Posted by Brian_Wa on July 17, 2008 at 12:37:37:
Wow, consulting an attorney or accountant. I have you ever found one with a brain?
Brian
Foreclose after effects - Posted by Charley
Posted by Charley on July 14, 2008 at 05:35:50:
I am currently faced with choosing to allow the banks to foreclose on a property I own. I own an investment property, which hasn’t made me any money for 2+ years. If I decide to allow the banks to foreclose, does this affect my current residence, which I own. It is currently rented at a loss, but I am faced with this vicious cycle. You seasoned investors may have faced this before, so what would you suggest? Please help. I don’t want my current residence to be affected by this.
Charley
It depends - Posted by Rich-CA
Posted by Rich-CA on July 14, 2008 at 18:14:23:
It depends on your state and things like the homestead exemption and whether or not the loan is recourse (meaning they can sue in court for any shortfall from the auction).
Re: Foreclose after effects - Posted by Dave T
Posted by Dave T on July 14, 2008 at 07:48:36:
Yes, there is a chance that your current residence will be affected.
If you allow your property to go to foreclosure, and if the foreclosure sale does not generate enough revenue to pay off your loan and the cost off the foreclosure, your lender could be awarded a deficiency judgment.
The deficiency judgement could then be used to attach a lien to any other property you own including your primary residence. The lien stays on the books accruing interest until you sell the house or until the judgment expires whichever occurs first. In my state of SC, judgments expire after ten years but may be renewed once for an additional ten years.
On the other hand, the lender may choose to just forgive the deficiency and issue you a 1099C. The forgiven amount becomes taxable ordinary income on your 1040 and there is no further impact on any other property you own.
Re: Foreclose after effects - Posted by Charley
Posted by Charley on July 14, 2008 at 08:12:13:
What if ownership was transferred to a new LLC?
Re: Foreclose after effects - Other factors… - Posted by IB (NJ)
Posted by IB (NJ) on July 14, 2008 at 09:57:09:
In addition to the good information you’ve already received, consider this:
-
Was your personal residence used to secure the other mortgage? Probably not, but just checking.
-
Are the two loans with the same bank? If so, ‘cross colateralization’ may be a factor. This basically says that if the bank has to foreclose on one loan, they get to foreclose on all other loans you have with them. Is this the case?
Re: Foreclose after effects - Posted by Dave T
Posted by Dave T on July 14, 2008 at 09:20:07:
It is the mortgage loan that is being foreclosed. Does not matter how the property that secured the loan is presently titled. Whose name is on the promissory note? I bet it is yours.
Re: Foreclose after effects - Posted by M. Ostermana
Posted by M. Ostermana on July 14, 2008 at 08:20:59:
Charley,
It depends on which state, purchase money and bank. Some do, some
don’t. I would consult an attorney or accountant rather than take advice
from a blog.
Mike