I've been hearing of so many people making the decision to just walk away from their home because they just can not get caught up on their payments. STOP! Don't do that! Beleive it or not, you have options!
"We truly believe that foreclosure is the worst alternative for all parties concerned andgo to great lengths to avoid foreclosure," Brendan McDonagh, CEO of Illinois-basedHSBC Finance and former chief operating officer of HSBC Bank USA in Buffalo, said inMarch testimony to Congress. "Financially, it is our worst alternative."
Contrary to popular belief, the bank does not want your house. They would rather sell it and get it off of their books and take the loss. The longer they hold onto it, the more money they lose.
Most guidelines state you can buy another home in less time through a short sale than if you lost your home through a foreclosure.You also have a better chance of avoiding a deficiency judgement!
So, what do you do next?
Call you lender's Loss Mitigation Department and ask them what kind of options are available for you. How much will it take to bring your mortgage current. More often than not, you may not be able to pay the full balance.
Tell them how much you have to put towards the outstanding balance.I recently worked with a homeowner who was 6 months behind and $11,000.00 in arears, but the lender allowed them to pay $4000.00 and added the remaining balance to their payments stretched out over 6 months. Their new first payment was 2 months later. They saved their home!
What if, you really do not have any money? You lost your job and or got aa divorce? Then that would be a good time to consider a short sale.
Short sales can be complicated and time consuming. But, that is just one the options available to you.
A good short sale representative would be able to wak you thru the process and coordinate everything between you and the lender.
First, you will have to prove you really cannot pay the mortgage. They will ask for bank statements and current paystubs if you have them.
next, make sure you understand the legal aspects of a short sale and how it would affect you. Consult with your CPA to see if there are tax consequences.
* Update Feb. 4, 2008 - The Mortgage Forgiveness Debt Relief Act of 2007 generally allows taxpayers to excludeincome from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as wellas mortgage debt forgiven in connection with a foreclosure, qualify for this relief.This provision applies to debt forgiven in 2007, 2008 or 2009. Up to $2 million of forgiven debt is eligible for thisexclusion ($1 million if married filing separately). The exclusion doesn't apply if the discharge is due to servicesperformed for the lender or any other reason not directly related to a decline in the home's value or the taxpayer'sfinancial condition.The amount excluded reduces the taxpayer's cost basis in the home. Hope this helps for now!
Not only is this true, but way too many just ignore the summons and various things, then they cut their options tremendously. Fight it, like you said, see what options can be arranged.