Foreclosures Help Information

Posts Tagged ‘rental’

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

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Foreclosed Rental Properties

Question: foreclosing on my rental property?

This month will be my 3rd month I missed mortgage payment. What's next? Should I let my tenants know the bank will take over the house ?
I got bills for sewer,water, garbage and property tax, Am I responsible for it or the bank does? when should I cut off my property insurance?
Thanks for your help.

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Answer: In my state, if you have been advised by the mortgage holder that foreclosure process is commencing, the property owner is required by law to notify tenants of the foreclosure action. Some of the states require the mortgage holder to notify each tenant that the property is being foreclosed upon, when the foreclosure sale is scheduled to be held, and how their tenancy will be handled if the foreclosure is completed. If the rents are current, any utilities which are included in the rent must be paid or the full utilities charged to the unit must be returned to the tenant. Not to do so is a chargeable offense.

Don't cut your property insurance until after the foreclosure sale. You are liable right up to the last minute. Sorry for your troubles!

Nightmare Rental Property

Japan Foreclosed Homes

The housing market is in serious need of stabilizing. People wages are going down, housing prices are going down and house payments are going up. These costs must be brought in line with rental payments or those facing foreclosure will and are opting to dump their houses for the lower cost of housing, i.e., renting.

There is not a lot of incentive to continue making payments on a house that is upside down on the mortgage payments.  Especially if the homeowners are financially distressed.

The whole idea is if the homeowners' payments can be brought inline with the rental market they will stay in their home before opting to move into a smaller home for the same housing payment. Even if the the value of the home is less than the mortgage, given the history of real estate the home's value will eventually rebound, putting the homeowners back in a favorable equity position.

It becomes a win-win situation for both the homeowners and the lenders they can avoid mortgage foreclosure process.

However, if you have been the unfortunate victim of losing your income with no reasonable expectation of recovering it you may have no choice but to downsize your housing wants and move into something to cover your needs. Of course, this is just until you are back on your feet. A temporary thing.

HAMP modifications:

to be eligible a mortgages have closed before January 1, 2009 
modifications end December 31, 2012
only owner-occupied homes qualify
no vacant or condemned properties
upside down loans are not exempt
financial incentives given to lenders to modify loans that are NOT in default if the borrower can prove imminent hardship
homeowners can get bonus eligibility for annual principal reductions of $1,000 for up to 5 years mortgage payments have been made on-time
borrowers must sign an affidavit of financial hardship & a 4506-T
Lenders will follow steps to reduce monthly payments to no more than 31% of verified gross monthly income. Second mortgage & lines of credit are not included in this calculation
HUD-certified consumer debt counseling program will be required of homeowners with total debt payments over 55% of their income
 
Hope Hotline at 888-995-HOPE (4673), website http://www.hud.gov/offices/hsg/sfh/hcc/fc/

Homeowners in bankruptcy may still be eligible
foreclosure proceedings will be suspended for a period of 90 days to prove the homeowners can make the modified payments. If homeowner defaults on modification plan, they are not eligible for any additional modifications incentives given to lenders to allow short-sales or deeds-in-lieu instead of foreclosing
second mortgages and lines of credit may be extinguished (to be determined)
voluntary participation in the program for lenders, but participation will be required if they receive Financial Stability program funds. Private Mortgage Insurance (PMI) companies have agreed to work out settlements on modified loans.

Homeowners will not be be getting their mortgages reduced as a part of this program. Sorry, but you borrowed the money and the government is not looking to pay it back for you, just yet. But the way things are going, who can tell.

It might be cheaper to buy every defaulting American's home than do what they are doing. After all, if I had no mortgage payments to make, I might buy a new car. Made in Japan of course.

Procedures to reduce a home owner's payment to qualify:
Lenders may add to loan amount to be modified:

accrued interest
past due real estate taxes and insurance premiums
delinquency charges paid to third parties in the ordinary course of servicing and not retained by the lender
any required escrow advances already paid by the lender and any required escrow advances by the lender that are currently due and will be paid by the lender during the Trial Period
Late fees are not included
The interest rate will be reduced in 1/8% increments (subject to a floor of 2%) until the payment equals 31% of the home owner's income
extension of the term of the mortgage up to 40 years is allowed
The 40-year term begins at the start of the modification (after the borrower successfully completes the Trial Period).
 
IF necessary forbearance of principal is allowed. If there is a principal forbearance amount, a balloon payment of that forbearance amount is due:

on the maturity date
upon sale of the property
or upon payoff of the regular mortgage
the modified balance must be no lower than the current property value
there is no requirement to use principal reduction under the Home Affordable Modification program

These are most of the details most relevant to homeowners who might be in need of this program.

About the Author:

So if you are simply worried about your ability to keep up with your current payments...or if you are late making a payment...or your loan is due to reset to a higher payment...or if you are in default...there maybe a some help available through mortgage loss mitigation.
Download the Foreclosure Survival Handbook now and stop the mortgage foreclosure process before it is too late. For even more valuable tips go to Stop Mortgage Foreclosure Precess now.

Article Source: ArticlesBase.com - Avoid Mortgage Foreclosure Process With Obama's Home Affordble Modifications Program

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