Actual consequences of foreclosure

[Atlanta Bo]

What would be the actual long term consequences of letting a property go to foreclosure beyond the obvious of credit damage , loss of down payment and equity . Have fun Shelly .

JB

[6thGen]

Other than what you mentioned, I'd add personal honor, duty, integrity, and whatever good name you had left.

[Bob]

Most foreclosures are not from a lack of honor, but a cash flow crisis precipitated by job loss, medical expense or divorce. You will be able to secure another mortgage with reasonable terms in a few years, provided you have a history of paying creditors going forward.

[6thGen]

Most foreclosures are not from a lack of honor, but a cash flow crisis precipitated by job loss, medical expense or divorce. You will be able to secure another mortgage with reasonable terms in a few years, provided you have a history of paying creditors going forward.

Or from getting greedy and one getting in over one's head (not nec. the ATLBo). As for securing another mortgage, not if Congress has anything to do with it. That would be considered "sub-prime". I'll also add that if there is a deficiency after the property liquidation, lawyer fees, etcetera, you get sued.

[Atlanta Bo]

Other than what you mentioned, I'd add personal honor, duty, integrity, and whatever good name you had left.

These are exactly the reasons why I have not done such a thing but based upon the current market and the length of this downturn ( with no relief in sight ) , it is only human to think about all options , no matter how extreme . How upside down does one get ? I have no intentions of foreclosure ( I would really take a bath ) but thought it would stir up some discussion or other possibilties or solutions in this market .

AB

[Mango]

Foreclosures negatively affect entire communities as well. People would have been wise especially in condominiums and townhome developments to ask to see what the financial credentials were of some of these flippers during the frenzy before allowing them to buy in their developments.

In Florida, if the home is sold on the county steps as a foreclosure and the Bank purchases it, depending on the parcel type (condo or townhome) the Bank is limited in how much they have to pay in back assessments. In a townhome, they are not responsible for any delinquent common charges, hence the other "paying" owners have to cover the "delinquents" and foreclosed properties. I find this all ridiculous since the Banks were the ones who signed and sealed the mortgages being foreclosed in the first place.

I hope to see some legislation regarding foreclosure laws. The subprime market and interest only loans adjusting is going to affect everyone even who are timely with their mortgages. :blink:

In most of the Northeast States, common charges and taxes takes precedence over a mortgage, the way it should be. The Bank who made the loan gets whats left.

[flyguy]

I was doing a little research on the tax assessor site today on one of the condo buildings I am tracking. There were two units sold in the spring of 2005 for 560,000 and 564,000.

The last sale was for 360,000 and that was 8 months ago.

I have to think there are folks up and down the coast who are not only upside down on their mortgage but also looking at continued negative cash flow. These folks may be looking for any way out they can find.

I bet alot of people are researching their options. I would imagine a bunch of folks would love to just walk away from their property if they could.

On a related note. Does anyone know how to find properties in Bay and Walton counties that are in foreclosure or preforclosure. I know you can buy a service but thought their might be a better way.

JMHO
Flyguy

[Smiling JOe]

On a related note. Does anyone know how to find properties in Bay and Walton counties that are in foreclosure or preforclosure. I know you can buy a service but thought their might be a better way.


I understand that, locally, Realtors will soon (within the next month or two) be able to search for properties which are marked as pre-foreclosures or short sales. You can contact a good Realtor and have her or him put you on their Prospects list and notify you when any new listing marked as pre-foreclosure or short sale come on the market.

You can also find foreclosures on the Clerk of Courts sites for Okaloosa (http://www.clerkofcourts.cc/foreclosures/search.asp) and Walton (http://clerkofcourts.co.walton.fl.us/default.aspx?id=31) County.

[SHELLY]

What would be the actual long term consequences of letting a property go to foreclosure beyond the obvious of credit damage , loss of down payment and equity . Have fun Shelly .

JB

Foreclosures? In Florida? In the North Florida? In South Walton & Destin?? How could that be possible?

There's no risk in owning real estate....if anything goes wrong one could just sell it or live in it....that's what I've been told.

http://ec1.images-amazon.com/images/I/614ZTV0D0TL._AA240_.jpg


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[Bob]

Foreclosures? In Florida? In the North Florida? In South Walton & Destin?? How could that be possible?

There's no risk in owning real estate....if anything goes wrong one could just sell it or live in it....or so I've been told.

.And heat the home by burning Enron stock.

[SHELLY]

And heat the home by burning Enron stock.

Yeah....I would expect a large population of the Dot.Condo crowd would have been Dot.Commandos as well. And on the menu: Refried Beanie Babies .



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[Bobby J]

What would be the actual long term consequences of letting a property go to foreclosure beyond the obvious of credit damage , loss of down payment and equity . Have fun Shelly .

JB

I would get advice from a good Florida foreclosure attorney. The peanut gallery may not be the best place to get advice from on such a serious issue. I have been told Lewis & Jurnovoy give good free advice. There number is 850-863-9110.

