According to the Federal Trade Commission, a person facing foreclosure can give his house back to the bank with a deed in lieu of foreclosure. In exchange for signing over the deed to the home, the bank forgives the debt owed on the home.Continue Reading
When a debt is forgiven, the former homeowner must report the forgiven debt as income to the IRS, states the Federal Trade Commission. Although the income must be reported, the Mortgage Forgiveness Debt Relief Act of 2007 removes the tax liability for the amount of the forgiven debt. According to Bankrate, up to $2 million may be excluded; however, if a portion of the mortgage was used to pay for consumer purchases or to consolidate consumer debt, this portion of the loan is not excluded from the individual's taxable income.
As an alternative, the lender might agree to a short sale. According to the Federal Trade Commission, in a short sale, the homeowner sells the home and gives the proceeds to the lender. In exchange, the lender agrees not to foreclose on the home and to forgive the debt repaid by the sale. According to Bankrate, the amount forgiven is still reported as a partial charge off on the individual's credit report.Learn more about Credit & Lending
U.S. Bank National Association purchases foreclosed properties and sells them at auction. A current listing of homes being liquidated by the bank are posted on its website. The bank also provides mortgage loan assistance programs to customers seeking ways to avoid foreclosure.Full Answer >
To obtain a replacement deed, call the local courthouse or clerk's office that files deeds, or contact the attorney who helped with the sale of the house. The title company that wrote the title may also have copies of deeds.Full Answer >
It is possible to get a mortgage after a foreclosure, according to Nolo. The amount of time between foreclosure and a new mortgage application varies based on the individual's financial situation and the mortgage lender.Full Answer >
To avoid foreclosure, talk to your lender, contact a housing counselor and negotiate a work out plan. Consider a pre-foreclosure sale or short sale if all else fails.Full Answer >