Foreclosures Help Information

Archive for August, 2009

Hud Foreclosure Auctions

Question: Can we assume an existing loan when purchasing a pre foreclosure property and should we?

We have looked at auction sales, REO and HUD as possible sources of a well priced home in Fort Lauderdale, Florida. Now we want to feel we are covering the range if we look at pre foreclosure property as well. If we can identify real savings to be made, is there any impediment to assuming an existing loan as part of our offer?

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Answer: The lender must agree to the assumption for the seller to quit liability. An assumable mortgage has a contract that allows, or does not specifically prohibit, a creditworthy buyer from assuming the existing loan.
You have to weigh up the value of this loan to you. If there is an interest rate better than what you can get elsewhere then it could be a good deal as you will avoid closing costs. The balance owing and the period to run, as well as the length of time you expect to need the loan will all have bearing on the worth of the assumption to you. Your expected savings could be wiped out if you have to take a second mortgage to supplement the assumed one, eg in the case where the assumed loan has already been paid down substantially and the value of the property has appreciated since the loan was taken out. Except I would wonder in that case why the preforeclosure! Another point, where there are substantial savings to be made you can bet the seller will want to share them, usually in the form of a higher price.
As one of the other correspondents says, in recent years a "due on sale" clause means the lender could insist on repayment, but I know some who haven't although the interest rates were then raised to CMV. Where the assumption is allowed, the new borrower must meet all the same qualification requirements of the lender.

Madison AL Bank Foreclosure SOLD AT AUCTION

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What's the difference between a regular foreclosure and an REO foreclosure?

I've been looking up foreclosures at the county office to buy a foreclosure (the ones about to be auctioned). Someone said I should be looking at REO foreclosures. What's the difference between regular, normal foreclosures and REO foreclosures? and how do I buy one and or get info on these?

Foreclosure Laws In Nevada

Question: after foreclosure, can your mortgage company make you pay what they lose in a foreclosure sale?

I have a first and second mortgage (to avoid PMI) and I am wondering if, after foreclosure, if we are going to be liable finacially for the banks loss, or the difference between our loan balance and what they get in the foreclosure sale? I know that our credit score will be affected, but I am wondering if that is the only repercussion? I also know the laws are different in states I am in Nevada anyone that knows the nevada foreclosure law specifically would be great. I am also wondering once we move out, assuming we do so before notice to evict what role will we, as the homeowners, need to play in the foreclosure process? I have heard that you must fill out a 1099 form for taxes? saying the difference between the amount owed and what the bank gets is roughly 30,000 what would that mean we pay at tax time?

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Answer: Yes, the mortgage company can go after you for difference between the amount of sale at foreclosure and the amount you owe them. This is called a Deficiency Judgment and Nevada does allow for these judgments. Some banks will do this, some won't. It's totally up to them.

The tax implications come from another process that the bank could choose to do. They can choose to forgive the debt you owe to them. When they do this there is no Deficiency Judgment against you. The bank will issue a 1099 form to you and the IRS. This form basically states that you received X number of dollars as income from the bank. This "income" is the amount of money you owed them but they never chose to collect. The IRS treats this as income because the bank, in effect, gave you the money by forgiving your loan. You will then owe taxes on this income. Depending on your tax bracket you could owe anywhere from $6600 to $10,500 to the IRS for a $30,000 forgiveness.

Just as a note, it's best to try and work with the bank before they file a foreclosure with the courts. You will save them a lot of hassle if you choose to do a deed in lieu or a short sale. Once it goes into foreclosure court then you are getting yourself in a really bad place.

This site has the basic information on foreclosure laws for Nevada - http://stopforeclosure.com/Nevada_Foreclosure_Law.htm

Good Luck!

Nevada Foreclosure Laws - How to Stop Foreclosure