Mortgage Loan Issues

Typical Mistakes with Mortgage Short Sales

What is a "Short Sale" of a Property?

Bad Advice before the Short Sale:

• Run up and use credit cards to pay the mortgage. The logic is since the credit cards are not secure, they can be dealt with more easily. This only works in banruptcy situations;
•  Borrow money from family members to pay the mortgage. The idea is the "problem is only temporary" and they will be paid right back. Truthfully, this is rare/ Usually, the problem is a long term structural problem of toom musch debt to income and equity;
•  Hardship withdrawals from retirement accounts. This is particularly bad because most retiremetn plans are protected from creditors and grow tax free. The withdrawal is taxable income and there are big taxes and penalties to be paid to the IRS and state governments.
•  Payroll Advances from employers. Now the homeowner is bringing the employer into the mess. Suddenly, the employer now has to question the employee's stability.
•  Use an unsecured loan or home equity lines to pay the mortgage. This is just borrowing to pay for past borrowing leading the homeowner into a spiraling decline.  

What Should You Do?

• Don't borrow from friends and family. If you have to file for bankruptcy or do a short sale, you will be unable to pay them;
• Do not run up credit cards to pay the mortgage.  You will enter into a vicious cycle and never get out of debt;
• Never, ever, ever withdraw from protected sources such as IRAs and Retirement Accounts. These will be taxed as income plus a 10% penalty. Further, since retirement accounts are protected from creditors in most states, you are converting protected money to unprotected money;
• Get legal help right away!!

Call Ronald J. Cappuccio at (856) 665-2121 today!