Legal Question in Real Estate Law in Michigan
foreclosure
My wife and I are in a bind, with a
newly diagnosed child with Autistic
Spectrum Disorder. We are seeking
to get into the Grosse Pointe School
system which will help him
immensely. We have been trying to
sell our home for almost four years
and my wife has been instructed by
a lawyer to stop mortgage payments
on the house, write a ''heartfelt
letter'' stating our case and hand
over the deed with a sum of money
to get out of this house. Does this
sound plausible and what kind of
effect will this have on our credit?
(the lawyer in contact with my wife
sais it will be minimal.)
Thank You. M
2 Answers from Attorneys
Re: foreclosure
If you give your mortgage company a deed in lieu of foreclosure, it is very likely that they will issue to you a 1099 at the end of the year. This means you will have to pay tax on the amount of debt "forgiven." On the other hand, if you file for bankruptcy, most likely you will be able to discharge any deficiency on the mortgage.
Good luck.
Re: foreclosure
You need to contact your bank/lender directly to see what they can offer you and if they are willing to work with you. Each lender is different, and it depends on the value of your house, your equity, etc. Some lenders will accept a deed in lieu of foreclosure and some won't. It is best to call them and start negotiating and talking. Don't just send them a letter and/or money.
I would not describe having a foreclosure on your credit report as "minimal" - although not as horrible as a bankruptcy and in any event, not the end of the world. The most important thing is eliminating the stress from your life and focusing on your family and providing for your child.
Good luck.
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