Anyone been foreclosed on, what was the effects on credit. (FHA)
Question: Question for the netters:
What are the disadvantages (aside from loosing a place to live) of having a home with an FHA loan foreclosed on.?
Is the future credit troubles more or less, or the same as a full bankruptcy?
I would like to hear as much first hand responses as possible, if you have ideas, please let me know whether they are theory or personal/close relation experience.
thanks
Answer: 1. If HUD sells the FHA property for less than what they have into it, they may seek a deficiency judgement against you in essence making you pick up the balance.
2. Declared Income – If you have refinanced or taken out a second (hard money) and there is a deficiency, the IRS may want to talk to you if the lender submits a 1099 on you.
3. Damaged credit.
>Is the future credit troubles more or less, or the same as a full >bankruptcy?
This I can’t answer. In either case, you may find it difficult to purchase another home in the future. There are people who can structure home purchases for people with marginal credit.
>I would like to hear as much first hand responses as possible, if >you have ideas, please let me know whether they are theory or >personal/close relation experience.
Personal experience working with people in default since 1988. Recommendation: Find a good attorney and/or agent who will negotiate with lenders to try to get the foreclosure postponed until you can sell the property. If the property is worth less than the mortgage, try to negotiate a short sale (reduction of principal) with the lender (FHA) so you can complete a sale. Currently the FHA is not participating in short sales in the State of California. The California Association of Realtors has two lobbyists trying to get the rule changed.
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