IRS Publication p4681 - Canceled Debts, Foreclosures, Repossessions, and Abandonments
By viewing this page you acknowledge that as Real Estate Agents we are not qualified to offer Credit Score, Legal, Financial or Tax advice. If, after going through ALL your options to avoid a Foreclosure you think you would like to sell you home or need help getting into your next property, please call us.
WE RECOMEND THAT YOU SEEK LEGAL, FINANCIAL AND TAX ADVICE BEFORE PROCEEDING WITH ANY OPTION. THERE IS TONS OF BAD INFORMATION FLOATING AROUND AND EVEN SOME OF THE MOST WELL INFORMED SOUNDING PEOPLE CAN BE INCORRECT IN THEIR KNOWLEDGE. From what we understand, there is the possibility for HUGE Credit Ramifications, Legal, Financial or Tax problems in your future if you choose the wrong option. This is not intended to be a complete list of your option to avoid foreclosure, these are just some of the options we are aware of. There is a link at the bottom of the page to the HUD website that we suggest you further investigate.
Bring your loan payments up-to-date and maintain regular payments in a timely manner. This is the best option and can be achieved by:
- Working out a repayment plan with your lender.
- Refinancing your home with better rates and terms.
- Modifying your current loan with your lender.
- Borrowing money from a relative or friend to bring your payments current.
- Other options
Deed in Lieu of Foreclosure is when a homeowner gives the property to the lender because the owner can no longer make the mortgage payments. The lender then sells off the property to retrieve part or all of the loan balance.
Redemption refers to the borrower’s right to buy back the property or, to bring the mortgage up-to-date while the property is being foreclosed on or, after it has already been foreclosed on by the creditors. The borrower is required to pay all charges or collection costs and to make up all payments that are due. The length of time that a borrower has to redeem the property varies from state to state and can be for a period of years or months.
A
Short Sale is when a property is sold for less than the amount owed on the mortgage and the lender agrees to accept that amount as satisfaction of the total amount owed to pay off the home loan (including other transaction-related expenses such as closing costs, property taxes, transfer tax, and/or commission fees).
Other Options to Consider
- Rent your home and make the mortgage payments to your lender.
- Rent a room of your home to bring in extra income from the property.
- Sell your home and pay off the loan amount due.
- Get protection under the
Servicemembers Civil Relief Act (SMCRA).
- Enter into a Deed In Lieu of Foreclosure or “friendly foreclosure”.
- File for Bankruptcy protection to stall the foreclosure process.
Government Sponsored Option
HAMP
HAFA -
HAFA PARTICIPATING LENDERS
HAP
Contact a HUD Approved Housing Counselor
Federal Tax Relief Initiative
Things to Avoid
- Making a quick or uneducated decisions
- Hiring someone not experienced
- Giving Up
- Fighting with those you love
Things to Avoid as Recommended on the HUD Website (Actually, Copied from the HUD Website)
Avoid foreclosure prevention companies.
You
don't need to pay fees for foreclosure prevention help--use that money
to pay the mortgage instead. Many for-profit companies will contact you
promising to negotiate with your lender. While these may be legitimate
businesses, they will charge you a hefty fee (often two or three
month's mortgage payment) for information and services your lender or a HUD-approved housing counselor will provide free if you contact them.
Don't lose your house to foreclosure recovery scams!
If
any firm claims they can stop your foreclosure immediately and if you
sign a document appointing them to act on your behalf, you may well be
signing over the title to your property and becoming a renter in your
own home! Never sign a legal document without reading and understanding
all the terms and getting professional advice from an attorney, a
trusted real estate professional or a HUD-approved housing counselor.
The Department of Housing and Urban Development (HUD)
website which offers information and help.
The Arizona Government has put together a Task Force and
website to help prevent Foreclosures. They have also produced a helpful Brochure.
The Internet is filled with good and bad information on this subject. It is hard to know which is which. Please do not rely on the information contained on any website, this one included. Laws differ state, by state. Rules differ, Person by Person, because of individual situations. There is really no way for you to know if the information contained on a website pertains to you in the spirit of how the person was sharing their opinion, knowledge or expertise. Please seek professional and personal assistance.