Many who are just walking away await a surprise down the road as lenders turn around and sue for the deficiency. This can happen in foreclosure or short sale. It is imperative that if you are having problems paying your mortgage that you communicate with the bank ( or have your realtor or attorney) communicate with the bank to work out a resolution.
There are 3 options all FAR better than foreclosure. A loan modification if you want to stay in the house, a short sale which will have a much lesser effect on your future than foreclosure or lastly a deed in lieu. In any of these solutions you must make sure to get in writing that the entire loan is settled and that the deficiency is wiped out through the process.
Keep in mind if there is a deficiency, the mortgage company may ( and probably will ) sell the deficiency to some vulture company for pennies on the dollar , who will harass you and threaten lawsuits, garnishments and the whole lot.
But following the days of the housing boom that created plenty of millionaire investors seemingly overnight, it’s not uncommon for borrowers to default on mortgages while still holding lucrative investments.
As the next wave of the housing crisis plays out, those most in danger of getting slapped with lawsuits include angry homeowners who ransack properties they’re losing in foreclosure and borrowers who walk away from “underwater” mortgages. In both cases, analysts say, banks will want to discourage other people from such behavior. These are prime targets and although banks deny it, the revenge factor may be huge.
Also remember, that a forgiven mortgage balance through 2012 is not considered taxable income on a primary residence as long as the debt was used to buy or improve the house. But borrowers who walk away from investment properties risk having to pay federal income taxes on the forgiven amount.
If you are having trouble and need any information at all about how to proceed , please contact me and I will gladly assist you or get you to somebody who can help! call me at 619.985.6528 or just go to our website.
Have an incredible day!
Alan
