Foreclosure in 06880>Question Details

Free_spirite…, Home Buyer in Kansas

I have a mortgage on a house that was obtained through the USDA Rural Development

Asked by Free_spirited_chic, Kansas Tue Jun 12, 2012

and was unable to make my payments for 3 consecutive months thus far. I have received a notice of foreclosure from the USDA and I would like to know how this is going to affect me. I have had the house listed wtih a realtor for about a month now, without any offers. If foreclosure proceedings start, what do I tell my agent? What if the house sells for less than my current balance? I no longer live there (it has been empty for 6 months as I have had to move for a job); my initial plan was to finish rennovations to it and sell it for a good profit, but then I ran into pitfalls where I could not make the mortgage payment because I needed that check to pay for my rental. I would eventually like to buy another house again hopefully in the next 1-3 years and would not like to be penalized forever for this, as the case in the next 1-3 years will be that I WON'T have to be making a rental payment and a mortgage (estimating about $2000 in monthly housing payments)

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Depends on the loan

Typically California does not go after deficient judgement however there are some exceptions such as if its a second loan or refinance

It is highly unlikely that they will go after you for a judgement due to the time consuming process and costs also the legal ramification of selling the house at the court house however you never know

I recommend you get a good real estate agent that can negotiate your way for you be sure to have it on the approval letter that there will be no clause pursue
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0 votes Thank Flag Link Tue Jun 12, 2012
There are several things you should do right away.

First let your agent know. He/she needs to know the facts to give you correct representation. They may feel that if you reduce the price it will move quickly, even if it puts you in a short sale situation. Many lenders are preferring short sales over costly foreclosures and may be eager to work with you. They will be concerned that the house is being maintained so you will have to convince them you have somehow provided for that, or are there on a regular basis to check it out.

Secondly, call the bank servicing your loan. Ask for the loan modification department. While it is a little more difficult to qualify when it is not your primary residence there are programs available in your circumstances. You may qualify for temporary payment reduction or a modification in your interest rate, which could help you make payments unitl the home sells.

Thirdly, if you do consider a short sale get an attorney who has a lot of experience in this field. Many of the attorneys doing this kind of sale do not charge you anything up front and wait to get paid by the bank, when the house closes. A realtor dealing in these sales can refer you to an attorney.
0 votes Thank Flag Link Tue Jun 12, 2012
Selling a home for less than what is owed is called a 'short sale' and it is done all the time. Tell your agent right away exactly the situation you are in. You should look the house up on http://www.makinghomeaffordable.gov to see if your house qualifies as a HAFA short sale. There are benefits to HAFA and you no longer have to occupy the home. You will see there that you need to have suffered some sort of 'hardship' but don't worry, your change in job situation qualifies as a hardship. Depending on whether you have other assets, or whether the home qualifies for HAFA you may not even have to pay any of the balance back to the bank, and in some circumstances, you may even qualify for money to help you relocate. Your credit score will have taken a hit due to the missed payments but if you work at it you should be able to fix that and obtain your goal of buying again in the next 1-3 years. Nothing lasts forever.
0 votes Thank Flag Link Tue Jun 12, 2012
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