How Can I Find Help to Settle my Foreclosure

by admin on August 24, 2010

Question:

My parents recently lost their home to foreclosure and now they are planning to file for bankruptcy. They recently went to file their taxes and they found out IRS is billing them 52,000 for abandonment even though they have tried for months asking for help from the banks. Need some advise on how I can help guide my parents to the right people to settle the foreclosures?

Answer:

Basically, when a property is foreclosed on, the borrower cannot just walk away with an FC mark on his credit. After a year since the foreclosure they get a 1099, have to claim the bank’s loss and lastly, pay taxes on it. If they have unpaid taxes or if the IRS has sent a 2nd lien against the property, the IRS billing them is quite understandable. Another thing is that the borrower may ask help from the banks but they have to qualify for it. The borrower must show that he or she can afford a lower payment or interest rate. If they are not qualified for this, or if there are 2nd liens on the property, the banks’ hands are tied because the collateral can be foreclosed on by the other lien holders and therefore, the risk of loss is way too great.

You can do a couple of things in order to resolve the situation. First, if your parents haven’t been evicted yet or are in a “redemption state”, you may be able to redeem the property by making a year’s worth of interest payments. You can contact an attorney who specializes in foreclosure to get more details about this option. Another option would be to put the property on Short Sale where you can get an offer which is close to Fair Market Value. You can contact the REO of your parents’ loan service provider to inquire more about this step.

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