Skip to main content

I need advice. Foreclosure/ShortSale/Loan Modification for land that is 10% of loan amount?

Miami, FL |

Saw many articles from Margery Golant. Wondering, if you can advise. What is the likelihood of deficiency judgment. I'm with WF. The land is worth 10% of loan amount, so 10000 to 100000. What should I do, Modify Loan/ShortSale/Foreclosure?

I am working with the bank on a loan modification. Probably unable to show hardship.

Please can you help.

Attorney Answers 4

Posted

No one can tell you the likelihood of a deficiency judgment in your particular case. If Wells Fargo seeks a deficiency judgment from you then the likelihood in your case is 100 percent.

I recommend that you speak with a local foreclosure attorney about your options. You may be able to get a waiver as to all or part of the deficiency with a short sale, even with no evidence of hardship. In addition, a good Realtor will be able to assist in exploring all short sale options and programs. Good luck.

Mark as helpful

1 found this helpful

4 lawyers agree

Posted

I agree with the prior answer. It is very unlikely that you were completely unaffected by the economic crisis. Everyone has a hardship, it just may take some counseling to find the correct way to phrase it to the lender.

This answer is provided without full consultation and is suggestive in nature and not to be considered legal advice without entering into a formal legal engagement with an attorney. Before you decide, ask any lawyer to send you free written information about their qualifications and experience. This answer is designed for general information only. The information presented at this site should not be construed to be formal legal advice nor the formation of a lawyer/client relationship.

Mark as helpful

1 found this helpful

1 lawyer agrees

Posted

I agreed with the other answers. Although, the real answer is all three. You should be attempting to modify, while looking for a short sale buyer, and making notes and gathering records to present as many defenses as possible at a foreclosure.

The law is complicated and although the facts expressed may seem to be all that is relevant, there may be many other important facts to consider. Also, the law is constantly undergoing change, so what may be correct today, may not be accurate tomorrow. Only a full consultation with an attorney experienced or knowledgeable in the specific legal subject matter is likely to result in the optimal course of action. My practice has entailed more than a 30 year span of many real estate, personal property, and bankruptcy issues. Find out more about me at: FloridaPropertyLitigation.com.

Mark as helpful

1 found this helpful

2 lawyers agree

2 comments

Asker

Posted

I have hired a lawyer to attempt short sale. She indicated that the banker is only receptive to one thing at a time modify or short sale. Ideally, I would like to deed-in-lieu with deficiency waiver. Also, i'm under a time constraint with the loan that balloons. So, i'm considering Chapter 13 with either cramdown loan or give it back. Crandown sound appealing since the investment current value is 10% of the loan.

Asker

Posted

Additional, Since chapter 13 stays on credit for 7 years. I have no other debt outside of primary resident mortgage and investments are IRA accounts and another investment property. Parallel, foreclosure, stays on credit for 7 years and you have the possibility of judgement. However, will be consulting a bankruptcy lawyer. The way I look at it , if i can maintain my job, i can save that 90% of loan (cash) over the 7 years and over that time rebuild credit and in the end have it remove from report. Overall, only looming effect is the public record of filing Chapter 13 but that is life - i'm my own corporation.

Posted

As you state in your question that your property is "land", you have not indicated if this is an undeveloped residential lot or a commercial property.

Under the Mortgage Loan Forgiveness Act, if this is a residential lot that you had planned on building your primary residence on, it might fall under the Act. The significance of this, is that if you short sell the property, or if it gets foreclosed, you might not be liable for a deficiency.

On the contrary, if this is commercial land, or is a lot you purchased for investment, it likely would not be covered under the Act. With a short sale, the lender may file a 1099c- which is a Cancellation of Debt, where the IRS could count the forgiven debt as taxable income to you.

With a loan modification, you would not need to worry about a deficiency.

Additionally, you did not state what caused the property to drop 90% of its original value. You might have some recourse, or a defense within this issue.

With all of these scenarios and possible outcomes, you need to review this matter in detail, with an attorney.

This information is for education purposes only and is not to be relied upon as legal advice, legal opinion or as a complete answer/information to/for this discussion. You should always seek competent legal advice from a licensed attorney in your area for help with your specific legal question. No attorney - client relationship is created, intended or should be construed upon from this general discussion.

Mark as helpful

3 comments

Andrew Jarrett Sky

Andrew Jarrett Sky

Posted

There was a typo in my answer. In my second paragraph, what I meant to say, is that under the Act, that you likely would not be responsible for taxable income due to cancellation of the debt, not that you would not be liable for a deficiency. The lender is free is to pursue a deficiency, regardless of whether or not the Act is applicable.

Asker

Posted

Andrew, Thank you. Ok. Its undeveloped residential land full of florida pine tree was meant as investment (the loan is investment land loan). As for why the lot has devalued ; how does one find that out? How does one label a primary to fall under mortgage act? If you have a current primary dwelling?

Andrew Jarrett Sky

Andrew Jarrett Sky

Posted

You may contact me or any other attorney of your choice, for a consultation. We cannot give specific legal advice on this forum.

Real estate topics

Top tips from attorneys

What others are asking

Can't find what you're looking for?

Post a free question on our public forum.

Ask a Question

- or -

Search for lawyers by reviews and ratings.

Find a Lawyer

Browse all legal topics