Our hearts go out to those affected by this far-reaching devastation. The NYSBA Lawyer Referral and Information Service has created a dedicated number (1-800-699-5636) for people in need of help, and is currently recruiting attorneys to provide free telephone consultations to individuals affected by the storm. They are recruiting volunteer attorneys to provide assistance with insurance, landlord/tenant, co-op and condo, and FEMA appeals experience.
Lenders might take you to court after you walk away from an upside down mortgage. Usually, lenders have the right to pursue a person who owes them money in court. The State of California declared itself a non-recourse state, meaning that mortgage lenders cannot sue homeowners over money still owed, but not all homeowners receive protection. California prohibits primary lenders from pursuing reimbursement for unpaid debts, even when homeowners walk away from debts in so-called strategic defaults. The protection applies only to those mortgages originally taken out for home purchase. Second mortgages or home equity lines of credit do not apply, and those lenders have the option to sue for money still unpaid.
When someone forgives a debt you owe him, you might owe the government money in turn. Debts forgiven usually count as taxable income. Both California state and the federal government passed legislation that exempts homeowners from reporting debt relief as income. As detailed by the California Franchise Tax Board, the state enacted SB 401--also known as the Conformity Act of 2010--on April 12, 2010. The Federal government enacted the Mortgage Forgiveness Debt Relief Act in 2007. The IRS explains that tax forgiveness applies only to primary residences. Any debts forgiven from home equity lines of credit or second mortgages might still be taxable income. Check with a tax attorney or certified public accountant in complex cases.
Normally foreclosure means a seven-year wait before being able to apply for a government-backed loan. Strategic defaults or abandonment now carry the same repercussions as foreclosure proceedings. Fannie Mae increased wait periods due to increased numbers of homeowners walking away from under-water homes, even when they could still afford monthly payments. The penalties apply to people who abandon homes for reasons other than financial hardship, not those who face bankruptcy. In addition, Fannie Mae decided to advise secondary lenders about pursuing debts in court. The government-backed entities of Freddie Mac, Fannie Mae and the Federal Housing Administration funded or purchased 95 percent of all home mortgages in 2009, according to a June 24, 2010 "Los Angeles Times" article, so it holds considerable sway over home buyers seeking loans. The rules serve to discourage people from abandoning properties. Walking away from an under-water home affects the lender and also affects neighborhoods, as abandoned and neglected properties can cause blight and further declines in home values
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I cannot truly express to you just how sorry I am to hear about your losses due to Hurricane Sandy. Assuming you qualify for chapters 7 or 13, you should be able to surrender your home to the mortgage company and discharge the indebtedness to such company. For instance, if the property is surrendered to the bank after you file for bankruptcy and the bank forecloses, it will not be able to go after you for any deficiency (assuming that it does not recover enough to satisfy its mortgage.) There is also no cancellation of debt income in a bankruptcy, so from a tax standpoint there is also a significant advantage. I would be more than happy to speak to you when you are able. You can contact me at 212-949-5586, my cell at 917-414-1190 or via email at firstname.lastname@example.org. Barbie D. Lieber, Esq.
Lieber & Lieber, LLP
60 East 42nd Street, Suite 2102
New York, NY 10165
Barbie D. Lieber, Esq.
Lieber & Lieber, LP
Legal disclaimer: Barbie D. Lieber, 60 East 42nd Street, Suite 2102 New York, New York 10165. www.lieberlegal.com. 212-949-5586. All information given on this site is general in nature and for informational purposes only, and not legal advice. Only a lawyer, reviewing the underlying documents and facts, in a meeting in person or over the phone, can determine what course of action any person can take. No attorney/client relationship is created by participation on this site. No attorney/client privilege attaches to any communication on this site
Even though things look bleak right now, it is time to take a deep breath. Rockaway Beach is a beautiful area. Things will get better.
The coop building has casualty insurance and probably has flood insurance. Eventually the property will be rebuilt. Generally your responsbility in a coop is to repair from the "sheet rock in". Meaning that most coops require you to repair what can be seen in your individual apartment.
You never mentioned whether or not you have a mortgage. This is a big factor in whether or not you can walk away from the property. If you do have a mortgage and you are not interested in keeping the property, I would suggest you or your attorney contact the lender. Tell them that you can no longer afford to hold the property and that you wish to give them the title to the coop in consideration of them releasing you from your monetary obligations to the bank.
Whether or not a lender is in issue, I would definitely speak to the coop board of managers to find out how they are planning to restore the property and exactly what your obligations are.
Note: This response is for general informational purposes only. No attorney-client relationship is created. No responsiblity shall be taken by the submitting attorney for any individuals acting pursuant to any information contained herein.