Contact UsSAN MATEO REAL ESTATE ATTORNEY SAYS “THINK BEFORE YOU WALK AWAY FROM YOUR LOAN”
Every day you read in the news about people losing their homes to foreclosure. Back in 2005 they got a loan at a ridiculously low interest rate and had no problem making the payments. And then the interest rate adjusted upward and they could no longer afford the payments. Thus, foreclosure.
Before you walk away from your loan, make sure you know the consequences.
When you stop making payments, the lender will post a negative rating on your credit report. The longer you go without making a payment, the worse your credit rating becomes. If you ultimately suffer a foreclosure, your credit score will be very low, making it difficult for you to borrow money in the future. Many employers today are running credit checks on their employees. Make sure a negative credit score will not adversely affect your employment possibilities.
Depending upon the type of loan you have or how many loans you have, a foreclosure might not be the end of your trouble. A lender might be able to come after your other assets for any deficiency on the loan amount.
There may be negative tax consequences to a foreclosure (or a short sale). When you walk away from a loan, the IRS considers you to be “relieved of indebtedness.” Under certain circumstances this could be taxable.
Maybe a short sale is a better option . . . maybe not. Entering into an agreement with your lender does not relieve you of potential tax consequences. Furthermore, you should have the fine print in the lender documents reviewed by an attorney to make sure you are not agreeing to things you don’t know about.
Get the facts before you make your decision. Call our office for a review of your particular situation.
Comments (1)
Thank you for trying to describe the terminlogy to the newcomers!