When mortgage payments begin to pile up, some struggling homeowners opt to sell their home. However, if selling your home does not materialize within a certain period of time – you are left with two options, either short sale or foreclosure.
Before filing foreclosure, it is important to have some knowledge of the process and speak with an attorney. First, you will receive a Breach Letter that will lead to a ‘Foreclosure Workout’ between you and your lender. The objective is to come to a resolution for both parties in order to cease delinquent payments. This process will take 45 days, after which a foreclosure action will commence if there is no resolution. It usually takes 90 to 120 days before you receive a Notice of Default or NOD.
Afterwards, a temporary indulgence is granted, which usually takes 30 to 60 days where you are given a chance to bring the loan current. The borrower can also come up with special or long term forbearance. This involves payment suspension for 18 months and up to 24 months for long term. Other procedures may apply, for example, military indulgence, pre-foreclosure sale, deed-in-lieu of foreclosure, forbearance and modification.
A short sale can be a very enticing solution, but should come with fair warning. Short sale involves your lender selling your home at a much lesser amount than you owe. For example, if you are required to pay $190,000 on your loan, the price of your home can be sold for “selling short” of $40,000 at an equivalent of $150,000 only.
For homeowners who choose this option, it is important to remember the tax exemption that was originally granted by Congress in 2007 has expired. The exemption of taxes for “imputed income” due to short sale transactions ended at the last quarter of 2014. As a result, the ‘selling short’ or remaining balance of $40,000 will leave you liable for a hefty tax bill from the IRS at the end of the year.
Understanding the pros and cons of foreclosures and short sales is crucial before moving forward with either option.
Choosing the right attorney can make the difference between whether or not you can keep your home. A well-qualified Miami foreclosure defense attorney will not only help you keep your home, but they will be able to negotiate a loan that has payments you can afford. Miami foreclosure defense attorney Timothy Kingcade has helped many facing foreclosure alleviate their stress by letting them stay in their homes for at least another year, allowing them to re-organize their lives. If you have any questions on the topic of foreclosure please feel free to contact me at (305) 285-9100. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.