Foreclosure in 78660>Question Details

vp, Other/Just Looking in Pflugerville, TX

I have a home whose original purchase price was $125K, with $6K of upgrades, that now has major foundation issues and other small repairs that may

Asked by vp, Pflugerville, TX Wed Dec 2, 2009

cost around $20K to fix. Were the home in good condition, its market value may have been around $135K. The original FHA loan principal was $123K, and I currently owe $100K. Being unemployed for a while and having failed to make the last monthly payment, and quite possibly the coming month too, if this were to go to foreclosure, would there be negative tax implications for me? Also, would the lender try to sell it for as much as they can, or are they limited to only the balance owed plus expenses?

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I am not a tax expert, thus I cannot comment on the "negative tax implications". Depending on the type of loan that you have will determine what the lender does. If you have a FHA loan, then the house would be given back to HUD for resale and it would be at an FHA appraised value.
0 votes Thank Flag Link Thu Mar 15, 2012
Dear VP,
Call your bank and as for the loss mitigation department. Explain your circumstances and be prepared to provide supporting income/expense documentation. Call a local Realtor with Short Sale knowledge to help you with the pricing analysis of your home. The sooner you speak to someone, the sooner you will have an understanding of the implications and the better you can choose your course of action. I agree with the earlier post......sooner is better than later!
0 votes Thank Flag Link Fri Aug 13, 2010
You're best bet is to find out what the true "as-is" value of your might be. It doesn't matter what the value would be in good condition unless you plan to make the repairs necessary to bring the home into that condition. So, knowing the true and current value of the home is critical to determining your options.

The lender will be reimbursed for losses suffered because you have mortgage insurance on your loan. The lender will try to get a fair market value for the home based on it's current condition, but that value will be based on an appraisal in the event of a foreclosure or "short-sale." Obviously, what you, I and the lender thinks the home should sell for would be vastly different, especially in light of the fact that the lender can't lose.

Since you're now behind on your mortgage, you should immediately look at your options. Foreclosure? Short-Sale? Bankruptcy? Retail sale? Investor purchase? It's hard to say what your best option is at this point because there are too many unknown variables in your posting, but I would definitely communicate with your lender ASAP and let them know you're working on a plan. Communication is key. Keep all letters you receive from the lender as well.

As both a real estate broker and investor, I would be happy to discuss a possible purchase of your home, but I would need more info. If you wish to discuss this, feel free to call me at 512-507-5864 or email me at

Best of luck.

Guy Gimenez
Broker / Investor
0 votes Thank Flag Link Wed Dec 2, 2009
You still have to pay the tax. A short sale should be tried before foreclosure. Most lenders will work with you in trying to solve this problem. With the house having problems, the sale price may be below the loan principal, which you may have to make up to the lender. Get a realtor on board and stage the house so you can get it on the market now.
0 votes Thank Flag Link Wed Dec 2, 2009

Please know that you are not alone out there. First, communicate with your bank. It really can make a difference sometimes, depending on the Lender, as to how they will work with you.

You may want to consider putting you home on the market. Yes, the issues with the house will effect the selling price. The lender needs to know these issues as well. Depending on the how the home shows, it is possible to sell the home for less than you owe, called a Short Sale, and you get out of the home. Foreclosure is a long process and takes a several months. And, the Lender will only be able to sell the home for whatever they can get if they foreclose. This is usually considerably less than what is owed.... hence, they may consider working with you in trying to sell the home. Your lender is going to end up doing whatever they think will cost them the less amount in the long run... loss due to foreclosure or loss due to a short sale.

Do not just pack-up and leave. AND DONT TAKE THINGS FROM THE HOME THAT WILL BE NEEDED TO SELL THE HOME (LIKE APPLIANCES). This will not be a reasonable remedy for the Lender and they will not work with you.

Please ask your CPA how a Short Sale vs. a Foreclosure will affect your taxes.


Chris Rodriguez, e-PRO®
Realty Executives - Central Region
(512) 366-8181 Office
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REALTOR® - Licensed to Practice Real Estate in the Great State of Texas

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• National Association of Hispanic Real Estate Professionals
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0 votes Thank Flag Link Wed Dec 2, 2009
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