“quit-claim” procedure
Question: Can someone discuss the merits of this procedure for terminating house payments? My impression it is legally transferring your house deed to the first mortgage holder, i.e. returning keys to the bank. The motive for doing this would be when the equity of the property goes negative, i.e. the outstanding mortgage plus selling expenses is greater than the price. Such has happened in various areas of the country during the recession. I am under the impression returing the keys does prevent the bank from suing the deed’er for the negative equity and expenses, but banks would not pursue suits in every situation. Quit-claim can wreck a credit rating? Quit-claim is less costly in a banks view than foreclosure?
Answer: Quit claim will accomplish that too. Quit claim can also be used between spouses where one wishes to own the property by themself, even in community property states. If you are in default to the bank, they’ll probably ask you to sign a ‘deed in lieu of foreclosure’ instead of a quit claim deed. If that is the case, then you’ll probably run into something called ‘debt relief’…where our local IRS office will come knocking on your door, asking for the taxes to be paid on the amount of the loan(s) above and beyond the fair market value…who knows who they can figure that out…but they do.. Except if the property is in Texas or any other ‘deficiency judgement’ state. The Banks have additional recourse, in addition to the house, to come after ALL your assets to cover their losses. If the property is a commercial loan, they’ll come after you no matter which state the property is located, because it falls under a different ‘real property’ category, as opposed to your primary residence.
If the banks see fit, they will come after you, however, it seems rare, because, even in Texas, those seem to want to go belly up and eat their losses than to stop their bleeding and go after the deficiency judgement…So now, they’re hemoraging the entire country, because everybody gets the idea that they can just walk away and not wory about the bank payments anymore. NO WAY…..unless you were in default to begin with, than the defaulted mortgage will show up as a ‘bad credit rating’ otherwise, ‘quit claim deeds’ CANNOT show up on the credit report, as it is not a ‘financial obligation’..it’s like signing away the pink slip to your car… You just don’t own it anymore. Yeap..talk to them….maybe they’ll even renegotiate the terms of the original loan…They don’t want the property either, unless it’s the RTC, because it represents job security to them. A bank would much rather have a performing real estate loan than a ‘non performing asset’. You probably can get them to adjust the principal balance owed and the interest rate.
I just saw an interest rate starting at 4.25%…. !!!!! Try calculating your first year payments at 4.25%…you may decide to keep it if the principal loan amount is also no more than the fair market value…ie.. 100% bank financing….!!!!Keep the silly thing..
The above statements are deemed to be correct…but who knowsss…. GO talk the the attorney now….before it’s too late….
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