My husband just recently lost his very well paying job. His new job pays half of what he used to make, and our budget was tight before he changed jobs. We simply have no way of affording the payment anymore, and we have no savings. We are close to being in default on our mortgage. I do not see any way to keep the house even long enough to sell it. It also has damages from a backup of the septic (which was installed improperly) and needs new carpet and baseboards in half of the house. We do not have the resources to fix this, and we have little to no equity in the house. It may even be upside down. Can we simply give the house back to the bank? Are we responsible for the difference if the house does not sell for what we owe? If so, when do we pay that balance, and how is that handled if we do not have it upfront? Do they ganish wages, seize assets, etc? Please help! Thanks in advance.
2007-11-11 05:41:09 · 3 answers · asked by Linda C 1 in Business & Finance ➔ Renting & Real Estate
You can offer the bank the property through a deed in lieu of foreclosure. They may not accept it until you are late on the payments and have tried selling, or they may not accept it at all, in some cases.
If the property sells at sheriff sale for less than what is owed, you are not responsible for the difference. The bank (depending on your state laws) may be able to sue you after the auction for the difference and then you'd be responsible for paying it. But banks almost never do this since they know that foreclosure victims do not have the money to pay back tens of thousands of dollars in judgments.
If they sued you after the foreclosure, they could try to garnish your wages or seize assets, but banks do not particularly care about doing either. They aren't in the business of selling your car or taking money from you, they are in the business of making loans and collecting interest, and most banks don't have the resources to go after your other income or assets. Again, they almost never sue for a deficiency judgments after foreclosure.
2007-11-12 02:28:06 · answer #1 · answered by Anonymous · 0⤊ 0⤋
Voluntary Foreclosure
2016-11-13 07:55:34 · answer #2 · answered by Erika 4 · 0⤊ 0⤋
The first thing you need to do is call your lender. You never know what they can offer you. In Indiana where I live they are allowing some people to trade in there more expensive home for an older cheaper one to prevent foreclosure. You can give it back to the bank, you will have to pay for the costs of the balance due on the loan after the bank sells the property, as well as any cost like real estate fees the bank incurs to unload the property. The only option in the case would be to file bankruptcy or write them a check for the balance due. Yes, they can garnish wages or seize assets. Please call and talk to them about your options now. Do not wait for too little, too late.
2007-11-11 05:47:45 · answer #3 · answered by Lily 7 · 2⤊ 0⤋
After selling you home they will do one of two things, both bad for your credit, and both are going to cost you.
1. They will file a judgment in court for the difference, and from your description it will be substantial as the home has major flaws. With a judgment yes they can garnish wages, tax returns, inheritances etc.
2. They will file a 1099 stating that you earned X amount of income. THis income is taxed at the same rate of a bonus that you would get at work, the 30-36% rate. This will be reported to the local government, the state, and yes our friends at the IRS. The latter having no qualms about garnishments, inheritances, tax returns, liens etc.
Either way they also add penalty payments, interest rates, lawyer fees, court fees etc.
Just letting you know what you are in for in the upcoming year
2007-11-12 08:56:50 · answer #4 · answered by Pengy 7 · 0⤊ 1⤋