Being in preforeclosure on your home can be a disturbing experience. Bills are rapidly piling up and the mortgage company is threatening to take your home and still leave you with the bill and bad credit. To save your home or property as well as your credit rating you may want to consider doing a short sale, which is a step to stop foreclosure in los angeles so you can have a chance to protect your credit rating and keep your home.
A purchase price lower than the amount of property mortgage is negotiated by the investor in a typical short sale deal. Even with the foreclosure company acquiring the home for a fraction of the original mortgage amount, say they buy a home worth $100,000 for just $80,000, you still continue to owe the original amount. This yields to a 20% discount for the buyer. After the short sale, a remaining debt still has to be resolved by the homeowner.
The difference between the short sale price and the original mortgage can be paid through the two options offered by mortgage companies. At any rate, these options are both under the assumption that you’re still accountable for whatever amount is still owed on your mortgage. For the remaining debt, the mortgage company has two options to get this from you, either through a foreclosure deficiency judgment or via a 1099 form. A mortgage company has all the right to claim the $20,000 deficiency from the short sale to you with the use of a deficiency judgment.
After being able to stop foreclosure in los angeles via short sale, a deficiency judgment is then passed by the mortgage company against you so they can claim the balance owed. A judge can rule in favor of the mortgage company in a deficiency order, and if that happens, all you can do is pay the remaining mortgage debt to the lender or else face legal consequences. When you can no longer make the payments on your home, don’t give up as most mortgage companies don’t want to go through the trouble of filing a deficiency judgment if you can prove bankruptcy. As a workaround, what they will do is consider the $20,000 a business loss and consequently send a 1099 form instead of a deficiency judgment.
If you receive a 1099 form instead of filing for a foreclosure deficiency judgment you will have to list that $20,000 as income on your taxes, but you may only owe 10 ” 15% of this income on the 1099 to the IRS. By year end, keep in mind that you will have to include the figures reported in the 1099 as income for tax purposes. Since the figures in the 1099 are classified as income, it will be taxed accordingly but it will not have a huge impact on total taxes owing to the fact that not much income was earned prior to the 1099 and the sale of the property. In our example, you may only owe $2,000 in taxes if the amount on the 1099 is $20,000.
In conclusion, although short sale can save your property to stop foreclosure in los angeles, bottom line is you will end up owing a considerable sum of money. Depending on how the short sale was handled, you could end up either owing to a mortgage company or to the IRS. A debt remains after a short sale, but it is more manageable and it’s not as much as the amount in a foreclosure.
Let me help you save your home and stop foreclosure program in los angeles today!
categories: stop foreclosure in los angeles,Woodland Hills real estate