Posted on March 16, 2010.
If you received a cash refinance what happens when it ends in foreclosure? Example: You refinance with money at home $ 200,000 and $ 650,000 estimated. The loan is $ 520,000. Value of property drops to $ 450K if you can not refi, the money has been spent and now it goes into foreclosure. What the bank does?
They go after your other assets, accounts, assets and earnings until you have repaid all the money they gave you the interest on it and the legal fees for their return funds at their disposal.
Finally, you pay them.
From the perspective of the bank have a loan for $ 520K and $ 450K property value, so they have a bad debt against you for $ 70K. They can sue you for the difference or issue you a 1099-C for $ 70K.
From your point of view, you sold the house to the bank for $ 450K and canceled debt income of $ 70K. You calculate your gain / loss on the property using the number of $ 450K. You can have a taxable income at a time.
Same as any other lock.
He will seize. It is now the owner, who currently represents approximately $ 450,000.
It will determine the value of property by a BPO (broker price opinion). It will then list the house with a realtor, probably for a price around the OPL. Assuming your estimate is correct, the BPO would be about $ 450,000. Then, on a regular basis, it will lower the price of the house. For example, perhaps every 45 days it will lower the price of 10,000 USD. At one point, someone will come and buy it.
As the owner of the house, foreclosure property transfers from the house. And it is a black mark on the credit of the owner. Once lock occurs, the owner has no right to live there, and must move.
The bank ruled out - like any other foreclosure. The cash flow "out" refinancing has nothing to do with it.
