subject: Foreclosure Deficiency - 4 Shocking Secrets You Should Know About A Foreclosure Deficiency [print this page] Let"s face it, if you can"t afford your home anymore, or the home is underwater, you have no other choice but to let it foreclose. Taking this route will leave you with a huge deficiency bill that you will have to deal with. This deficiency amount could cause serious problems if the bank decides to sue you in court. I have provided you with three secrets that you can use to help with the deficiency amount.
Foreclosure deficiency secret - 1
After foreclosure, when can the lender sue for the deficiency amount?
Every state is different, but they can usually sue six months after the foreclosure date, so check your state laws for the correct amount of time.
Foreclosure deficiency secret - 2
What about the deficiency on the second mortgage?
If you have a second mortgage on your home and your first mortgage forecloses, in some states the lender has six years to come after you for the deficiency amount on the second mortgage.
Foreclosure deficiency secret - 3
Do I have to pay the deficiency amount?
Check with your state to see whether lenders are allowed to collect the deficiency amounts. In some states, the deficiency judgment is automatically entered against you, and in other states the lender must sue you. Talk with an attorney for your options, and see whether you qualify for the Mortgage Debt Forgiveness Program. In this program, the lender forgives the loan debt, and you will receive an IRS 1099 at the end of the year. The 1099 displays the amount of money the bank forgave, and it will be counted as income according to the IRS. You will be responsible for paying taxes on the deficiency amount listed in the 1099. Lastly, you may consider filing for bankruptcy if the back debt is so high that it"s causing you a hardship. For more information on the Mortgage Debt Forgiveness Program, check
Wait about two years and allow the foreclosure files to be moved to the storage unit. At this time, you can begin your basic dispute method. Remember, when you dispute files that are old, the bank some times just choose not to verify the debt due to time constraints. If you are sued for the deficiency amount, you will need to hire an attorney to help you settle this matter. You can argue that you surrendered the home. You paid off the loan, or you entered into a Deed In-Lieu of Foreclosure. You can also settle the balance for 30 cents on the dollar. With large deficiencies over 75,000, you should probably start talking to a bankruptcy lawyer.
Concluding, these are four secrets I feel that most people who are going through foreclosure should know. Educate yourself in this area before you let your home foreclose.
