Real Estate Law
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I live the USA. I have a home in the state of New Jersey. My house is underwater by over $150,000. Also, I have not paid the mortgage in over one year. An investor has approached me and stated that they will be happy to take the deed so that the house is no longer in my name. Once the deed belongs to the investor the investor stated he will do a short sale with the bank that holds my mortgage (Chase). I have tried doing a short sale through a real estate broker but Chase bank always either rejects the buyers for offering low prices or never responds back to our request for short sale review. I have not tried a deed in lieu of foreclosure. I am very interested in getting rid of this property and the mortgage off my hands for the year 2013 because Congress Extends Mortgage Forgiveness Debt Relief Through 2013. Is this a good idea? Response 1: No, it is not. Transferring ownership of the property to the investor does nothing for you--it does not release you from your obligation on the mortgage and your personal obligation on the Note. Also, once the investor gets hold of the property, what would prevent the investor from renting the property and pocketing the money without paying off the mortgage? In addition, you had already tried to do short-sales previously without getting any cooperation from the lender. The lender is not all of sudden going to cooperate because the investor has the property. I have NEVER seen this kind of arrangement work out for the homeowner. Infact, it creates more problems because homeowner no longer owns the property, but she is still liable on the mortgage! If it is a good idea to transfer the deed over to the investor, what protections can I place in the contract so that I will no longer be responsible for the house and the mortgage? Response 2: It is not a good idea. See my previous response. You remain liable for the mortgage until it is paid off. Or any other advise that I should consider that I did not consider regarding this transaction? Also, what are the tax ramifications for doing such a deal meaning will I qualify for the Mortgage Forgiveness Debt Relief Act of 2013. Response 3: You may try to approach the bank with an offer for deed-in-lieu of foreclosure. Any help will be greatly appreciated. Thank you
Response 4: Do not get taken by the so-called investor. This kind of arrangement does not end well for the homeowner. You cannot transfer ownership of the property to anyone without the mortgage being paid off as part of the arrangement. Otherwise, you get all the liability and the investor gets all the benefits.
I am sorry that I do not have better news for you.
Thank you very much for your help.