Foreclosures and short sales - Posted by Stephan
Posted by Stephan on March 06, 2002 at 08:57:24:
I am learning the foreclosure process and have a lot of questions. For those with experience:
How can money be made on a house with no equity, but is in no need of repairs (but could use some updates), in a market with decreasing house prices (houses are not moving). The owner is not yet behind on payments but has unsuccessfully tried to sell and now is starting to fall behind. I see that offering financing, an investor could make a profit by hiking the price, but what about in a slow market?
What if the same house is upside-down on the loan?
Is it possible for a distressed owner to quitclaim deed the property back to the lender for the amount owed? At what phase would this happen, when payments are already late or before a notice of default is filed? My thoughts here are that a lender may prefer the house back, in good condition and ready to sell, before payments fall behind and instead of pursuing a foreclosure.
In either of these situations would a short sale help the owner? Is it as damaging to his credit as a foreclosure?
What are the tax implications for the owner on short sales and deficiency judgements?
Thank you very much for the input. I feel in order to effectively help distressed owners, I need to understand the process as much as possible and help spell out both options and implications.