Legal Question in Real Estate Law in Virginia

Negotiating after foreclosed

I had a house in VA which foreclosed in 2008. I tried hard to do the short sale with the bank and deed-in-lie, both didn't work and bank foreclosed the house.

The house had 2 mortgaged (first mortgage had interest only loan 80%). Now IndyMac sell the 2nd loan to GreeTree, they called and threating me to work with them on the 2nd mortgage, and I am not sure what options I have and what to do. I do have 2nd home where I am living, that is also 95% financed and in VA

GreeTree said that they can get the deficiency judgement against me and garnish my income. is that true?

I did try to short sale and submitted the offer to the bank but they took so long and the offer expired.

My question is ... is it possible for me to negotiate down the amount in order to be done with it? How would I go about doing that? What are the tax implications upon the scenario?

Should I negotiate with them or wait until they get the judgement? Could I possibly pay 10% of $89k to be done with this or will that not work? In the larger picture of the number of foreclosures happening in this country, how successful are banks/law firms/collectors on collecting on mortgage deficiency judgements? specially in VA


Asked on 1/06/10, 9:51 am

1 Answer from Attorneys
Daniel Press Chung & Press, P.C.

If the lender wants to try to get a mortgage deficiency judgment, it will be successful unless it can't prove that it is the holder of the note (which is sometimes the case). If they write some or all of it off, you may be liable for income tax unless (a) you discharge it in bankruptcy (before they write it off otherwise), (b) you are insolvent even after the write-off; or (c) it is "qualified principal residence indebtedness (i.e., basically indebtedness for the purchase price for your principal residence). Settling will result in the tax liability. You may want to consult with an experienced bankruptcy/tax lawyer to advise you.

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Answered on 1/11/10, 7:06 pm


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