. But only in NV. And, in the normal way, it is more complicated than that.
The problem with moving this sort of post to Real Estate is that it is state specific and the programs and parameters discussed exist only in NV.
Should likely have been left in the Las Vegas list.
OleCapt, why the time differential? They are being harsher with someone who was pro-active about trying to prevent a foreclosure.
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