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Roger
Roger, Lawyer
Category: Real Estate Law
Satisfied Customers: 31662
Experience:  BV Rated by Martindale-Hubbell; SuperLawyer rating by Thompson-Reuters
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My house in currently in forclosure. I have been working on

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My house in currently in forclosure. I have been working on a deed in lieu since April today it was denied. The bank wont take the house back, I moved out (cross country) because of the deed in lieu. I am not sure if I should let it go to foreclosure, do a short sale, or file for bankruptcy

Kirk Adams : Hi - my name is XXXXX XXXXX I'm a Real Estate litigation attorney. Thanks for your question. I'll be glad to assist.
Customer:

Thank You Kirk!

Kirk Adams : If you can get a short sale approved, that would be the next best thing, but the only problem is getting a buyer and having the sale approved before the foreclosure sale occurs.
Kirk Adams : Also, you would want the lender to agree to accept the short sale as full satisfaction of the mortgage so they don't seek a deficiency judgment.
Customer:

Well, when I spoke to the bank today, they said I should try to sell the house or find a realtor to do a short sale. Honestly Kirk, I am just frustrated with the whole thing. What would be the consequences of just letting go vs bankruptcy

Kirk Adams : If you just let the property go, it opens you up to be sued for a deficiency judgment - - the difference between what the house's fair market value is and what you owe (42 Pa. Con. St. Ann. § 8103[a]).
Kirk Adams : That's the only threat to allowing things to proceed, but if you think there may not be a deficiency, it may make no difference (but if a short sale is in play, there's likely a difference between what you owe and the FMV.
Kirk Adams : If you were to file bankruptcy, you could avoid the deficiency and have the debt discharged.
Kirk Adams : You could always let the foreclosure go through, and IF the lender ever files for a deficiency judgment, you could file bankruptcy at that point nd have the det discharged.
Customer:

what would you say would be most detrimental for me in the end?

Customer:

or does it matter at this point?

Kirk Adams : Facing a huge deficiency judgment is the worst outcome - - because you still owe the money even though you no longer have the property/asset.
Customer:

Credit wise, does it all affect me the same?

Kirk Adams : But, like i said, you can always wait to see if the lender seeks a deficiency judgment agianst you (you'll be served just like with a regular lawsuit), so you'd have time to file and stop it.
Kirk Adams : Credit-wise, there's not much difference. A judgment or a bankruptcy is going to stay on your record for at least 7 years.
Customer:

I see. If you could give me advice what do you suggest based on the options?

Kirk Adams : If you can do a short sale and have the deficiency waived through the short sale agreement, that would be best.
Kirk Adams : BUT, if that doesn't work out, it's probably best to let the foreclosure happen and if they seek a deficiency, then file bankruptcy.
Customer:

Kirk I want to thank you greatly you don't know how much I appreciate it. I just was not sure of my options or what to do after being denied. Finally, do you think that a realtor would be able to degotiate that or should I?

Kirk Adams : Do you mean negotiate the short sale?
Customer:

Yes and seek to have the deficiency waived

Kirk Adams : The realtor can negotiate the sale, BUT you'll have to deal with the lender to set up the short sale agreement and deficiency being waived.
Customer:

Perfect thanks Kirk!

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