Question: I have a modified loan and a second loan with the same bank in New York City, which are now current. I recently lost my job and am unable to continue making mortgage payments. I also have no possibility of sale as the combined mortgage principles and the home value may be the same at the present time. If I decided to go for a short sale or go into foreclosure, does the lender here in New York City have the right to go after me with a deficiency judgment, and if they do how long the foreclosure procedure will take before eviction?
Response: It is always better to do a short sale than to go into foreclosure. As a result of foreclosure, the bank can try to obtain a deficiency judgment against you but of course getting it satisfied is a matter of having assets. Short sale, on the other hand, if properly negotiated, does not result in a deficiency judgment but rather debt forgiveness, as it gets reported to the IRS. This year, you don’t have to pay taxes back on the amount of debt that gets forgiven and you basically walk away without liability. As a matter of fact, most banks will offer you money to do a short sale. Please note that foreclosure in New York City can take several years if you are trying to wait it out and see if you can get back on your feet and then reinstate your mortgage.
In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.
The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information.
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