Foreclosure Lawyer Heber City Utah
Heber City is a city in northwestern Wasatch County, Utah, United States. Heber City was founded by English immigrants who were members of The Church of Jesus Christ of Latter-day Saints in the late 1850s, and is named after the Mormon apostle Heber C. Kimball. It is the county seat of Wasatch County. The original Heber City town square is located on the west side of Main Street between Center Street and 100 North and currently houses city offices as well as the historic Wasatch Stake Tabernacle and Heber Amusement Hall. The city was largely pastoral, focusing largely on dairy farms and cattle ranching, and has since become a bedroom community for Orem, Provo, Park City and Salt Lake City. Heber City is currently governed by Mayor Kelleen Potter along with City Council Members. Within the city limits are Heber Valley, Old Mill, Daniels Canyon and J.R. Smith Elementary Schools, Timpanogos Middle School, Rocky Mountain Middle School, Wasatch High School, and Wasatch Alternative High School. An additional school in the Heber Valley is Midway Elementary School. All of these schools are part of the Wasatch County School District. Utah Valley University maintains a satellite campus just north of Heber City along the US-40 corridor. Heber City supports five LDS stakes, as well as congregations of Southern Baptists, Catholics as part of the Diocese of Salt Lake City, and Jehovah’s Witnesses.
How Foreclosures Work
The most obvious effect of foreclosure is that you now find yourself without a home. Many people rely on family at this point to get them through the coming months. Some people are able to afford to move into an apartment while they get their finances back on track. Sadly, some people that suffer foreclosure find themselves homeless. Most states have homeless prevention programs that assist people who are down on their luck and in need of a boost. If you’ve been foreclosed on and have no housing options, check with your state and local department of human services to see if they can assist you. Your credit rating is another way foreclosure can affect you. While being foreclosed on does have a negative impact on your credit rating, it doesn’t damage it beyond repair. Credit ratings are based on your credit history, so the foreclosure will be factored in along with everything else. If you had a good rating before you fell behind on your loan, you might be surprised at how high your credit score is after you foreclose. The most obvious effect of foreclosure is that you now find yourself without a home. Many people rely on family at this point to get them through the coming months. Some people are able to afford to move into an apartment while they get their finances back on track. Sadly, some people that suffer foreclosure find themselves homeless. Most states have homeless prevention programs that assist people who are down on their luck and in need of a boost. If you’ve been foreclosed on and have no housing options, check with your state and local department of human services to see if they can assist you. Your credit rating is another way foreclosure can affect you. While being foreclosed on does have a negative impact on your credit rating, it doesn’t damage it beyond repair. Credit ratings are based on your credit history, so the foreclosure will be factored in along with everything else. If you had a good rating before you fell behind on your loan, you might be surprised at how high your credit score is after you foreclose.
Strategic Default: Should You Walk Away From Your Home?
If your home has become a bad investment, you might be considering defaulting on your payments—even if you can still afford to make them—and letting a foreclosure happen. This tactic to rid yourself of a bad real estate investment is called a “strategic default.” Strategic defaults were common during the foreclosure crisis that happened from around 2008 to about 2014, though they’re less frequent now.
What Is Strategic Default?
Sometimes a property is so far underwater that it could take years before the home regains all of its value. If that happens, borrowers sometimes choose to stop making payments, even if they could afford to stay current, simply because the home has become a bad investment. This decision is known as a “strategic default,” which is also sometimes called “voluntary foreclosure” or “walking away.” Generally, the term “strategic default” implies a different situation than a homeowner who’s struggling financially and can’t afford to keep paying the mortgage payments. With a strategic default, the borrower does the math and makes a business decision to voluntarily stop making payments, even if it’s within their ability to stay current on the loan. After the homeowner voluntarily stops paying, the bank forecloses.
Downsides to Walking Away
If you’re contemplating a strategic default, you should know the consequences and consider them as part of your decision-making process.
In a foreclosure, the borrower’s total debt might exceed the foreclosure sale price. The difference between the sale price and the total debt is called a “deficiency.”
Example. Say the total debt owed is $300,000, but the home sells for $250,000 at the foreclosure sale. The deficiency is $50,000.
In some states, the bank can seek a personal judgment called a “deficiency judgment” against the borrower to recover the deficiency. Generally, once the bank gets a deficiency judgment, it may collect this amount—in our example, $50,000—from the borrower using normal collection methods, like garnishing wages or levying a bank account. With a strategic default, you might be liable for a deficiency judgment after the foreclosure, depending on your state’s laws. Some states, like Utah, for example, have anti-deficiency laws. If a state has anti-deficiency laws, a foreclosing bank can’t seek a deficiency judgment under specific circumstances. Most homeowners in Utah won’t face a deficiency judgment after a foreclosure. Other states, like Florida, for example, do allow deficiency judgments. To find out if the bank can get a deficiency judgment in your state.
Difficulty Getting a New Loan
If you walk away from your home, you might have trouble getting a new mortgage loan. Fannie Mae, for instance, has stated that strategic defaulters won’t be eligible for a Fannie Mae-backed mortgage for seven years from the date of the foreclosure. Fannie Mae also stated that it will take legal action to recoup the outstanding mortgage debt from borrowers who strategically default on their loans in jurisdictions that allow for deficiency judgments.
Significant Credit Score Drop
A foreclosure won’t ruin your credit forever, but it will have a considerable impact on your score, as well as your ability to obtain another mortgage for a while. Also, a foreclosure could impact your ability to get other forms of credit, like a car loan, and affect the interest rate you receive as well.
