Foreclosure

[mmesser0]

Well, looks like I am going to have my house foreclosed on, so I was just seeing if anybody on these forums have been through a foreclosure, and if so, how bad did it mess up your credit? Any help would be great. Thanks.

 

[brownda2]

I have not been through it so I have no advice, but I am sorry that it is happening to you.

 

[vraiblonde]

Never been through a foreclosure but I know it does screw up your credit.

BUT - what does that really matter? Frankly, it won't prevent you from getting a vehicle loan, or a credit card, or even from buying another house. So don't really worry about that too much.

Good luck! This has to be a very stressful time for your family.

 

[Pete]

You might want to consult a lawyer. If I am not mistaken a foreclosure can be held against you forever and could prevent you from ever getting another mortgage unless you pay off the difference you owe the bank after they finally sell it.

Bankruptcy on the other hand is final and is off the record in 10 years.

 

[BoyGenius]

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Well, looks like I am going to have my house foreclosed on, so I was just seeing if anybody on these forums have been through a foreclosure, and if so, how bad did it mess up your credit? Any help would be great. Thanks.

1. Don't get involved with anyone offering "foreclosure rescue" and under any circumstances do not give them money.

Example:

Maryland Attorney General - News Release

2. Don't give the lender any money for promises of "considering to allow you to do a short-sale." Most short-sales never happen, those that do take long periods. Every real estate agent now claims to be a short sale expert. You'll probably have agents approach claiming they can sell the house.

BLOG.FranklyRealty.com: Short Sales Are "Fake Listings." Only 5% Close!

3. Don't move out until they force you out, but get your stuff ready to leave quickly. Monitor your case here, so you'll know how much time you have:

Maryland Judiciary Case Search

4. Learn the timeline of how long it will take for them to get you out and foreclose the home:

Calculated Risk: Maryland Foreclosure Law Changes

Know your rights:

'Angel' of foreclosure defense bedevils lenders - Mortgage Mess- msnbc.com

5. SAVE the money from no longer making house payments for your next place such as a rental. You'll need it for a deposit etc. You'll have bad credit, so you will need a bigger deposit most likely.

6. Be careful of the lender offering to make you another loan you can't afford or one that will rise steeply several years from now that you still can't afford to string you along. Unless they actually forgive "principal" it's probably not a good deal if you have serious negative equity.

7. If you have equity, just sell the home.

Good luck.

 

[Tilted]

Well, looks like I am going to have my house foreclosed on, so I was just seeing if anybody on these forums have been through a foreclosure, and if so, how bad did it mess up your credit? Any help would be great. Thanks.

Do you have the house on the market? If not, then you should. If you are going to lose it to foreclosure anyway, you would be better off trying to get it sold yourself. Given the current housing market, most mortgage holders are willing to accept pretty heavy short sells (if you can find a buyer that is willing to buy it at a price significantly less than you owe on it, the mortgage holder may agree to accept the sale price and write off the difference). I know someone who owes about $300,000 on their house and the mortgage holder has agreed to accept a short sale for $210,000, if they can find a buyer.

A short sell will negatively impact your credit, but not as bad as a foreclosure, and you won't be legally liable for the amount that a foreclosure sell might have come up short. You should check with the bank about the possibility of doing this. I don't know how far along they are in the foreclosure process, but understand that they really don't want to actually foreclose now because they will have difficulty moving the house. That's not to say that they won't do it - they will, but generally speaking, it takes longer than normal and they are more willing to try to work something else out.

 

[BoyGenius]

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Do you have the house on the market? If not, then you should. If you are going to lose it to foreclosure anyway, you would be better off trying to get it sold yourself. Given the current housing market, most mortgage holders are willing to accept pretty heavy short sells (if you can find a buyer that is willing to buy it at a price significantly less than you owe on it, the mortgage holder may agree to accept the sale price and write off the difference). I know someone who owes about $300,000 on their house and the mortgage holder has agreed to accept a short sale for $210,000, if they can find a buyer.

A short sell will negatively impact your credit, but not as bad as a foreclosure, and you won't be legally liable for the amount that a foreclosure sell might have come up short. You should check with the bank about the possibility of doing this. I don't know how far along they are in the foreclosure process, but understand that they really don't want to actually foreclose now because they will have difficulty moving the house. That's not to say that they won't do it - they will, but generally speaking, it takes longer than normal and they are more willing to try to work something else out.

