What are you doing??!!
It takes 21 days to get rid of dead beat tenants!
Your credit is being destroyed. You are about to get foreclosed on. It's not the lender's fault - rental property is a business. If you aren't going to run it like a business, hire a manager to do it!
You are on the hook for the money you borrowed - whether you own the property or not! Right now you have options but once your are foreclosed on you'll still owe the money, you'll have bad credit that sticks to you for 10 years and you'll lose whatever you put into the home to buy it.
Call me! We can get this whole thing handled in 30 days!
2. Get the tenant to pay rent or get out....you can evict them.
3. Once you get the tenant out, get it rented again.
4. You can put it up for rent or sell at the same time.
5. If you don't pay your mortgage chances are Funding Partners will foreclose on you and take the property back. This will negatively affect your credit or that of your wifes.
6. This can also cause you many more problems than just bad credit. What if they take the property back and sell it for $30,000.....you may still owe them the shortfall and they potentially can come after you personally for the difference.
7. They may send you a 1099 for the shortfall. How would you like to pay taxes on extra income of $40,000 next year? Not fun I'm sure.
Sorry to say, but from reading the post, you seem to imply all these problems are those of "funding partners". If your name is on the deed or note, you need to make it your problem or pay the consequences.
Get motivated and get working on this problem. This is your money and your credit at risk, don't put it in someone elses hands to figure out.
Let me be sure I understand, so that I can give you a knowledgeable answer to your question. You & your wife own an investment property (in her credit). You are permitting tenants to stay in the home for free the last 4 months. The lender has extended $70,000 in credit to you to buy the house, in other words your mortgage with them is $70,000, right? They have now asked you to either make payments or they will call the entire loan due, correct? You state you do not want to pay for the loan. They are also alerting you they will foreclose on the house, and indicate in their conversations that there are also back taxes NOT being paid on the property, is that also right? You also don't want the property at all, don't want to pay on it anymore, and you want to know what to do?
You could do what your already doing, let it go into foreclosure. You could also avoid hurting your wife's credit any further than what has happened because at some point in the next 7 years it is highly likely you will want to have credit for buying a car, a house, obtaining credit, renting, etc. The choice then would be to sell the house, list it for sell then pay the lenders off through the sell of the home, or if the property qualifies for a short sale, enter into a listing with a Realtor who will work with the bank on your wife's behalf (at no cost to you) to accept an offer short of what you owe on the property, and sell the house, thus your lender accepts money short of what is owed to them but agrees to sell the house, and your Realtor can further work for you to see that the loan is paid credit in fulll, and doesn't leave you open for the difference owed, and also doesn't leave you open to the back taxes.
I reside in Far North Dallas area and would be happy to talk with you about your home if your interested in selling it, click on my name in blue by my photo and email your contact info to me, I will call you within 3 business hours.
I teach foreclosure prevention workshops here are your concerns:
You are vulnerable in three areas. First is your credit, second is the tax hit and third is the possibility of a deficiency against you by the lender.
Regarding your credit, you will loose 80 points if you miss two payments. If it goes through foreclosure, short sale, deed in lieu you will then have an additional negative remark on your credit but you will not loose any more points. The points are 80 total all the way through foreclosure. I can help you with this down the road through credit restoration process.
Next, In Texas I believe you have a judicial foreclosure process there, and you will want to see if your loan is a recourse or a nonrecourse loan. Then you know where you stand.
Ideally, you are better off if you have a nonjudicial foreclosure with a nonrecourse loan.
You can call your lender and ask them directly "how will you foreclosure on me." On your loan documents you can find out if your loan is recourse or nonrecourse. Or of course you can ask your lender what type of loan you have. Then you will know and you will not have to pay an attorney to get that information. See if you do use an attorney you will want to know as much as possible before going in their office to save yourself $$. It seems as if you already lost some money anyway with the tenants.
As far as the tax hit, this is a perfect question for your accountant or cpa. This tax question is regarding the 1099A or 1099C that will be issued to if you let the property go.
The previous answer was correct about the Deed and the Loan. Whoever is on the loan is vulerable credit hit wise.
Also, in Texas I think your statute of limitations is 7 years, therefore if your lender does issue a deficiency judgement against you and you do not have assets now you might in 4 years and they will try to collect. Therefore my advice is protect yourself.
Find out how your lender will foreclosure: judicial or nonjudicial (Deed of Trust)
What type of loan you have recourse or nonrecourse.
Once you know those two things you will know where you stand and how vulnerable you are and that will give you the various options that are available to you.
You have several options.. and you have legal rights!
In fact your lender is more vulnerable than you are they just like to make us feel we are. Here is my link to my Foreclosure Prevention Workshops!
A foreclosure or letting the lender take the property back is not the best option for you if you want to save your credit. While each late payment has negatively impacted your credit, a foreclosure will have a very negative impact for up to seven years. Plus, you will not be able to get another loan for up to five years.
A short sale may be your best option. A short sale is when you negotiate with the lender to discount the remaining balance in order to sell the property to another buyer. This is a better option for the lender and for you as if it is done properly, there are no closing costs or realtor costs to you. The lender will pick up these costs as part of the sale. In a sense, the lender becomes the seller of the property.
There is a slight impact to your credit, but far less than a foreclosure and you can get another loan if you need one in 18 to 24 months not five years.
We specialize in short sales and work with agents throughout Texas. Please call us to discuss your options.
Foreclosure Prevention Network
The foreclosure process in Texas is very quick so there is no need for the lending company to get the county to foreclosure, they can foreclosue within a couple months after filing the first lega process in the foreclosure in texas.
It sounds like if you do not work something out with the bank who every sign the mortgage will have some credit issues. Either get a attorney to assist you or contact the bank and start negotiating something to reduce the credit harm.
Assuming that you tenants were going their part - actually paying their rent - would that cover the basic monthly expenses (mortgage, insurance, water, sewer, property taxes)? Have you started eviction proceedings? In most states you can do this after 3 months, but again - check with a real estate lawyer - one who also knows foreclosure law - since that is being threatened on you.
It *might* be possible that the lender would consider letting you walk away entirely - if you are giving them all the equity that you used to buy into the property. But that too should be negotiated with an attorney at your side - since you'll need a contract in any case. I wish you well and hope that this can have a good ending for you.