Consumer Credit Counseling San Francisco
If I stop making mortgage payments on my rental house, can the bank force me to sell my primary house?
I live in California and both properties are in California. Primary in San Francisco, rental in Richmond.
If I let the banks foreclose on my rental property can they come after my primary home?
The value of my Richmond property has gone down by 40%, and I owe more to the banks that what I could sell it for. I have been struggling to make the monthly payments since last Nov 2007, and as a real estate agent, I have had no sales since 12/07. Therefore I can no longer make my mortgage payments. I cannot sell or refinance my rental property due to the decrease in value.
I have contacted Bank of America, Washington Mutual and the many “consumer” counseling sites such as 999-hope for help. But all tell me that unless I stop making payments the banks will not talk to me about modifying terms. However, once I stop making payments I will then ruin my credit. And so I have until May 15, 2008 to either make my payment or not. And at this moment I am thinking of stopping payments.
On the upside, if you default on your primary residence, you can escpape the ordinary income & tax of debt cancellation http://www.irs.gov/individuals/article/0,,id=179414,00.html
Unfortunately, this does not apply to investment properties. It may be better to let the primary residence foreclose & then move into the rental home.
Most banks will not work out a short sale or loan modification until you prove assets, income, etc., in addition to being late on payments to the point of foreclosure process being on your doorstep.
Leading Providers Overview – San Francisco, CA – 415-892-9400
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