NOBODY should get involved in a short-sale in which they agree to pay the lender any significant amount of money that the lender lost. IE, that 90k scenario above is pure stupidity for someone to agree to pay and only the dummies do. Everybody else is just walking away and not paying it. You can go through the recent foreclosures in the court records all day long and nobody has had a judgement filed against them for the loss. Even those that didn't file bankruptcy.

 

[Tilted]

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NOBODY should get involved in a short-sale in which they agree to pay the lender any significant amount of money that the lender lost. IE, that 90k scenario above is pure stupidity for someone to agree to pay and only the dummies do. Everybody else is just walking away and not paying it. You can go through the recent foreclosures in the court records all day long and nobody has had a judgement filed against them for the loss. Even those that didn't file bankruptcy.

That's what I'm talking about - a short sell wherein the mortgage holder agrees, in writing, to accept the lower sale amount as payment in full for the debt. The mortgagee has no further legal obligation and the mortgage holder takes a hit. The question is how much are they willing to take in order to get a significant amount of the principal back. Right now, they are willing to take a much bigger hit than usual, to be assured of getting something and to avoid having to go through the foreclosure process.

Of course you wouldn't agree to it if you still had to pay the money back, that's not what is generally meant by a short sale.

 

[retiredweaxman]

Well, looks like I am going to have my house foreclosed on, so I was just seeing if anybody on these forums have been through a foreclosure, and if so, how bad did it mess up your credit? Any help would be great. Thanks.

Here are a couple of sites that might help answer your questions:

foreclosure and credit:

How Foreclosure Affects Your Credit History and Credit Score — Credit.PrivacyMatters.com | Credit Articles

foreclosure process:

Guide to Avoiding Foreclosure - HUD

Best of luck to you and your family!!!

 

[mmesser0]

Thank you all for the wonderful information. I just contacted Hope for Homeowners to possibly see what other options we may have, because our lender told us we are pretty much S-O-L. Does anybody know any realtors personally involved with short sales? Our mortgage lender suggested that, and it sounds like a good idea. But like somebody else mentioned, we don't want to be screwed in the end by a short sale having to pay the difference. Guess my next step will be to contact my local EAP office and get some free legal help with all this stuff. In the end, I think we'll be better off, because at least we'll be able to pay all of our debt off. Debt that accumulated with soaring gas prices, being furloughed in "Gorgeous Prince Georges County", and high daycare payments that are about to go up yet again. I'm just ready for it to be over!

 

[mmesser0]

Do you have the house on the market? If not, then you should. If you are going to lose it to foreclosure anyway, you would be better off trying to get it sold yourself. Given the current housing market, most mortgage holders are willing to accept pretty heavy short sells (if you can find a buyer that is willing to buy it at a price significantly less than you owe on it, the mortgage holder may agree to accept the sale price and write off the difference). I know someone who owes about $300,000 on their house and the mortgage holder has agreed to accept a short sale for $210,000, if they can find a buyer.

A short sell will negatively impact your credit, but not as bad as a foreclosure, and you won't be legally liable for the amount that a foreclosure sell might have come up short. You should check with the bank about the possibility of doing this. I don't know how far along they are in the foreclosure process, but understand that they really don't want to actually foreclose now because they will have difficulty moving the house. That's not to say that they won't do it - they will, but generally speaking, it takes longer than normal and they are more willing to try to work something else out.

One thing about short sales that I can't understand is if the price they are willing to let me sell the house for, is one that would give me a much lower payment, why don't these lenders take the loss through the Hope for Homeowners program? I don't understand... and unfortunately, our lender isn't participating in the government program right now.

 

[Pete]

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NOBODY should get involved in a short-sale in which they agree to pay the lender any significant amount of money that the lender lost. IE, that 90k scenario above is pure stupidity for someone to agree to pay and only the dummies do. Everybody else is just walking away and not paying it. You can go through the recent foreclosures in the court records all day long and nobody has had a judgement filed against them for the loss. Even those that didn't file bankruptcy.

If your lender accepts a short sale as payment in full there would be no judgement.