[SHELLY]

I would get advice from a good Florida foreclosure attorney. The peanut gallery may not be the best place to get advice from on such a serious issue. I have been told Lewis & Jurnovoy give good free advice. There number is 850-863-9110.

I thought this question was just thrown out there to stir up some conversation...if it was otherwise, BJ is right about getting some SERIOUS input from more knowledgeable folks. Seek out a professional who can look at one's ENTIRE portfolio and budget to advise where to do some NipTuck.

Lewis & Jurnovoy are Bankruptcy Lawyers--hopefully you won't find yourself that far down in the ditch (trying to keep your primary residence from going into foreclosure).

If you're trying to hang on to a second/vacation/investment home, it may be just a matter of selling off the Hummer and jetskis; cutting back on the number of next year's vacations from 4 to 3; skipping the Latte Grande every morning; and doing a refi from adjustable to a fix (with no money out).

If you're planning on unloading a dog, do a cashflow sheet to include what it will cost you to carry the property for another year or two (tax, insurance, maintenance, PM, utilities, interest, etc)--would subtracting the costs from the asking price bring the buyers running to snatch it off your hands tomorrow?

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[Bobby J]

Good advice Shelly. I believe those guys also do foreclosures? Anyway, I am pretty sure they will consult one time for free.

[scooterbug44]

If anyone consults a foreclosure attorney, I'd love to hear what the official word is, just to add to my general knowledge. I don't really understand the whole process and from the projections, it will be a big issue in the coming months/years.

[Franny]

It was my understanding that if you foreclose on a property in Florida say for $500,000 and the bank sells it for $200,000 you are still responsible for the $300,000. I would think that this would wreck your credit for many many years........any comments.

[Pirate]

I would defer to one of the mortgage guru's here for a final word on this, but I am pretty sure if the bank comes up short on the sale of your property they can chase you for years for the difference. Just a thought.

[Bob]

It was my understanding that if you foreclose on a property in Florida say for $500,000 and the bank sells it for $200,000 you are still responsible for the $300,000. I would think that this would wreck your credit for many many years........any comments.That amount would presuppose a BK.

[Bobby J]

I think it all really depends on the deal with the bank.

[SHELLY]

Good advice Shelly. I believe those guys also do foreclosures? Anyway, I am pretty sure they will consult one time for free.

I would recommend that someone who is not on the brink of bankruptcy (i.e., you've got an "investment" condo that you want to unload, but you've still got some assets the bank/developer can come after) consult a lawyer who specializes in Real Estate (vs. bankruptcy)--there are more and more of their ads popping up in newspapers as this RE frenzy continues to unwind.

Foreclosure will put a big black mark on your credit report which will not only make it a bit more difficult to get a loan (since the subprime industry is tanking), but also can affect job prospects, insurance rates, security clearances, etc.

Additionally, the difference in the amount of money you owe on the home and how much the bank can sell it for may be counted as taxable income and can also come back as "Zombie Debt" to haunt you further down the road if some debt buying agency like Asset Acceptance Capital scoops it up at pennies on the dollar and comes knocking for their money years down the line.

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[Mango]

Shelly, quite a few attornies who've been around the block a few times and or worked for one, specialize in both bankruptcy and real estate.
Someone looking for advice would be wise to seek out one who does.

[OnMackBayou]

I own a company that does asset investigations/recovery work for banks and attorneys. Much of what we do involves cases pre and post foreclosure.

It all depends on the bank. If the foreclosure does not clear the balance, many will pursue a deficiency judgment. If they are successful, you not only lose your property but you have to face the prospects of someone trying to recover the judgment.

Also, if there is a shortfall, they will most likely report that amount as income to the IRS, and you will owe taxes on it.

From my experience, those that come out the best are those who are highly involved in working with the bank towards a solution. Generally, those that fare the worst are those that let this happen without getting involved.

[SHELLY]

From my experience, those that come out the best are those who are highly involved in working with the bank towards a solution. Generally, those that fare the worst are those that let this happen without getting involved.

I think the the banks and lawyers are used to working with folks who really don't have the money or the means to pay the mortgage. Although lately they are seeing an increasing abundance of these folks at the door, the RE frenzy has produced a whole new group of people who are experiencing buyer's remorse over "investment" properties that are now bleeding red ink. Many of these "investors" have the means to keep paying the mortgage and carrying costs, but it will mean cutting back in other areas of their lifestyle. They don't want to work towards a solution...they just want it gone. They're discovering that a condo is not just like a few shares of stock that can disappear with a click of the mouse.

How can a banker work with that? :idontno:


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[OnMackBayou]

I think the the banks and lawyers are used to working with folks who really don't have the money or the means to pay the mortgage. Although lately they are seeing an increasing abundance of these folks at the door, the RE frenzy has produced a whole new group of people who are experiencing buyer's remorse over "investment" properties that are now bleeding red ink. Many of these "investors" have the means to keep paying the mortgage and carrying costs, but it will mean cutting back in other areas of their lifestyle. They don't want to work towards a solution...they just want it gone. They're discovering that a condo is not just like a few shares of stock that can disappear with a click of the mouse.

