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Q. What is a foreclosure?
A. In simple terms: You have not been making the payments, and it is the action the financial institution can use to take the house back. You borrowed money using your house as collateral with the agreement that if you could not pay it back, then the lender could take the house.
Q. Can the bank just come and kick me out of my house?
A No. Sometimes people are told by collectors, “Just leave the keys in the mailbox”. You still have time until the sale has occurred, and the house is no longer yours.
Q. How long does the foreclosure process usually take?
A. From the time you miss your first payment to the final foreclosure sale it’s not uncommon for 5 months or more to pass. In some states this could be more and in others considerably less. It will also depend upon your mortgage holder and how aggressively they pursue your case.
Formal Legal Foreclosure Process:
- Bank sends Notice of Intent to Foreclose.
- Immediately following the notice, bank files action in the court system to foreclose
- Legal notices as required by law are published in local papers.
- No payment or settlement arrangements are made with the lender.
- Notice and waiting periods expire.
- Court issues order allowing the bank to foreclose on property. (Beware, as several of these steps happen so quickly that the process can be very short).
- Legal notice of actual foreclosure sale published in local papers.
- House sold at auction to highest bidder.
Q. When should I be alarmed?
A. Most people aren’t alarmed until they receive a notice of default. At this point you should be very alarmed! You should already have a foreclosure specialist helping you to protect your position at this point. (Don’t forget that Peg McNab IS a foreclosure specialist).
Q. How will I know which is the best option for me?
A. This is based on individual circumstances. The response to this question will depend upon your assets, liabilities, income, expenses and the underlying reason why the house is in foreclosure. The best solution will also depend upon the type of mortgage you have and where in the foreclosure process you are when you make the decision to save the house, and/or save your credit by as much as 200-300 points.
Q. What if there is a Renter, can I still list the property as a Short Sale?
A. As long as the renter is aware of the situation and is willing to cooperate with you as the listing agent and the current owner then, yes.
Q. Is the seller/homeowner going to get hit with a tax bill or a 1099 if they do a short sale?
A. The Mortgage Forgiveness Act of 2007 was signed into law on 12/20/07 and is now official effectively getting rid of the question, “Will I be taxed on the short sale.” Prior to this action, forgiven mortgage debt due to foreclosure, short sale, or deed in lieu of foreclosure, was potentially taxable income to the borrower. This was the subject of much media attention and led to many questions and concerns from Sellers wondering whether or not they were going to get “hit with taxes” on the short sale.
Do you have any other questions? Are you interested in avoiding Foreclosure and keeping your home or at least saving your credit history? If so contact us at 520-508-1660 or email at Azhomes@mcnabs.com for more answers and to see how we can help you.
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