Comments on: Short Sale “Promissory Notes” and Foreclosure “Deficiency Judgements”: How Much Will YOU Owe YOUR BANK After a SHORT SALE VS FORECLOSURE?

By: Prefer Forclosure instead

Prefer Forclosure instead — Thu, 02 Feb 2012 23:13:13 +0000

Here’s why I would understand why people prefer forclosure instead…

In a short sale, UNLESS the lender agrees (you have to have a good agent to fight for this) then they will forgive the difference and just issue you a 1099-c (which is still good till 2012 mortgage forgiveness act, but that is only Federal, consult with your state law).

In reality, unfortunately there more Agents that are just out to make the sale, not saying everyone, but a handful of them.. that would just agree on whatever the bank says, and unfortunately most of the homeowners are not savvy and does not educate themselves with what’s going on, an djust relying their trust with their dishonest agent. So they don’t read the paperworks and just sign off whatever documents, even the docs that states that homeowner will be responsible with the difference of the sale.

if you have a good honest agent that looks after their client interest first before themeselves (as most of them are.. right?!) then short sale is good to go.. even though people says that you can buy in 2 years.. you better make sure you do have enough money down and needs to be prepared to actually pay more on interest and pmi.

FORCLOSURE on the other hand.. Agent’s and the banks don’t like it, because of course agents don’t make a commision on it, and the bank supposedly spend more money if they forclose (but go figure why sometimes they would rather forclose than approve a legit shortsale offer)

BUT the good news is, if you are on a non recourse state, and if your loan is a purchase money, (meaning all the loans we’re paid to the house, and no cash went to the homeowner) then the LAW ACTUALLY PROTECTS YOU FROM DEFICIENCY JUDGEMENT.

Keep in mind, Forclosure or Short Sale, there will still be tax implication. like i said currently under the Mortgage Forgive relief act, federal exempts the 1099-c intil 2012.

In forclosure, with non recourse state and purchase money, you don’t have to worry about the lender going after you after the sale is done.

IMO

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By: Peter

Peter — Fri, 16 Dec 2011 02:40:39 +0000

Hi Jeff,
I know of a debt settlement expert that can help you further negotiate your deficiency in your area. Please email me at Peter@seatteshortsaleblog.com and we can further discuss your situation. Thanks

Peter

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By: Jeff of Florida

Jeff of Florida — Mon, 12 Dec 2011 00:27:43 +0000

HI!

We sold our home via short sale and closed last week of March 2011. Second lender’s right for deficiency judgment wasn’t waived, as they never agreed to it. Our Deficiency Balance is around $33200.
We are just renting a house at the moment and still anytime now they could sue my family for a Deficiency Judgment.

How can you help in this kind of situation? Can this debt be forgiven or at least be settled very soon? Just in case you can, how long does this usually take? It is very stressful to think about it and there’s know way we can afford to pay it because of our financial situation. We might as well file for bankruptcy rather than pay it.

Thank you for your time, I greatly appreciate it!

Sincerely,

Jeff

By: SSB

SSB — Fri, 09 Dec 2011 00:23:16 +0000

Hi Lynette, Visit here to see if you qualify for the mortgage forgiveness debt relief act. I suggest consulting with your CPA and calling the IRS to make sure that you qualify. Also, I would contact your attorney for this matter. If I were you, I would pay the lump sum and release yourself from any and all deficiency but make sure that you are free and clear on writing. Hope this helps

By: Lynette

Lynette — Wed, 07 Dec 2011 02:50:06 +0000

We purchased a house, but b/c of job loss, we foreclosed in Nune of 2011. The bank note at the time was $132K. The house was bought back by the bank for 58K and they paid (or forgave) the PMI….resulting in the final amount owed as 47K. We have been recieving phone calls from a company saying that they will help us settle the debt for pennies on the dollar (meaning they will accept approx. 5K) and then our debt will be considered paid. We aren’t sure what to do. Do we pay the 5K and be done with it all or do we wait if or until they serve a judgement against us for the 47K?? We are in Ohio and I know this is a recoarse state. Will they really sue us…in all honesty? We only had one mortgage on the property. What about taxes? Will we pay taxes on the 47K (because it wasn’t paid), the 5K (should we choose to pay it to settle the outstanding debt), or will we qualify for the Mortgage Forgiveness Debt Relief Act of 2007? Please help!

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By: SSB

SSB — Thu, 13 Oct 2011 23:20:29 +0000

Hi Beth,
I highly recommend speaking with your attorney for this matter as you do not want to risk the penalties of mortgage fraud.
In your decision to rent the property, I would factor in all the costs (HOA dues, taxes, utilities, repair costs and etc.) and see if you can get a positive cashflow or at least break even every month. If you are not able to, doing a short sale as soon as possible would be in your best interest as in all probability, your condo prices will drop making it harder for you to sell the property without a large promissory note at closing. Also, because this is your primary residence, you will not be liable for income taxes after the sale of your home due to the mortgage forgiveness debt relief act. However, the expiration date of this act is December of 2012.

Although your reduction of deficiency amount is based on the lender and bank you work with, you will most likely end up closing the short sale with a promissory note. If you can get a strong negotiator to work on your behalf, this would greatly increase your chances of walking away from your husbands property on good terms.
Hope this helps

By: Beth

Beth — Wed, 05 Oct 2011 18:26:32 +0000

Our purchase price was around 200K and now its most likely 130K. So, big difference. However, my husband bought this condo on his own without my name on it. Our thought was to apply for a new mortgage loan together and either short sell this or get it rented. I understand that we can get chased for judgement deficiency or even mortgage fraud so we’re unsure on how to tackle this at this point.