Troubled homeowners get a triple-whammy: Foreclosure then fees then taxes

Posted Nov 6th 2007 11:55AM by Zac Bissonnette
Filed under: Newspapers, Housing

Losing your house should be bad enough, but once you add in huge and often questionable foreclosure fees and taxes (!), it really stinks.

According to The New York Times, "As record numbers of homeowners default on their mortgages, questionable practices among lenders are coming to light in bankruptcy courts, leading some legal specialists to contend that companies instigating foreclosures may be taking advantage of imperiled borrowers."

Katherien Porter, a law professor at the University of Iowa, studied mortgages in Chapter 13 bankruptcy and found that half contained questionable fees.

Families in foreclosure are extremely vulnerable to this malfeasance -- they lack the resources to fight it. If they could afford a protracted legal battle over their foreclosure, they wouldn't be in foreclosure!

Back in August, I wrote about an absolutely insane IRS policy that require home losers to pay the IRS taxes on the amount of a loan that is forgiven in foreclosure.

There's going to be a lot of foreclosures in the next few years -- some experts suggest that 20% of subprime loans made in 2006 will end there. We need to make sure that homeowners who end up in this sad situation are not further victimized ... by unscrupulous lenders and a greedy Uncle Sam.

Tags: Foreclosure, Housing, inthenews, Real Estate, RealEstate

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Reader Comments (Page 1 of 1)

11-06-2007 @ 12:35PM

JOhn Reed said...

Back in 92 I made a deal with a bank for "future financing" of new properties I wanted to buy and do rehabs on. I did my part, they didn't do theirs, and I lost 9 properties (about half a million dollars) and had to file Bankruptcy. I read your article with interest because I've lived it! For example, the Courts added $1,000 onto each of my foreclosure for "Administrative Services"? I thought I paid Tax's for that! The Lender's Attorney's added $2,500 for each one. Isn't that just a bit high for filing a pre-made, fill in the blanks, piece of paper (foreclosure filing)? And then AFTER the Bankruptcy the Bank continued to report I had mortgage obligations to them on 5 of my properties. I wrote them AND the 3 Credit Agencies over 100 separate times, trying to get them to "update" my Credit report to show these mortgage loans were included in my Bankruptcy, but the Bank would only change the amount of the mortgage's owed and once they claimed I owed them a total of 6 Million dollars (actually more like $150,000) which kept me from getting Credit & Employment for 10 years! I've heard a lot about the Banks don't want your house. Bull....! Do the homework! They get DOUBLE judgments (which they get to add to their "Assets" to borrow money from the Fed with, they buy the house at auction for "no money out of their asset base" (and nowadays aren't transferring the Deeds into their names so they won't have to keep an abandoned house up to community standards) and then get to use the house as an asst to borrow more money from. They make LOT'S MORE MONEY by foreclosing than by continuing financing! They ruined me financially for over 10 years. Now, 11 years later, Finally they have left my Credit Report. Still pissed in Dayton! John

11-08-2007 @ 10:24AM

owclist.com said...

I'll say it again. Don't let the bank take your house, do anything to keep that from happening. It is not the easy way out. Sell it on an owner carry back, lease option or even rent to own contract. A contract with some kind of down payment(to get you current & help you move on). Check out this FREE website for owner carry backs, lease options & rent to owns www.owclist.com You just may have a chance.

11-08-2007 @ 10:08AM