George Beckus has nearly 10 years legal experience. He began his legal career in the Offices of the Public Defender 7th Circuit in where he handled thousands of criminal cases, both felony and misdemeanor.
George Beckus started his own Law Firm in 2011, concentrating primarily in areas of bankruptcy, foreclosure and criminal defense. The following is some free information he offers about the benefits of a short sale.
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Due to the poor economy you may have fallen behind or your mortgage and are either no longer able to make the payment or you find that your home is so upside down that there really is no incentive for you to continue with the mortgage, well what should you do at that point in time?
The best option for someone in this situation is to call a reputable realtor that has experience in short sales. There are many advantages to negotiating a short sale prior to your property being foreclosed upon:
Better for your credit:
While a short sale does ding your credit, it is much better than having a full blown foreclosure on your credit report. Therefore, you will be better off every way possible trying to get a short sale as early in the foreclosure process as possible.
Waiver of deficiency:
Whenever I negotiate short sales on my client’s behalf, I always insist the bank expressly state in the contract that any and all deficiency will be permanently waived. Let me explain, when dealing with a short sale the mortgage is always more than the value of the property. So if your home is worth $100,000 and your mortgage is $200,000 and the bank accepts the short sale amount, you would legally still owe the difference of $100,000, unless the bank forgives it. Conversely in a foreclosure you will always owe the difference and the bank will in all likelihood come after you for it in the future.
Mortgage Forgiveness Debt Relief Act – Under the Mortgage Forgiveness Debt Relief Act of 2007, signed by the President on December 20, 2007, IRS code 108(a)(1)(E), says that a taxpayer cannot be taxed upon cancellation of debt income if the following conditions are met: The short sale property was the taxpayer’ principal residence. The cancellation of debt is Qualified Principal Residence Indebtedness* Applicable to debt forgiven in calendar years 2007 – 2012. This act was extended until 2014. Hopefully congress can get their act together and extend it past the deadline.
If a foreclosure judgment is issued against you that is usually not the end of your ordeal but the beginning. After the foreclosure judgment is issued the bank then has the opportunity to come after you for the “deficiency judgment”. What is a deficiency judgment? That is the difference between what the bank recovers after the sale of the property and the amount of the foreclosure judgment. So if your home sells for $100,000 but there is a foreclosure judgment against you for $200,000 you would legally owe the difference. The bank will then be able to come after you for the difference, by attempting to garnish your salary, placing liens on property you own currently or in the future, by attaching tax returns and any other means possible.
Now in the case of owner occupied residential property, the “deficiency judgment” is the difference between the judgment amount and the fair market value of the property on the date of the sale. The statute of limitations period for a lender seeking a deficiency judgment on a note secured by a mortgage on residential property (one to four family dwellings), is one year, for a deficiency action commencing on or after July 1, 2013, regardless of when the cause of action accrued.
It is important to seek the advice of a qualified attorney as there are a lot of potential pitfalls to be navigated throughout the foreclosure process. Contact the Beckus Law Firm for a free consult.