Home-buying strategy may be hiding assets
If you don't qualify for a conventional loan modification or President Obama's loan modification plan -- which is in the process of being worked on by the regulators and the banks -- then your only option is to try to sell the home and move on. To find out whether you qualify under President Obama's plan, go to MakingHomeAffordable.gov.
While I'm sure you'd love to sell, you'd have to do a short sale. That means you'd have to get your lender to agree to take whatever you can get for the property and wipe away the remaining mortgage amount. You'd walk away with nothing from the sale. And for now you won't have to pay any federal income taxes on that portion of the loan that your lender forgives as part of the short sale if the home was your primary residence.
The problem with this option is if you have other assets or other income, the lender may not approve the short sale if it believes that you have the financial means to pay off the loan.
Short sales will damage your credit, as will foreclosures or doing a "deed in lieu of foreclosure," in which the homeowner signs over the deed to her home to her lender in lieu of a protracted foreclosure process. In fact, anything other than a clean sale will do nothing to help your credit, will likely damage your credit score, and may prevent you from buying another home for the next two to five years. For credit purposes, a short sale may look better to another lender in the future while a foreclosure or bankruptcy may not.
If you're in danger of not making your mortgage payment, you can see if you're eligible for a loan modification through the Homeownership Preservation Foundation's Hope Hotline: 888-995-HOPE. You can also go to their Web site, www.995hope.org. One of their partner organizations is the federally sponsored Hope Now Alliance, which includes housing counselors, mortgage companies, mortgage insurance companies, Fannie Mae, Freddie Mac, real estate trade organizations and others involved with helping homeowners stay in their homes.
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