HOWEVER, I believe, I am not totally sure that the $90K in the example is considered a "gift" and can cause tax liability. Check that out before you decide. You do not want a 1099 for $90K showing up and screwing you.

 

[Tilted]

Thank you all for the wonderful information. I just contacted Hope for Homeowners to possibly see what other options we may have, because our lender told us we are pretty much S-O-L. Does anybody know any realtors personally involved with short sales? Our mortgage lender suggested that, and it sounds like a good idea. But like somebody else mentioned, we don't want to be screwed in the end by a short sale having to pay the difference. Guess my next step will be to contact my local EAP office and get some free legal help with all this stuff. In the end, I think we'll be better off, because at least we'll be able to pay all of our debt off. Debt that accumulated with soaring gas prices, being furloughed in "Gorgeous Prince Georges County", and high daycare payments that are about to go up yet again. I'm just ready for it to be over!

Just make sure that you get the terms of the short sale in writing. If a mortgage holder is willing to accept a short sale, they are willing to spell out the terms in writing. Don't take anyones word for it, make sure you have a signed agreement stating that you will not be liable for anything further, and that the agreed short sale revenue will be regarded as payment in full of the debt. Any legal assistance you get should be able to verify the terms for you.

 

[mmesser0]

If your lender accepts a short sale as payment in full there would be no judgement.

HOWEVER, I believe, I am not totally sure that the $90K in the example is considered a "gift" and can cause tax liability. Check that out before you decide. You do not want a 1099 for $90K showing up and screwing you.

Yeah I'll definitely have to contact legal resources to help figure this one out. Thanks again everyone!

 

[Tilted]

If your lender accepts a short sale as payment in full there would be no judgement.

HOWEVER, I believe, I am not totally sure that the $90K in the example is considered a "gift" and can cause tax liability. Check that out before you decide. You do not want a 1099 for $90K showing up and screwing you.

Yes, but the recipient of a gift is not responsible for the potential 'gift tax'.

 

[BoyGenius]

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If your lender accepts a short sale as payment in full there would be no judgement.

HOWEVER, I believe, I am not totally sure that the $90K in the example is considered a "gift" and can cause tax liability. Check that out before you decide. You do not want a 1099 for $90K showing up and screwing you.

"In December, 2007, Congress acted to protect many debtors from income tax liability associated with foreclosure avoidance. The Mortgage Forgiveness Debt Relief Act of 2007 states that homeowners will not be subject to income tax from release from mortgage liability if and to the extent the mortgage proceeds were used to buy or improve their primary residence. There is no income tax shelter from foregiveness of mortgage debts for investment property, vacation homes, or mortgages used for businesses or to pay off credit card balances. The protection expires in December, 2009. You should speak with an attorney or CPA familiier with the new law to see if you qualify for income tax protection."

mortgage foreclosure deficiency judgement bankruptcy cancellation debt income tax

 

[Ray]

How are things going mmesser? I am dodging some bullets right now and may have to do the same as you.

 

[JULZ]

Well, looks like I am going to have my house foreclosed on, so I was just seeing if anybody on these forums have been through a foreclosure, and if so, how bad did it mess up your credit? Any help would be great. Thanks.

I heard a news report just the other day that said a woman significantly delayed her being booted out of her house under foreclosure simply by asking the mortgage company to provide a copy of the original loan agreement.

Apparently, because mortgages get sold from bank to bank so much the original paperwork was filed away somewhere and the homeowner could not be forced out without her request being granted.

 

[jetmonkey]

Never been through a foreclosure but I know it does screw up your credit.

BUT - what does that really matter? Frankly, it won't prevent you from getting a vehicle loan, or a credit card, or even from buying another house. So don't really worry about that too much.

Good luck! This has to be a very stressful time for your family.

exactly - no benefit to keeping good credit anymore besides self-satisfaction

 

[jetmonkey]

I heard a news report just the other day that said a woman significantly delayed her being booted out of her house under foreclosure simply by asking the mortgage company to provide a copy of the original loan agreement.

Apparently, because mortgages get sold from bank to bank so much the original paperwork was filed away somewhere and the homeowner could not be forced out without her request being granted.

From what I understand this depends greatly on the judge hearing the case.