Actual consequences of foreclosure

Discussion in 'Real Estate' started by Atlanta Bo, May 16, 2007.

  1. Atlanta Bo

    Atlanta Bo Beach Lover

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    What would be the actual long term consequences of letting a property go to foreclosure beyond the obvious of credit damage , loss of down payment and equity . Have fun Shelly .

    JB
     
  2. 6thGen

    6thGen Beach Fanatic

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    Other than what you mentioned, I'd add personal honor, duty, integrity, and whatever good name you had left.
     
  3. Bob

    Bob SoWal Insider

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    Most foreclosures are not from a lack of honor, but a cash flow crisis precipitated by job loss, medical expense or divorce. You will be able to secure another mortgage with reasonable terms in a few years, provided you have a history of paying creditors going forward.
     
  4. 6thGen

    6thGen Beach Fanatic

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    Or from getting greedy and one getting in over one's head (not nec. the ATLBo). As for securing another mortgage, not if Congress has anything to do with it. That would be considered "sub-prime". I'll also add that if there is a deficiency after the property liquidation, lawyer fees, etcetera, you get sued.
     
  5. Atlanta Bo

    Atlanta Bo Beach Lover

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    These are exactly the reasons why I have not done such a thing but based upon the current market and the length of this downturn ( with no relief in sight ) , it is only human to think about all options , no matter how extreme . How upside down does one get ? I have no intentions of foreclosure ( I would really take a bath ) but thought it would stir up some discussion or other possibilties or solutions in this market .

    AB
     
  6. Mango

    Mango SoWal Insider

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    Foreclosures negatively affect entire communities as well. People would have been wise especially in condominiums and townhome developments to ask to see what the financial credentials were of some of these flippers during the frenzy before allowing them to buy in their developments.

    In Florida, if the home is sold on the county steps as a foreclosure and the Bank purchases it, depending on the parcel type (condo or townhome) the Bank is limited in how much they have to pay in back assessments. In a townhome, they are not responsible for any delinquent common charges, hence the other "paying" owners have to cover the "delinquents" and foreclosed properties. I find this all ridiculous since the Banks were the ones who signed and sealed the mortgages being foreclosed in the first place.

    I hope to see some legislation regarding foreclosure laws. The subprime market and interest only loans adjusting is going to affect everyone even who are timely with their mortgages. :blink:

    In most of the Northeast States, common charges and taxes takes precedence over a mortgage, the way it should be. The Bank who made the loan gets whats left.
     
  7. flyguy

    flyguy Beach Lover

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    I was doing a little research on the tax assessor site today on one of the condo buildings I am tracking. There were two units sold in the spring of 2005 for 560,000 and 564,000.

    The last sale was for 360,000 and that was 8 months ago.

    I have to think there are folks up and down the coast who are not only upside down on their mortgage but also looking at continued negative cash flow. These folks may be looking for any way out they can find.

    I bet alot of people are researching their options. I would imagine a bunch of folks would love to just walk away from their property if they could.

    On a related note. Does anyone know how to find properties in Bay and Walton counties that are in foreclosure or preforclosure. I know you can buy a service but thought their might be a better way.

    JMHO
    Flyguy
     
  8. Smiling JOe

    Smiling JOe SoWal Expert

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    I understand that, locally, Realtors will soon (within the next month or two) be able to search for properties which are marked as pre-foreclosures or short sales. You can contact a good Realtor and have her or him put you on their Prospects list and notify you when any new listing marked as pre-foreclosure or short sale come on the market.

    You can also find foreclosures on the Clerk of Courts sites for Okaloosa and Walton County.
     
    Last edited: May 16, 2007
  9. SHELLY

    SHELLY SoWal Insider

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    Foreclosures? In Florida? In the North Florida? In South Walton & Destin?? How could that be possible?

    There's no risk in owning real estate....if anything goes wrong one could just sell it or live in it....that's what I've been told.

    [​IMG]


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    Last edited: May 16, 2007
  10. Bob

    Bob SoWal Insider

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    And heat the home by burning Enron stock.
     
  11. SHELLY

    SHELLY SoWal Insider

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    Yeah....I would expect a large population of the Dot.Condo crowd would have been Dot.Commandos as well. And on the menu: Refried Beanie Babies .



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  12. Bobby J

    Bobby J Beach Fanatic

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    I would get advice from a good Florida foreclosure attorney. The peanut gallery may not be the best place to get advice from on such a serious issue. I have been told Lewis & Jurnovoy give good free advice. There number is 850-863-9110.
     
  13. SHELLY

    SHELLY SoWal Insider

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    I thought this question was just thrown out there to stir up some conversation...if it was otherwise, BJ is right about getting some SERIOUS input from more knowledgeable folks. Seek out a professional who can look at one's ENTIRE portfolio and budget to advise where to do some NipTuck.

    Lewis & Jurnovoy are Bankruptcy Lawyers--hopefully you won't find yourself that far down in the ditch (trying to keep your primary residence from going into foreclosure).

    If you're trying to hang on to a second/vacation/investment home, it may be just a matter of selling off the Hummer and jetskis; cutting back on the number of next year's vacations from 4 to 3; skipping the Latte Grande every morning; and doing a refi from adjustable to a fix (with no money out).

    If you're planning on unloading a dog, do a cashflow sheet to include what it will cost you to carry the property for another year or two (tax, insurance, maintenance, PM, utilities, interest, etc)--would subtracting the costs from the asking price bring the buyers running to snatch it off your hands tomorrow?

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  14. Bobby J

    Bobby J Beach Fanatic

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    Good advice Shelly. I believe those guys also do foreclosures? Anyway, I am pretty sure they will consult one time for free.
     
  15. scooterbug44

    scooterbug44 SoWal Expert

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    If anyone consults a foreclosure attorney, I'd love to hear what the official word is, just to add to my general knowledge. I don't really understand the whole process and from the projections, it will be a big issue in the coming months/years.
     
  16. Franny

    Franny Beach Fanatic

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    It was my understanding that if you foreclose on a property in Florida say for $500,000 and the bank sells it for $200,000 you are still responsible for the $300,000. I would think that this would wreck your credit for many many years........any comments.
     
  17. Pirate

    Pirate Beach Fanatic

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    I would defer to one of the mortgage guru's here for a final word on this, but I am pretty sure if the bank comes up short on the sale of your property they can chase you for years for the difference. Just a thought.
     
  18. Bob

    Bob SoWal Insider

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    That amount would presuppose a BK.
     
  19. Bobby J

    Bobby J Beach Fanatic

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    I think it all really depends on the deal with the bank.
     
  20. SHELLY

    SHELLY SoWal Insider

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    I would recommend that someone who is not on the brink of bankruptcy (i.e., you've got an "investment" condo that you want to unload, but you've still got some assets the bank/developer can come after) consult a lawyer who specializes in Real Estate (vs. bankruptcy)--there are more and more of their ads popping up in newspapers as this RE frenzy continues to unwind.

    Foreclosure will put a big black mark on your credit report which will not only make it a bit more difficult to get a loan (since the subprime industry is tanking), but also can affect job prospects, insurance rates, security clearances, etc.

    Additionally, the difference in the amount of money you owe on the home and how much the bank can sell it for may be counted as taxable income and can also come back as "Zombie Debt" to haunt you further down the road if some debt buying agency like Asset Acceptance Capital scoops it up at pennies on the dollar and comes knocking for their money years down the line.

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