| Illinois foreclosure, short sale
What is the name of your state (only U.S. law)? Illinois
I am currently living in Texas. I moved from Illinois about a year ago. I have been trying to sell my home in Illinois for all that time. This was not a risky subprime or “exotic” mortgage product. The mortgage was obtained 6 years ago as a 30-year fixed VA guaranteed mortgage at 5.6% APR. Of course I have lowered my asking price over time to the point where it might not even cover what I owe. Part of the reason for that is I took out a home equity loan for $30K and put every penny into home improvements.
I’m fed up with throwing away thousands of dollars on a house I’m not living in. So last month I have stopped paying on the mortgage. It appears that my only options are to allow a foreclosure, or pursue a short sale. I realize that a short sale is an iffy process and nobody knows what a lender will agree to. It would be helpful to know how much does a foreclosure cost the lender? One of my coworkers was involved in a short sale last year. She told me that she received a 1099 from the lender declaring the “short” amount as income to her. That has me concerned but I think the laws have changed to protect people from that sort of thing.
Bankruptcy is probably not an option as I have no debt other than house crap. I’ve already been down the road of renting it, and I have already tried talking with the lender multiple times. They have not been responsive but I suspect after a few more missing payments I might get more attention. Maybe they have not responded because it’s a VA guaranteed loan.
In any case, the purpose of this posting is to get some opinions and help deciding between allowing the foreclosure or pursuing the short sale. I would like to know what are ramifications of a foreclosure? How would it affect my taxes? Also, my realtor tells me that it would not make sense to continue paying the home equity loan if the home is going into foreclosure. Does that make sense?
Thank you. | 
06-01-2009, 01:12 AM
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