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Old 04-16-2009, 01:43 PM
 
1 posts, read 5,869 times
Reputation: 11

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I have a home with an FHA mortgage that is in the middle of the foreclosure process. I have moved out of the home, and no longer wish to keep it. I am wondering if the FHA mortgage insurance helps me in any way with the debt I am accruing. Also, once the house is sold at auction and there is a difference between that and the amount I owe, will they be able to garnish my paycheck or take my state or Federal Tax Returns for this debt? I have heard that Oklahoma is a recourse state and the debt will be forgiven.....it will just kill my credit. Does anyone have any answers or suggestions. Can anyone explain the recourse / non-recourse issue to me? Thanks!
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Old 04-16-2009, 10:56 PM
 
Location: Edmond, OK
47 posts, read 217,336 times
Reputation: 29
Lose your job?
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Old 04-17-2009, 09:48 AM
 
Location: Pawnee Nation
7,525 posts, read 16,163,014 times
Reputation: 7088
Quote:
Originally Posted by wooden.connie View Post
I have a home with an FHA mortgage that is in the middle of the foreclosure process.
Have you tried a short sale?
Quote:
Originally Posted by wooden.connie View Post
I have moved out of the home, and no longer wish to keep it.
Guess not, on the short sale, eh?
Quote:
Originally Posted by wooden.connie View Post
I am wondering if the FHA mortgage insurance helps me in any way with the debt I am accruing.
No. FHA mortgage insurance helps the lender only. It pays about 20% of the loan amount to the lender because traditionally a lender will lose 20% of the value of their note on a forced sale.
Quote:
Originally Posted by wooden.connie View Post
Also, once the house is sold at auction and there is a difference between that and the amount I owe, will they be able to garnish my paycheck or take my state or Federal Tax Returns for this debt?
What traditionally happens is that they will send you a 1099 for the deficiency and write it off their books. For example, if you owe $100,000 and they sell it for $50,000 after foreclosure you still owe them $50,000. They know you don't have it....if you did have it you would not have gone through foreclosure........so they write it if off as a loss. To make that loss acceptable to the IRS they send you a 1099. That 1099 tells the IRS that you were "paid" $50,000. You now owe taxes as though you received a check for $50,000. If you are at the 15% income tax rate, you will owe the IRS $7500. Further, as you received it as income you will owe both sides of the Social Security and Medicare taxes, about 16%, so you owe an additional $8,000. Thus that $50,000 forgiveness will run you around $15,000 in taxes.
Quote:
Originally Posted by wooden.connie View Post
I have heard that Oklahoma is a recourse state and the debt will be forgiven.....it will just kill my credit.
Losing the house in the first place already killed your credit. The forgiveness is optional on the part of the lender. The reason they don't send it to collections and try to garnishee you paychecks is they know that if they do you will simply file bankruptcy and they are out of the money anyway.

If you do bankrupt, reaffirm one or two of your credit cards. they will keep your credit going and you can rebuild it in a couple of years to where it was before all this happened.
Quote:
Originally Posted by wooden.connie View Post
Does anyone have any answers or suggestions.
Talk to an attorney.
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Old 04-17-2009, 11:41 AM
 
930 posts, read 2,325,983 times
Reputation: 1000
Quote:
Originally Posted by sasafras View Post
Lose your job?
Shortest post I ever repped

Everyone wants to "skip the details" but the details are all that really matter. Did you suddenly face some unforeseen hardship, or did you walk away because the investment went down in value?

And if you maxxed out the HELOC on a mercedes and hawaii then share that with us so we can sympathize with you.
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Old 04-17-2009, 01:44 PM
 
Location: Edmond, OK
47 posts, read 217,336 times
Reputation: 29
Thanks Beena. I'm just not a sympathetic person when it comes to these things. I just lost $100k on my house in Florida when I sold it ($60k that I put down and another $40k at closing). I was only in it for 3 years. The market is that bad there but I priced it right and SOLD it within 4 months.

Luckily I had the support of my family that allowed me to avoid a short sale or foreclosure. I did it the right way to preserve my credit, but I am out a lot of money in a very short period of time. But now I am in a position to BUY another house (even bigger) here in Oklahoma with the job that brought me here to begin with.

I'm doing my part to better the economy during these times!
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Old 06-18-2014, 08:09 AM
 
Location: Oklahoma City
6 posts, read 9,719 times
Reputation: 10
Just curious, since FHA loans are assumable by owner occupants, if the terms on the loan are good this makes it a very appealing property. Why did you not try to sell it when you first got in trouble? Also, there are other ways of purchasing homes by investors that could have got you out from under this burden.
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Old 06-18-2014, 08:20 AM
 
Location: MMU->ABE->ATL->ASH
9,299 posts, read 19,757,938 times
Reputation: 10385
The O/P posted and has not been back since 4/20/2009. So S/He will never see the above post.
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Old 06-18-2014, 08:34 AM
 
Location: Oklahoma City
6 posts, read 9,719 times
Reputation: 10
Okay, thanks for the heads-up on that, I just joined. Wonder why they leave threads that are this old on here?
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