If I give my house in PA. the mortgage company, I am, I am financially responsible for anything?

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The building is about plumbing problems for the mayor and the mortgage company will not be condemed aprove me a loan because I already owe $ 20,000 more than the house is worth. I need another 20,000 to this problem should beheben.Ich lived in the house for 6 years and I have already spoken, a 3 Atorney months to see if we could make that agaist some of the owner, but person is dead now.

  1. Reply
    Help Is Here!
    May 15, 2011 at 1:25 am

    Find out if your state is a non recourse state.
    They may send you a 1099 at the end of the year though and the shortfall may be considered income that you have to add to your tax return.

  2. Reply
    Expert Realtor
    May 15, 2011 at 1:56 am

    If the city is getting ready to condemn the property, then I would wager you have a serious problem on your hands.

    How long have you been in the home? Did you pay for a home inspection when you bought the house?

  3. Reply
    May 15, 2011 at 2:23 am

    A deed-in-lieu of foreclosure (aka surrenduring your home back to the mtg company) contract should contain language that you will not be held responsible for any deficiency after the home is liquidated. BUT – read your contract if this is the route you’re going. You may recieve a 1099 for the deficiency amount, which will hurt you a bit on your taxes next year, but is far better than the alternative.

    If you just walk away and let it go to foreclosure, you are held responsible for the remaining deficiency balance. It essentially becomes an unsecured debt (like a credit card) and would likely be sold to an agency for collection or settlement. In some rare cases, creditors can sue on the basis of the promisory note and collect funds through wage garnishment.

    Long story short, negotiate a short sale or a deed in lieu. Read your contracts, and you should be fine.

  4. Reply
    May 15, 2011 at 2:50 am

    You basically gave your home up based on a deed-in-lieu of foreclosure. This will appear as a negative on your credit report.

    About the deficiency that everyone seem to think you will have to pay. Most lenders will not come after you for a deficiency judgment. It takes too long and in order to obtain this deficiency judgment they are required to go through the courts to obtain the judgment.

    If they decide to do this they incur the extra cost of hiring an attorney to prove their case. Then there is the time associated with getting into court system and most don’t or will not take the time. This is not cost effective. They also may not sell or do anything to the house until the case is brought before the judge and a ruling is made. The chance of the lender filing a deficiency judgment against you is extremely slim.

    If there is a short fall on the mortgage balance then someone has been determined have a gain. This person is you, therefore if this situation occur your lender will send you a 1099 that you will be required to file with your current year taxes.

    Seeking an attorney to find out if there is a possible case against the former owner is a stretch. You have been living there for 6 years there is such thing as preventative maintenance. Painting, plumbing and electrical are on going things that need to be taken care of or upgraded like a new roof every 10-12 years.

    I hope this has been of some use to you, good luck.

    “FIGHT ON”

  5. Reply
    May 15, 2011 at 3:12 am

    If the property is condemned by the city, I’d say the lender has a problem. And I would remind them of that. Most lenders won’t provide a loan for $ 20,000, it’s a small amount. Check with your local banks, not national lenders and see if they won’t under write a rehab loan, also any lender providing FHA loans have a product called 203K to help you make repairs.

  6. Reply
    Andrew D
    May 15, 2011 at 4:00 am

    You might consider using the document: “deed back in lieu of foreclosure”. It costs about $ 10 to file with the county recorder. (depending on which state you live in.)

    You walk away, they take the house back with no questions asked, and you don’t get a foreclosure on your record.


  7. Reply
    May 15, 2011 at 4:48 am

    You can file claims against the previous owner only within 24 months after taking over the possession of the house. 6 years have since lapsed so claims will not be possible.

    Yes, you will still be financially liable between the selling price of the property (forced sale) versus loan amount owed to the bank.

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