Fan Mail Friday How To Stop Foreclosure

Fan Mail Friday How To Stop Foreclosure
Carl Mullin:
Hey, good morning. This is Carl Mullin with Rapid Home Deals, and this is Fan Mail Friday once again. Last time we were talking about what to do when the seller is behind two and a half months on his payment, what options they might have. We talked about going to the bank and what type of forbearance items they might be able to work out with the bank. All right? Let’s say now that you’ve been to the bank and the bank said, “No, we’re not going to do that. We’re not going to give you a forbearance.” Especially in 2020 we’ve seen quite a bit of that. Now, the bank’s not going to give you forbearance, what are your options? You are weeks away from getting a notice of default, which is the official start of the foreclosure process.

There’s a couple things you can do. Obviously, what you can do, even though you might hate to do this, is you can sell your home. Simple as that. If you’ve got any equity in the home, that makes more sense than going into foreclosure and ruining your credit for years and years to come. Because when you ruin your credit, it not only impacts what happens on your mortgage, it impacts your car payments, it impacts your credit cards, it impacts everything that deals with credit going forward for years. While it’s not really that visible, it is something that’s going to impact you and make it even harder for you to live your life going forward. Number one, sell your house.

Number two is a short sale. This normally happens when there is not enough equity in the house to make a sale without the seller having to bring money to the table in order to close the deal. A short sale is very simply this. The house, let’s say you owe 100,000 on it and the bank has agreed to let you sell it for 80,000. That leaves $20,000 short, hence the name short sale. The only issue with a short sale is you have to negotiate one other item, and that item is the lack of the 1099, because the bank can issue a 1099 for that $20,000 shortfall and you would get taxed on it just like you had earned it. Here you are in a financial situation that you’re trying to get out of and now you’re going to get a 1099 for the difference between what the mortgage balance was and what you sold the house for. That’s not a good thing, but that can be negotiated away.

The next one is what’s called a deed in lieu of foreclosure. Sometime you’ll hear it as referred to as cash for keys. Basically you agree with the bank to turn the house over to the bank and you sign the documents and then you hand them the keys. Now the bank owns the property, they are now on the deed, and you are off the deed and you are out from underneath that house. That is a cash for keys. That one will also impact your credit scores because it goes down as a non-payment of a debt, or an incomplete payment of a debt, I should say. That one is cash for keys. The atomic method is to declare bankruptcy. When you declare bankruptcy, all foreclosure activity stops. Until your bankruptcy is cleared or dismissed, the banks can not foreclose on your properties. That is, like I say, the nuclear solution. Some people use it.

Unfortunately, my research shows that people who do that in order to stop a foreclosure will find themselves, after they come out of bankruptcy, are back into a foreclosure situation within a matter of months after finishing their bankruptcy, so that takes discipline to get through that, and you’re going to get a lot of help because the courts are going to hand over all of your assets to a trustee to determine what can be done with these assets in order to try and make up the debt or to forgive the debt, if you don’t have enough assets or can’t raise enough capital. But that’s all up to a trustee, that’s not up to you. So you lose some control over that when you’re going through bankruptcy. But again, it’s one way to stop foreclosure.

If you have any questions, mail them to cvmullin@gmail.com, or you can call the office at 352-480-0955 and we’ll answer your questions here on Fridays. Again, if you know anybody that needs to sell their house quickly, have them call 352-480-0955, or go to our website, RapidHomeDeals.com, and we’ll see you next time.
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