If I foreclose on my rental home and the bank does a short sale.....?If I foreclose on my rental property in Queen Creek, AZ (loan amount 154,053.89 on 1.25 acre with mobile home) and the bank does a short sale will I be responsible for the remainder of the balance if they do not sell it for the whole loan amount? Also the loan is in my husbands name but on the deed it lists himself... | |
If the bank forecloses, there will be no "short-sale." The bank will simply sell the property at a later time and recoup as much of their loss as they can. If you're not a borrower on the loan, you're not responsible for the repayment of of the loan, so your husband's credit will be negatively impacted but yours should not. I've never had a client who was foreclosed on or who sold via a short-sale receive a 1099 form, but in theory it could happen. On many short-sales, lenders are now requiring the borrower to sign a promissory note for some of the loss the lender suffers, but if you get foreclosed on this does not come into play. All they "could" do is seek a judgment which is not likely.
it depends if your loan is a recourse loan or not. I will also have to see if in Arizona you use trustee sales or do a judicial foreclosure. Regardless, whether it is a short sale or foreclosure, the outcome is the same. I suggest you do a short sale.
You will not be affected at all as the person on the loan is affected, not the one on title.
Good Luck
