David L. Leon
What to Do If You Want to Abandon Your Property
If you want to abandon your property and walk away from the loan, you have a few different options:
1. You can do nothing.
The bank will proceed with its foreclosure action and reclaim the property. This is usually the worst option to take. In some cases, the mortgage company might not make enough on the sale to cover the loan. The bank may have the option to sue the borrower for the deficiency.
2. You can ask the bank to accept the property, and dispense with the foreclosure.
In most cases, the bank will not take any further action. This is typically called a “deed in lieu of foreclosure.”
3. You can attempt to sell the property.
If you sell it for more than the loan, plus closing costs, you keep the difference. If you sell it for less than the loan, the bank may waive the difference. This is called a “short sale.” In a short sale situation, the borrower should not receive any money from the sale. Also, the borrower may have to pay taxes for the amount of the debt that was forgiven by the short sale.
Before you make this decision, you should discuss it with your accountant and a lawyer. Our office will give a free telephone consultation regarding your options if you no longer wish to keep your home.