Southern California Real Estate Agent

If you owe more than what your California home is worth because the home depreciated or because the equity has been taken out then the lenders typically do not try and show too much mercy. They want their money. However, they are willing to negotiate the payments or work with you because foreclosures are expensive for them. They have to pay lawyer fees, court fees and California home sale fees if you foreclose so if they can avoid this they will. Lenders view the situation like this, when California home appreciation went up they did not share in the rewards so they feel like they should not be punished if California home values depreciate. Either way the lenders feel they are owed whatever the loan amount states. If you call the lender they will work with you to help you make payments, but they will not allow payments to disappear unless you are facing bankruptcy or wish to deed back the property in lieu of filing for a foreclosure, but even then it is up to the lender and they only do this if you can show financial distress, unemployment, an illness in the family or something dramatic.

Here are some more options: One option is to give the lender the option of making a short sale on the California home. This means that the lender may sell the home for less than your loan and waive the difference between what they sell the California home for and what you owe. However, keep in mind that the IRS views this difference as taxable income, because in the IRS's point of view the mortgage company writes down the difference as a loss but the IRS does not want to lose their taxes so they charge the person who had the debt waived as a tax on them. For example if your California home loan when you bought the house was $500,000 and is now at $450,000 and the market value for the CA houses your size is $400,000 and the bank sells the property for $400,000, the IRS views the extra $50,000 as taxable profit for the person who did not pay back the loan. Consult a tax advisor for specifics. HUD, the US Department of Housing and Urban Development also has some options available to try and help you avoid foreclosure. You can see what they say at US Department of Housing and Urban Development, HUD: How to Avoid Foreclosure and if that link does not work in the future, try US Department of Housing and Urban Development, HUD. There are different requirements to qualify for help. All of the options are very time sensitive so it is best to look into your options right away if you are facing financial difficulty.

Please Describe Your Request Below:

Name: Phone Number: Email: Please check all that apply: Do you want to buy? Do you want to sell? What type of property are you interested in? Residential Homes Condos or Townhomes Land Mobile Homes Commercial Property Businesses In how many days do you plan on buying or selling? Right Now! 30-90 Days 6 months or more

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© John-Robin Middlebrook. Last updated April 2008.