Question:

Foreclosure Ramifications?

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I'm in a divorce right now, we put house up for sale, we paid $98,000. We had a 80-20(80 with one company. 20 with another), loan on the house, with the market being it's horrible self, we are only getting offers in the 70-85,000 range. We still have debt for home repairs and upgrades we did. A shortsale make take up to a year if the 2 companies wanna fight it out.

My soon to be ex-wife has no interest in staying nit he house till it sells, neither can afford it on our owns. We really just wanna leave. And start our owns lives but can't seperate till we rid ourselves of the house. So what really happens when we foreclose. I need a list of everything that happens to us and what we do to get the ball rolling.

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6 ANSWERS


  1. First off, don't pay your taxes if the home is being foreclosed.  Its just a waste of your money.

    Second, the Short Sale probably won't work as more often than not the second mortgage will just mess the whole thing up.  You may get an offer, but by the time the mortgage companies get their heads out of their butts the buyer will have walked away.  

    You asked what you had to do to get the "ball rolling".  First thing is to stop making the payment.  Depending on your state laws you can live in the house mortgage payment free for 6-12 months without even fighting with your bank.  Eventually there will be a sale and even then you may still have another month in the house.  Had you put down your state I could have given you an exact timeline.

    Without making a payment, one or both of you can walk away, but beware, there are consequences.  You won't be able to get another mortgage for at least 3 years and you may also be subject to 1099-C Cancellation of Debt Income and a potential Deficiency Judgment.  If you receive a Deficiency Judgment or are liable for Cancellation of Debt Income a Bankruptcy may be advisable to cancel those debts.

    Mr. Financial Freedom

    http://www.5stepstofinancialfreedom.com


  2. My sister is in almost the exact same situation as you.  She and her soon-to-be ex-husband did decide it would be best to just let the bank foreclose on the house, since they had taken out a few loans against the house and it would never sell for as much as they had paid for it.

    Here's how a foreclosure works.  (See Citation)

    After about three to six months of missed payments, the lender orders a trustee to record a Notice of Default (NOD). At the County Recorder’s Office. This puts the borrower on notice that he or she is facing foreclosure and starts a reinstatement period that typically runs until five days before the home is auctioned off.

    If the default isn't corrected (the loan must be brought current) within three months, a foreclosure sale date is established. The homeowner will receive a Notice of Sale, and this notice will also be posted on the property. In addition, the Notice of Sale is recorded at the County Recorder’s Office in the county where the property is located. Finally, this Notice of Sale is also published in newspapers local to the county in question over a three-week period.

    The foreclosure Trustee Sale typically occurs on the steps of the county courthouse in which the property is located. The time and location of this sale are designated in the Notice of Sale. At the Trustee Sale, the property is auctioned in public to the highest bidder, who must pay the high bid price in cash, typically with a deposit up front and the remainder within 24 hours. The winner of the auction will then receive the trustee’s deed to the property.

    Aside from losing your home, the only other real ramification is your loss of credit (not to downplay the importance of credit, but to stress that nobody is going to jail you for foreclosing.)  It will show on your credit report that you had a mortgage for x amount of money, and that you defaulted and the home was foreclosed upon.  It will show up on your wife's credit too.

    Back years ago, it was seen as the worst thing ever to have a foreclosure on your credit report.  These days, this type of thing is becoming more and more common, and isn't looked at quite as badly as it was in the past.  Even still, this will hinder your chances of being able to buy another home anytime soon, and will make getting autoloans, credit cards, and even an apartment (if they do a credit check) much more difficult for the next 7 years (negative things remain on your credit report for 7 years.)  

    Personally, I believe what you're doing is the best choice, especially since I am watching as my sister is going through it right now.  Since it's either let the house be foreclosed upon or share a home with your ex-spouse-- this is definitely the best solution.

    Best Wishes!

  3. ok -- foreclosure is  a bad thing as neither of you will be able yo buy a home for 4 years. If you do this then once sold you will have to pay the balance owed  or go bankrupt. This will again affect both of you . Try getting a loan for the balance that you owe even if both of you have to get half each in order to sell short of pay offs and both of you can bring that money to close and deliver good deed. Then just pay off the 5-7K note on your own and call it good

  4. Go to your lender and ask about the short sale. You may be able to negotiate a reduced payment per month until it goes through, so you can afford to live there by yourself.

    Short sales generally take longer than foreclosures. But, they can only take a few months if the listing agent has any experience with them. And, they look a lot less damaging on your credit report than a foreclosure.

  5. If this is the decision that the both of you have made that foreclosure is the solution and you have no desire to fight for the house just let it go.

    Call your lender, tell them you would like to explore the possibility of a deed in lieu of foreclosure. If  they allow you to use this procedure then simply complete the papers they send you and return them. The documents they send you will need both you and your wife's signature.

    If they do not allow you to do this, which is their options, then simply move out of the house and go your separate ways.

    The lender will place on each of your credit reports that a foreclosure existed with this person. This normally stay on your credit report for between 7-10 years depending on whom you talk to and what side of the bed they woke up on.

    Once the foreclosure has taken place you are off the hook. financially. Credit wise you will be messed up for a couple of years.

    If you reestablish your credit, normally lenders will look at a mortgage loan application in 2 years and will approve the application. Expect to pay a higher interest rate.

    Now there are some of these experts that will tell you that most lenders will seek a judgment against your income and garnish your wages. This is true if the lender decide to take you to court for a judicial foreclosure. They have to right, but may not do so. Under this procedure you also could have up to one year to reclaim your house.

    Most lenders use the non-judicial foreclosure procedure. This method of foreclosure does not normally call for them to get a judgment against you. They only take the collateral that was signed for when you signed the loan docs and that was the property that is currently in foreclosure.

    Under this procedure they normally do not have the right to go after your for a judgment. You also do not have the right to reclaim the house for any period.  

    I hope this has been of some use to you, good luck.

    “FIGHT ON”

  6. You need to contact an attorney.  Check out this website:

    www.feldmanlawcenter.com

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