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samuelluvsliz · Dec 15, 2008, 02:42 PM

Me and my husband have a house but the loan in only in my name. We have a negative am loan and a home line of equity with taxes and insurance separated. My husband has qualified for a loan by himself and he wants to let the house go that we have now because we are paying too much money and no one will modify the loan for us.

I know that my credit will go bad but what really worries me is if we have to pay taxes on our house if it forcloses and how much. Can someone please give me some advice if you or someone has already gone through this?? :confused:

Fr_Chuck · Dec 15, 2008, 03:33 PM

And if it sells for less than the loan, you may still owe the balance.
Best bet to sell it if possible, short sell maybe.

And what is the reason you need to let it go, can you no longer afford to keep it, can you not make the payments.

suzQ · Dec 17, 2008, 11:03 AM

Foreclosure will stay on your credit report 10 years. Any negative action will affect your FICO score, thus affecting your ability to obtain loans. Once you foreclose, you do not owe the balance.

If you choose to sell your home on a short sale, it will stay on your credit report for 8 years. Most banks, in the end, will state they will not approve a short sale unless you sign a promissory note to pay back the difference (from amount due to sold price). My clients had to write a letter stating they did not have the means to pay the difference & the bank went forward with the short sale. If the home is not your primary residence, but an investment property, then you have to pay taxes on the amount forgiven by the bank. Check with your accountant/ tax person.

Either way you go, it is an extremely stressful, emotional, long road with a lot of pressure from the bank. There has to be a verifiable hardship that caused this action. This is not an easy way out.

You can normally get reviewed for a loan 3 years after one of the above actions, but you WILL pay a much higher interest rate.

Worst case scenrio, you take one of these actions in your name only. Life unexpectedly happens: Your husband passes or divorces you.. . then you are stuck. You would not be able to obtain any credit for a long time. Why would you want to put yourself in this position?