If a house is repossessed by the mortgage company, it is usually sold through an auction or a real estate agent. Depending on both the mortgage company and the state, the former owner may have the opportunity to redeem the property. If the home sells for less value than the outstanding mortgage, the former owner may be sued by the lender for the difference or have the debt forgiven.Continue Reading
The sale of the house varies by state and by mortgage company. Some companies may set a reserve price on auctions for the house while others don't. If the home does not sell via auction, the company next turns to a real estate agency to help sell it. After it is sold, the new owner may move in immediately, though there may be a period of days or even months where the former owner can redeem the property by paying the remaining mortgage as well as any accumulated interest and other associated fees.
If the property is not redeemed and sells for less than the outstanding mortgage, it is up to the lender to either sue the former owner for the money or to forgive the debt. Forgiven debt counts as income to the IRS unless this was the former owner's first mortgage, or the debt involved an equity loan to improve the home. If the former owner meets these criteria or proves insolvency to the IRS, he does not have to pay taxes on this forgiven debt "income."Learn more about Credit & Lending
Keeping a house after filing bankruptcy is possible. It depends on the type of bankruptcy and where it is filed because states have different rules. There is no answer that covers all cases, as explained by Nolo, FindLaw and Bankrate.com.Full Answer >
Home buyers can employ several calculations to determine the affordable price range. Lenders recommend that home owners' monthly principle, interest, tax and insurance payments equal less than 28 percent of gross monthly income. Lenders further recommend that a home owner's debt-to-income-ratio not exceed 30 to 40 percent. Debt-to-income-ratio is the percentage of income that goes to all debt, including the mortgage and debts such as student loans and car payments.Full Answer >
Banks such as Wells Fargo gain full ownership of foreclosed homes after they are unsuccessful in selling the property at auction, explains Investopedia. The common term for bank-owned homes is real estate owned properties, known as REO.Full Answer >
A foreclosure settlement serves as a warning indicating the auction of your property due to your negligence in the payment of monthly dues. The settlement may state a final deadline for complete payment or give a date for your property's auction.Full Answer >