So many people have tried the loan modifications. What the banks rarely tell participants is that the clock doesn’t stop running.

If your loan is backed by Freddie Mac – you will only be able to participate in the HAFA program IF you have a short sale offer submitted to your bank at least 15 days Before the Sheriff Sale date.

That’s a Critical component. Most people don’t even know who backed their loan.

check these sites:

and for Fannie Mae:

IF it is not backed by Freddie Mac – then From the actual sheriff sale date, you will have a 6 month redemption period. However, there are other factors to consider.

1. If you just let the house go back to the bank, you risk being pursued for the deficiency.

Ex: owe 260k – bank sells for 200k = deficiency of 60k

The bank will gather all the deficiency notes they have and sell to a collection agency.

If that collection agency can’t collect – they will sell to another one

And each time – it’s recorded on your credit report ---- UNTIL you file bankruptcy.

A short sale gives you an opportunity to get that deficiency waived.

2. The Homeowner Relief Act expires on 12-31-16. This is the phantom tax. If you close by the end of the year – the IRS will not tax you on the deficiency

Ex: again: owe 260k – bank sells for 200k = 60k income profit, which will possibly be taxed starting in January 2017. And we know how that goes --- IRS tacks on penalty fees, etc…


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