Once someone decides to allow forecloser to occure are they at any way finacially responcible for the property? Someone told me that when the property is foreclosed on that the bank would sell it at a low price and the previous owner would still be responsible for the balance . Say they purchased at 70,000.00 and it was foreclosed on and sold for 20,000.00 the previous owner would be sued for 50,000.00. Is that true and does the previous owner need to go bankrupt?
2007-06-17 07:26:13 · 5 answers · asked by allsmiles 1 in Business & Finance ➔ Renting & Real Estate
Yes, the bank sells the property and then any balance left on the mortgage goes back to the home owner.
2007-06-17 07:31:06 · answer #1 · answered by elijahjaye 5 · 3⤊ 0⤋
Most lenders that foreclose on property rarely go after the homeowner once the property has been sold at the public auction.
You should check with a cpa that know real estate law, there might be some tax problems about the matter of how much the house sold for at the auction.
Since most lenders lend up to a certain percentage of the value of the house they can at least get back the amount that was loaned on the property.
Now if you allow the foreclosure to go through until it is completed the foreclosure will stay on your credit report for at least 5 years.
Now this is not as bad as it appears. In a lot of instances, you may purchase a house after 6-12 months have elapsed. Now your interest rate will be a little higher because of your previous foreclosure, but it can be done.
You can eliminate some of the bad credit by making your remaining debts payments on time, especially your car payment since this is the next largest investment you will have besides your home that you lost in foreclosure.
You will be getting a lot of pre-approve/qualified credit cards after your foreclosure. I would recommend you not get involved with them. They are normally higher in interest rate and will not help your credit report in the long run.
You do not have to go bankrupt, though you will get lots of mail from lawyers, investors, mortgage loan people that all want to help you out of your current situation. Bankruptcy is the last and final option you should try.
You have to pay the attorney no matter the outcome of the foreclosure.
If you are gonna allow the foreclosure to proceed, you should call your lender and as for a deed-in-lieu of foreclosure. This will bring things to a halt and not drag out the problem. This is an option that has to be approved by your lender, but it is worth a try.
I hope this has been of some use to you, good luck.
"FIGHT ON"
2007-06-17 14:55:43 · answer #2 · answered by loanmasterone 7 · 2⤊ 0⤋
Yes they will sell the house and any amount they get is deducted from the total amount due, and that is up to you to pay. With the changes in the bankruptcy laws you really cannot wipe out this debt and the bankruptcy will be on your credit for 10 years.
2007-06-17 14:38:14 · answer #3 · answered by Pengy 7 · 1⤊ 0⤋
foreclosure is when you lose the house and the bank sells it for the balance and anymore they can get. It totally ruins your credit. That's what it does for you. You don't have to go bankrupt you just lose your property..
2007-06-17 14:29:43 · answer #4 · answered by Joanie798 1 · 0⤊ 1⤋
Check with your accountant about how the IRS will treat your "forgiven" loan amount. It may be considered taxable income.
2007-06-17 22:31:55 · answer #5 · answered by venicefloridarealtor 4 · 0⤊ 0⤋