Future Housing Issues
If you plan on renting a house or apartment after a strategic default, bear in mind that it’s standard for landlords to review your credit report when deciding whether to rent to you. The rental market is competitive, and a landlord might be able to select a renter with better credit over you.
While foreclosure has lost much of its social stigma, many employers routinely run credit checks on potential employees. Because a foreclosure will appear on your credit report, it could cause issues for your job prospects. Of course, whether having a foreclosure on your credit report will affect your options depends on the employer and, to some extent, the reason for the foreclosure. For example, if you’re applying to work at a telecommunications company, a foreclosure might not hurt your employment chances—especially if you can show extenuating circumstances, like you had serious medical issues that led to the default. But if you’re applying for a job in the financial services or banking industry, a bad credit report could very well affect your ability to get the job. The potential employer might think that if you couldn’t manage your own money, you won’t be able to handle someone else’s competently.
Moral Implications of Strategic Default
Arguably, some moral implications are associated with walking away from an underwater home. Strategic defaulters tend to justify walking away from a severely underwater property as something permitted by the mortgage contract itself, which specifies the consequence of a breach. Specifically, the bank can foreclose and take the home. But when you signed the promissory note, you promised to pay the loan back. Some people consider it immoral to voluntarily break this promise. Others don’t.
Alternatives to Strategic Default
Some options to consider instead of strategically defaulting are:
• Short sale: A short sale is when you sell your home for less than the total debt remaining on your mortgage, and the proceeds of the sale pay off a portion of the balance. Be aware, though, you might be subject to a deficiency judgment if you complete a short sale.
• Deed in lieu of foreclosure: A deed in lieu of foreclosure occurs when the bank agrees to accept a deed to the property instead of foreclosing. With a deed in lieu of foreclosure, you could face a deficiency judgment as well. The deficiency amount would be the difference between the fair market value of the property and your total debt.
• Modify the loan to make it more affordable: You could approach your loan servicer to find out if it will modify the loan to make it more affordable or give you some other option to avoid foreclosure.
How Much Will a Foreclosure Affect a Tax Refund?
Foreclosure is one of those difficult experiences certain homeowners may have to go through. Not only does foreclosure affect your credit rating, but it also can make it difficult to purchase another home in the immediate future. Additionally, there may be tax consequences attached to your foreclosure. In certain cases, foreclosed homeowners have been hit with a significant tax bill that often reduces or eliminates any tax refund due.
Foreclosure Tax Consequences
Often, the Internal Revenue Service (IRS) considers debt that’s forgiven by a lender because of foreclosure to be taxable income. Through calendar year 2012, the IRS is waiving taxation of mortgage debt forgiveness in certain cases. Because the IRS is waiving taxation of forgiven mortgage debt, any income tax refund isn’t affected by your foreclosure. However, foreclosures occurring in 2013 and beyond could affect the income tax refunds of those experiencing foreclosures.
Other Taxation Circumstances
After foreclosure, the IRS could consider taxable any cash you took from your home as the result of a refinance. In addition to cash-out income, any income you took from a home equity line of credit (HELOC) could be taxable under IRS rules. Your forgiven mortgage debt and income gained from refinances or HELOCs might also be taxable at the state level.
Reporting Foreclosure Income
Taxable income resulting from forgiven mortgage debt and any cash-out refinances or HELOCs has to be declared in the year in which the foreclosure occurred. IRS taxation waivers of forgiven mortgage debt apply only to principal residences. However, money taken from a cash-out refinance or HELOC that’s applied to home renovation or improvement is often tax-exempt after foreclosure. Also, ensure the federal income reporting document (Form 1099) your mortgage lender gives you after your foreclosure is accurate.
Federal law considers debt discharged in bankruptcy, including potentially taxable forgiven mortgage debt, to be non-taxable as a result. Insolvency immediately before mortgage debt is forgiven also could exempt you from taxation of that debt. According to the IRS, insolvency is when the total of your liabilities exceeds the fair market value of your assets. Consult a tax professional if you’ve recently experienced foreclosure in order to discuss any income tax and tax refund implications.
Judicial Foreclosure vs. Non-Judicial Foreclosures
Not all foreclosures are created equally, and you have a better chance of fighting some than others—with or without an attorney.
Non-judicial foreclosures can move very quickly because they don’t have to involve the court system. The procedure isn’t exactly the same in all the states that allow for these foreclosures because the rules depend on state law, but in many cases, your lender need only file a notice of default or similar document with the county recorder’s office. It will then publish a date on which it intends to sell your home, typically at auction. Unfortunately, the majority of states—29 of them and the District of Columbia—recognize this type of foreclosure as of 2019. You might be subject to it if you have a deed of trust rather than a mortgage, and if the deed of trust includes a “power of sale” clause.
A judicial foreclosure must move through more restrictive legal channels. Your lender must first file a lawsuit against you, and you have the right to respond to that lawsuit in court. The lawsuit will effectively ask the judge to allow the lender to take possession of and sell your home, and the lender can’t do so without a judge’s permission. You can sometimes make the lawsuit go away if you can catch up your late mortgage payments within 30 days.
Foreclosure Lawyer Heber City Utah
When you need a foreclosure lawyer in Heber City Utah, please call Ascent Law LLC for your free consultation (801) 676-5506. We want to help you.
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506