Foreclosure Specialist
Foreclosure on a family's home is overwhelming is so many ways. let corry investments assist you before it comes to foreclosure. Saving your home, your credit, and your dignity. There are options...options that are not disclosed by banks.
Foreclosure is the legal and professional proceeding in which a mortgagee, or other lienholder, usually a lender, obtains a court ordered termination of a mortgagor's equitable right of redemption. Usually a lender obtains a security interest from a borrower who mortgages or pledges an asset like a house to secure the loan. If the borrower defaults and the lender tries to repossess the property, courts of equity can grant the borrower the equitable right of redemption if the borrower repays the debt. While this equitable right exists, the lender cannot be sure that it can successfully repossess the property, thus the lender seeks to foreclose the equitable right of redemption. Other lienholders can also foreclose the owner's right of redemption for other debts, such as for overdue taxes, unpaid contractors' bills or overdue HOA dues or assessments.
The foreclosure process as applied to residential mortgage loans is a bank or other secured creditor selling or repossessing a parcel of real property (immovable property) after the owner has failed to comply with an agreement between the lender and borrower called a "mortgage" or "deed of trust". Commonly, the violation of the mortgage is a default in payment of a promissory note, secured by a lien on the property. When the process is complete, the lender can sell the property and keep the proceeds to pay off its mortgage and any legal costs, and it is typically said that "the lender has foreclosed its mortgage or lien". If the promissory note was made with a recourse clause then if the sale does not bring enough to pay the existing balance of principal and fees the mortgagee can file a claim for a deficiency judgement.
LEGAL ISSUE: DEFICIENCY
Now, Corry Investments is not an attorney nor are we giving you legal advice here and you may want to obtain legal counsel to determine what all you are liable for because of the loan default. But I want to make you aware of the legal issues I know of which you are facing no matter what happens; whether we are able to successfully buy your home or if it continues to go to foreclosure.
Usually there are only 2 outcomes that will occur as a result of the foreclosure process that has already started for you. The bank will calculate what it lost on the foreclosure process which is called a Deficiency. For example: If the bank was owed $200,000 and they can only get $150,000 to pay off the loan, then that difference… the $50,000 is what they “lost” on the loan.
1. The bank can elect to file a judgment against you for that amount and try to collect it. They could garnish your wages, attach bank accounts or other assets you may have that may not be exempt from a creditor. While most lenders are not doing this, nothing stops them from changing their mind later. But I really wouldn’t worry about it since it is out of your hands.
2. Or they will just forgive it and not pursue it. And we have no way of predicting what will happen.
But I don’t want you to think that this is tied only to a short sale or foreclosure, it will happen no matter what occurs. However, the bank is paid off, there is going to be some kind of deficiency.
One last issue I want to go over with you and again, I’m not giving you legal advice but because the bank will take a deficiency of some amount, the IRS can look at that as income tax loss, and they can make you responsible for paying the taxes on it. But a new law has removed that for homeowners whose home being foreclosed on is their primary residence. So the bank will still issue you a 1099-C that shows forgiveness of debt. And you will turn that into the IRS with your taxes paperwork.
