Potential Foreclosure?
Question:
Please advise?
Answer:
Have the agent request a short sale from the bank. They often agree to loose money if they know in advance.
The foreclosure stays on your credit for 7-10 years after you pay everything owed back. It is not 7 years period. The 7 years you are thinking of varies by state and refers to how long the bank has to sue you for their money after teh foreclosure. If they foreclose and do not get teh amount owed on a sale you are still responsible for the remainer amount. You borrowed and spent their money.
Once your home goes to sheriff sale, you have X amount of months to come up with the money you owe.
Lets say you owe 100k, it sells for 80k at sheriff sale. BY LAW, you only owe 80k instead of 100k which is pretty nice but coming up with the 80k is still hard.
Another example, lets say you owe 100k and the bank takes your property and resells it to Joe Johnson for 75k. The bank is going to have to report that 25k as a loss. The IRS will be expecting you to put that 25k as a profit so you'll be paying taxes on that 25k. Also, on your credit report it will say open collection for X amount of dollars. Where if you sold it, it would say borrower/lender agreed to terms.
See if your lender will accept a short sale. If they say no, then your going to have to find out what kind of loan you have..conventional/FHA/VA etc. because if your lender says no, then FHA will step in and postpone your sheriff sale.
Elsa is correct, just do a short sale and see if it gets approved. You can also see if the agents and others involved will take a hit to their fees and commissions to make it work since they might risk losing everything.
Regards
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