How can a banker work with that? :idontno:


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Believe me, I understand the psychology of those who are upside down and do not want to own up to their obligation. An investor or homeowner who wants it "gone" can try to sell, work with the bank, or ignore it. Those that are facing a loss can try to get some kind of break from the bank. Most banks will listen and cut some kind of deal.

Owners who do not get involved face the consequences, regardless of how they feel about it. My experience is that those who push their cause come out better than those who don't.

The impact to one's lifestyle will be determined by the size of the deficiency, and how that particular bank chooses to deal with it.

[sberry123]

Believe me, I understand the psychology of those who are upside down and do not want to own up to their obligation. An investor or homeowner who wants it "gone" can try to sell, work with the bank, or ignore it. Those that are facing a loss can try to get some kind of break from the bank. Most banks will listen and cut some kind of deal.

Owners who do not get involved face the consequences, regardless of how they feel about it. My experience is that those who push their cause come out better than those who don't.

The impact to one's lifestyle will be determined by the size of the deficiency, and how that particular bank chooses to deal with it.



How about the appraisers who appraised properties so high to allow such large mortgages? I have said this before, it is not only the inverstors who got greedy. :blink:

[Babyblue]

Foreclosure will put a big black mark on your credit report which will not only make it a bit more difficult to get a loan (since the Subprime industry is tanking), but also can affect job prospects, insurance rates, security clearances, etc.

Additionally, the difference in the amount of money you owe on the home and how much the bank can sell it for may be counted as taxable income and can also come back as "Zombie Debt" to haunt you further down the road if some debt buying agency like Asset Acceptance Capital scoops it up at pennies on the dollar and comes knocking for their money years down the line.

.[/QUOTE]

Actually if someone files for BK they are a better credit risk because they owe nothing. If they go 7. 13 a little tricky. :yikes:

[Babyblue]

I would get advice from a good Florida foreclosure attorney. The peanut gallery may not be the best place to get advice from on such a serious issue. I have been told Lewis & Jurnovoy give good free advice. There number is 850-863-9110.

Watch their TV show on Sunday night.

[SHELLY]

Actually if someone files for BK they are a better credit risk because they owe nothing. If they go 7. 13 a little tricky. :yikes:

The new bankruptcy laws made it much more difficult to file for Chap 7...if you make above the median income in Florida (just south of $36K for a single and $60K for a family of 4) you'll be put on a payback schedule under Chapter 13.


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[Babyblue]

The new bankruptcy laws made it much more difficult to file for Chap 7...if you make above the median income in Florida (just south of $36K for a single and $60K for a family of 4) you'll be put on a payback schedule under Chapter 13.


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True, but how many Floridians bought in the RE Frenzy? Most docs I see they are out of towners.

[SHELLY]

Watch their TV show on Sunday night.

....especially if you are having trouble falling asleep. Their monotone droning is serious competition for the makers of Lunesta®..:sleeping:



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[SHELLY]

True, but how many Floridians bought in the RE Frenzy? Most docs I see they are out of towners.

Same rules apply for Chap 7 "means test," but using their home state's median income.

<BTW, more than 1 or 2 Floridians got caught up in the frenzy too>
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[Babyblue]

[QUOTE=SHELLY;242345]....especially if you are having trouble falling asleep. Their monotone droning is serious competition for the makers of Lunesta®..:sleeping:

True. I see you watch it also.

[SHELLY]

[QUOTE=SHELLY;242345]....especially if you are having trouble falling asleep. Their monotone droning is serious competition for the makers of Lunesta®..:sleeping:

True. I see you watch it also.

Actually, I caught the last 5 minutes of it one night while I was waiting for Ron Popeil's Showtime Rotisserie ("Set it, and forget it!)...I dozed off and when I finally woke up Chef Tony was hawking the Pasta Express!!!:bang:


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[Babyblue]

Same rules apply for Chap 7 "means test," but using their home state's median income.

<BTW, more than 1 or 2 Floridians got caught up in the frenzy too>
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Ah, but the equity is protected by Florida Constitution.

[SHELLY]

Ah, but the equity is protected by Florida Constitution.

What equity?? :confused:

Most of those now heading into foreclosure have "harvested out the equity;" HELOCed it to kingdom come with overblown appraisals; or did an 80/20 with Zeeero down.


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[Babyblue]

What equity?? :confused:

Most of those now heading into foreclosure have "harvested out the equity;" HELOCed it to kingdom come with overblown appraisals; or did an 80/20 with Zeeero down.


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What foreclosures?

[Dune-AHH]

[QUOTE=Babyblue;242349][QUOTE=SHELLY;242345]....especially if you are having trouble falling asleep. Their monotone droning is serious competition for the makers of Lunesta®..:sleeping:

Luuuu-NNNeSSSSSS-Taaaa (woops...random thought...:biggrin: )