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Mortgage Foreclosure Law Practice Article
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Learning About Foreclosure & Short Sale
from:Foreclosure on a home is a devastating process for the homeowner. They often feel that all their life-long dreams of home ownership are going down the drain. For whatever reason, they are no longer able to make the payments on their home so the home is in foreclosure. When a home is in foreclosure, the lender is selling the home at public auction where the highest bidder gets the home. Sometimes as an alternative to the actual foreclosure, short sale may take place.
A foreclosure short sale may take place if the lender agrees to sell the home for less than what is owed to the bank. The bank accepts a discounted payoff and releases the mortgage. However, many times the bank will list the home as a foreclosure short sale, but they may not accept the offer given by the new buyer. A home may not actually be in foreclosure for a lender to offer a short sale. If the value of the home has fallen way below what is owed on the mortgage, the lender may consider a short sale as an attempt to bring the price of the home in line with market value.
Although to avoid a foreclosure, short sales are often accepted, there are circumstances where the lender may not want to accept a short sale. In some circumstances, the lender will come out ahead if they go through with the foreclosure. This may be the case when the value of the home is much higher than what is owed on the mortgage. In a situation such as this, the lender may be able to sell the home for less than it's worth but still be over what is owed on the mortgage.
If you are a buyer looking for a cheap home to buy, be aware of the negatives involved in a pre-foreclosure short sale. You may see a home on the market that seems to be too good to be true. Check with a real estate agency to see if the home is a short sale. The lender may not accept your offer and short sales are seldom simple to complete, often taking months to complete.
A foreclosure short sale may seem like the answer to the homeowner facing the loss of their home. They will have the opportunity to be out of debt, but there are also consequences to a short sale. The largest consequence is the tax liability that may fall on the seller (homeowner). The lender has to notify the IRS of any taxable sales and they may give you a 1099 for the amount they were shorted. Although the Mortgage Forgiveness Debt Relief Act of 2007 forgives many debts in foreclosures, some of the dollar amounts are exempt from this act.
Before you get too excited about a short sale, contact a lawyer to find out your possible tax liability. Another negative about a pre-foreclosure short sale is what it does to your credit rating. It will show up even more negatively on your credit report than a foreclosure. So consider all options when your home is facing foreclosure.
Mortgage Foreclosure Law Practice News
Ally Financial: Newly Released Letter Show Scope Of Possible Mortgage Screwups - Huffington Post
Ally Financial: Newly Released Letter Show Scope Of Possible Mortgage Screwups Huffington Post GMAC carried out foreclosure sales on 1577 borrowers who were awaiting a decision about a loan modification. This is known as "dual tracking" and is one of the biggest complaints of homeowners and their advocates. The mortgage servicer hired a law firm ... Fed Publishes New Set Of Foreclosure-Review Documents Katten Muchin Rosenman LLP | Federal Reserve Tells Borrowers How to Apply For ... |
Colorado AG requests lawyers' documents from four county trustees - Denver Post
Colorado AG requests lawyers' documents from four county trustees Denver Post By David Migoya Mortgage fraud investigators with the Colorado Attorney General's office have gathered documents filed with at least four county public trustees' offices by some of the state's largest foreclosure law firms, according to several people ... |
USDA Is a Tough Collector When Mortgages Go Bad - Wall Street Journal
 Wall Street Journal | USDA Is a Tough Collector When Mortgages Go Bad Wall Street Journal Under a $25 billion settlement over questionable foreclosure practices announced in February, five large banks agreed to slash loan balances and forgive the debt of borrowers who lost homes to foreclosure. USDA Rural Housing Administrator Tammye ... React & Act: What is second-mortgage debt? |
Calif. homeowners with foreclosed second mortgages targeted by firm - News10.net
 News10.net | Calif. homeowners with foreclosed second mortgages targeted by firm News10.net By Rick Jurgens Adding new uncertainty in the state's ongoing mortgage crisis, a Texas company is aggressively pursuing hundreds of Californians to collect second-mortgage debt - on homes they've already lost through foreclosure. Texas firm targets Calif. homeowners with foreclosed 2nd mortgages |
A Law Shielded Many Texans When the Housing Bubble Burst - New York Times
A Law Shielded Many Texans When the Housing Bubble Burst New York Times The state was not spared all the excesses of the mortgage boom, said John Fleming, the general counsel of the Texas Mortgage Bankers Association, who also teaches consumer credit law at the University of Texas School of Law. |
Foreclosure-prevention efforts bog down - Kansas City Star
 Arizona Capitol Times | Foreclosure-prevention efforts bog down Kansas City Star A rare legislative conference committee called to rescue a pair of stalled foreclosure-prevention bills is bogged down in marathon sessions. Meanwhile, Gov. Jerry Brown is pushing to use some of California's share of the $25 billion national mortgage ... Arizonans sue to block mortgage fund raid MBA Advocacy Group Challenges California Foreclosure Legislation Billion Dollar Bait & Switch: States Divert Foreclosure Deal Funds |
Firm Targets Calif. Homeowners With Foreclosed 2nd Mortgages - KGTV San Diego
Firm Targets Calif. Homeowners With Foreclosed 2nd Mortgages KGTV San Diego Critics of Heritage Pacific say the company's central tactic is forcing settlements from people who can't afford a drawn-out legal fight and who don't know the details of California law. The company has sued people with second-mortgage debts of less ... |
Letter: Some law firms refuse settlements that can avoid foreclosure - TCPalm
Letter: Some law firms refuse settlements that can avoid foreclosure TCPalm Unfortunately, if the second mortgage holder is being represented by a law firm, some of these firms often reject such an offer of settlement. This causes the "short sale" to fail and proceed to foreclosure, where their client, the second-mortgage ... |