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Thinking of Walking Away in Michigan

Discussion in 'Deed in Lieu of Foreclosure - Do You Need Help to ' started by OliversRose, Jan 26, 2009.

  1. OliversRose

    OliversRose LoanSafe Member

    Hi-
    Is Michigan a non recourse state? If not, if someone decided to foreclose in the state of Michigan could the bank or mortgage company come after your other assets or garnish your income?
    Our mortgage is not the original it is a refi. This is the only loan I have to the house, no others.

    Right now, I am current on my mortgage. My next payment is Feb 1.
    I have done a restructure, (which took over 6 months to work with the HSBC mortgage company ) however, the mortgage company only gave me 6 months at a 5.25%. That means my ARM will go back up to 10.25% May 1. ($3700.00)
    Our house which used to be worth 400,000 is now only worth 230,000. We have a 369,000 mortgage.
    Also, we have a tax lien on the house. (not a property tax as that is paid and also current).
    The house is in my name. When I pulled my husbands credit report, it did not mention HSBC on his at all.
    Can the mortgage company come after just me or both of us or will they just not pursue us?
    I am just trying to be pro active and find out what options are out there.
    Thanks
    K
    Michigan
  2. OliversRose

    OliversRose LoanSafe Member

    Re: The IRS on Short Sales - Capital Gains, Losses/Sale of Home: Stocks (Options, Splits, Traders)

    Can you do a short sale on a home with a tax lien on it (not property tax but personal tax lien)? Or would the IRS come knocking?
    Thanks
    K
    Michigan
  3. helpinNE

    helpinNE LoanSafe Member

    Michigan is a recourse state. Meaning the lender can sue you for a deficiency judgement after the sale of the home following a forclosure.
    Since you only have one loan on the home it may be in your best interest to contact the mortgage company and see what you need to do to qualify for a Deed In Lieu of Foreclosure. The lender may require you to put your house on the market for 90 days before they will consider it, however, if the lender accepts the Deed In Lieu of the should release you from any defiecency.
    If the house is in your name only they will only be able to come after you personally and not your husband.
    There are tax implications of doing a Deed In Lieu of so I would visit a CPA for further explination on these.
    These are tough times we are facing and know that you are not alone whatever path you take.
  4. OliversRose

    OliversRose LoanSafe Member

    HelpinNE-
    Thanks so much for this information. I am looking into doing a short sale, and do have a real estate/tax lawyer involved. I will check on the tax information.
    I know that my tax lien, the IRS wil be first in line to collect:)

    Thanks you for your wonderful insight and letter of hope.
    K
    Michigan
  5. helpinNE

    helpinNE LoanSafe Member

    I would suggest seeing a real estate attorney not necessairly for the short sale but for the personal tax lien. This lien will need to be released before any transfer of title can take palce, including a short sale or a Deed In Lieu of.
    You should be able to hire a realtor, experienced in short sales, to list your property for you. This should not cost you any money up front and the realtor will be paid from proceeds of a short sale.
    Keep in mind, short sales are not easy but I think it would be in your best interest to try this. Also, you will need to deal with the personal tax lien before any sale can be completed.
    Best of luck.
  6. OliversRose

    OliversRose LoanSafe Member

    Thanks helpinNe
    I did just that yesterday. If it did sell, I know that the IRS would be waiting in line first, to be paid. I would guess that if the mortgage company agree to their share that the IRS would be able to get there share.
    If the IRS lien is attached to this house, would it make the mortgage company want to work with them or do they not care one way or another?
    Thanks,
    K
  7. OliversRose

    OliversRose LoanSafe Member

    One more thought:
    Or should I not try the short sale, and just do the Died in Lieu?
    The reason I thought the short sale might be a good idea, is if I can get the IRS paid, and HSBC takes whatever is left, I would be in such a far better place in the long run.
    That is my idea of a good day anyway:)
    K
    Michigan

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