Not paying either mortgage

[StartingOver08]

Bladerunner, your representative will negotiate the release of lien and the release of the debt. Lately I have closed many short sale properties and these negotiations center on these issues. Sometimes in order to release the debt a small note needs to be signed by the seller in order to release the debt. HOWEVER, that usually happens with the second mortgage and not with the first. Whether there is a release of debt along with the release of lien is ususally indicated in the written approval. Sometimes the lenders are silent on the issue. Having an experienced agent handle this is critical, don't get someone that does not do short sales on a regular basis.

If you have filed BK, this might not be the avenue for you if you have a second mortgage and the lender requires you to sign a note.

Lately the short sale negotiations are moving much, much faster. Think in terms of weeks rather than months. The process is more organized (on the lender's side) and the response is positive. Even for BOA believe it or not.

So as far as your question goes, the lender will issue a 1099 anyway, even if you are released entirely from the debt. But as pointed out, if it is your primary residence, and you meet the other terms of The Mortgage Forgiveness Debt Relief Act then no taxes are due on the forgiven debt. If you have filed and been discharged, no taxes are due on the discharged debt. Check here for details http://www.irs.gov/individuals/artic...179414,00.html and naturally, check with your tax professional.

[Tom_Mi]

I'm in michigan. Similar story, a bit farther along.

What needs to be said here (and I think too often is NOT stated) is that once the bank takes the home, you'll be renting for 3yrs. If you're ok with that then you're all set.

If you want to simply delay, here's what you do in Michigan:

-You'll probably get about 5 months before their law firm announces foreclosure.

-On THAT DAY, call the law firm and tell them you plan to negotiate a rework with the lender and want your "guaranteed 90-day stay". They'll be required to halt everything for 3mo. (you only have 14 days from their mailing to do this!! call the day you receive it)

-You can then try for a rework if you want, or just sit.

-after the 90 days, they'll turn on the foreclosure machine:
-option A- they'll schedule a sheriff sale in a month.
-option B- If you had the "rework negotiation meeeting" they might be required to foreclose "judicially". You might be able to find a clever (and cheap) lawyer who can muck up the works and slow this down.


After A or B happen:

-Then you get 6 months "redemption period".

-Then you gotta go.


**************************************

My plan was to make payments for 2 or 3 yrs and then sell/move, but my payment shot up and hosed everything. Since I want to buy my next home, I'm in a pickle because foreclosure - regardless of delay - puts me in a rental. Land contracts exist in this area but they're all dumps. We're hoping our meeting with the bank produces a payment that keeps us here longer, but we don't know.

[mickeyme]

TomMI - do you know if "guaranteed 90-day stay" works in CA? Or do you know where I may be able to find out this information?

I am in CA and made my last payment was on March 1, 2010. Received a certified letter stating they are moving forward with foreclosure but as of first week of June still no NOD. Would like to stya in our place until Dec if possible. Any suggestions? I was thinking short sale but I am not sure what is the first step in that either.

[brad10281]

subking,
I'm also in Michigan and in your exact same situation. I think my last mortgage payment(s) were made in Nov. 2009, I just recieved the "Intent to Accelerate" from BoA a couple weeks ago. In my case, I had 7 months of no mortgage payments but 3 of those were covered under my BK stay (discharged in March). I'm not sure if I'll try to delay the process or not. I just want to get out and move on...

[Tom_Mi]

TomMI - do you know if "guaranteed 90-day stay" works in CA? Or do you know where I may be able to find out this information?

No. This 90-day business is a new law Michigan enacted last year.


It's possible CA enacted such a law and I'm not aware of it, but I'm only referring to Michigan.