In his continuing efforts to educate and serve the community, Chip Waller talks about real estate foreclosure and what your options are in this commercial. If you have questions about a foreclosure or questions regarding your options with a mortgage that you are having financial difficulties paying, call our office and schedule an appointment to become better informed and make an educated decision. We are here to help you!
Do I have a right to sell my property if it is in foreclosure? You do have the right to sell your property whenever a foreclosure action is filed. You can sell the property any time prior to it being sold in a foreclosure sale by the clerk’s office. Presently, the foreclosure act is being concluded through a foreclosure sale online by the clerk. So, just because you have received a foreclosure complaint does not mean that you cannot sell your property.
Many people do, and it’s usually a short sale, meaning that the lender accepts the net proceeds in full satisfaction under a mortgage, so you’re selling it for less than the amount owed. So, don’t give up because you get served with a foreclosure complaint. You’re still in a position to sell your property at any time.
So, if you have any questions about selling your property, give me a call at (727) 847-2288.
If I sell my house, do I have to pay the difference to my lender? I’m going to give you a “lawyer answer” because it’s not always the same with every transaction. It’s transaction and borrower-specific. The usual case is that if you have a short sale, the lender usually forgives any difference between the amount that they receive from the sale of the property and what is owed. And a lot depends also on whether it’s a first mortgage versus a second mortgage. With second mortgage holders, some of them will not agree to forgive the difference and that can be treated a couple of ways.
Sometimes they require the borrower in the short sale to sign a promissory note for a certain amount of money. It may not be for the full amount or they may negotiate a lump sum amount, which they will accept to forgive the difference. With second mortgage lenders, a lot has to do with who the lender is. There are certain banks that will not release you from liability and they will release the property from their lien; however, they will continue to hold you responsible for that amount. Whether or not they sue you or bring a lawsuit for the difference, that remains to be seen. Usually, if they do, the amount can be negotiated to a probably $0.10 to $0.20 on the dollar as to what you owe if you can work out a lump sum payment.
Also, you must remember that if they do forgive your loans, they can issue what they call a 1099-C, which is a report to the Internal Revenue Service that they forgiveness of debt is considered income. If this is on your primary residence then you can probably avoid paying any taxes. If you’re taking a loss on your rental property, then you can avoid having to pay taxes by filing the tax return and having a basis higher than what they amount that you sold the property for, so that you have a loss on the property that offsets the gain. So whether or not they forgive the debt or not depends on your particular circumstances, particularly if you have the ability to pay. If you show a nice fat financial statement or good income, they’re more likely to order you to make a contribution at the closing as far as the unpaid balance. So if you have any questions about that, you can give me a call at 847-2288. Thank you.
If I short-sell my home, can I buy another home?
The answer is: Yes. After you short sell a house, you will not be able to obtain financing from a federally insured lending institution for at least a period of two years. Some institutions may stretch it out as far as three or four years, but certainly there will be a period of two years.
However, you can pay cash to buy other property. Or if you can get owner financing, you can owner-finance it, or borrow money from investors or whomever – as long as they’re not a federally insured lending institution and finance other property.
Sometimes we find people are underwater. “Underwater” is a slang term for value being substantially less than what is owed. They have good credit and so they go about purchasing another house, moving into the house, and then they short sell the home that they’re is underwater. That’s called a “buy and dump” and that happens fairly frequently. And there are a lot of bargains out there to be had by buyers at this time.
So if you have any questions, give me a call at (727) 847-2288. Thank you.
If my home is in foreclosure, can I buy another house?
The answer to that question is: You certainly can. The only impediment you may have is if you go to a federally insured lending institution and apply for a loan. If your home is foreclosed, then after the foreclosure you may be prevented – or you won’t be able to borrow money from a federally insured financial institution for a period of four years.
During the foreclosure action or even after the foreclosure actions, you can buy a home any time you want to. You can of course pay for it in cash, if you have the cash, and then move into the home and it’s protected as far as your homestead is concerned. You can see about owner financing to give some money down and have the owner carry the mortgage, or any other way that you can find to purchase a house.
So there’s no prohibition about buying a house. Some people find themselves with a mortgage that far exceeds the market value of the property. They have good credit and decide that they’re going to give up on that property. They have money, they have credit, and they go out and buy another house and finance that, and then short sell or let the original home that is underwater go. This is called “buy and dump,” and basically there is no problem in buying. And it’s something that does happen.
So yes, you can buy a house as long as you can figure out how to pay for it, either through cash or owner financing.
If you’d like to discuss this with me, give me a call at (727) 847-2288.