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I have that exact question. I've read horror stories online of all the money being gradually taken back from the government via income taxes. My house is currently being marketed as a short-sale with my loan being direct from USDA Rural Development. I'm curious if someone has been through their "Debt Settlement" process afterwards to shed some light on it.
I have the USDA Direct Loan as well. They gave me the feedback when I talked to the regional office that I had to come with an appraisal or an offer. When I asked what the appraisal would accomplish, the person I was talking to wasn't helpful at all. It seemed to me that coming with an offer was the better way.
Have you completed a sale yet? or put your home on the market? I am at the end process of a short sale with the same kind of USDA Direct loan and they will not forgive the deficit!!! The Mortgage Forgiveness Debt releif act is to prevent being taxed on what is forgiven but it does not require that a lender forgive the loan amount due after a short sale. I have heard that it depends from state to state whether or not they will forgive the deficit on a short sale, but now we are facing bankruptcy despite keeping our loan current and going through the process of short sale.
I have sold the house on a short-sale and have filled out the requisite Debt Settlement packet. It took a little over 3 months for the sale to be credited to my account. Now we are waiting for the results from the Debt Settlement packet. I did talk to someone earlier who had gone through the process and will be making a monthly payment for the next 5 years.
TUES March 4th 2014: I have a mortgage through the USDA RD DIRECT LOAN program. Is there any new information on short-selling an underwater home in this specific circumstance? The HARP refinance program is so restrictive that it is not a viable alternative for me. Any updates would be deeply appreciated.
I bought my home through the USDA Rural Development program. I am now trying to sell it, it has sat on the market for almost 6 months, I owe $160,000 and it seems every other house in my block is going for a foreclosure or short sale, driving the worth of my home down. I'm just wondering if anyone out there has ever sold their USDA financed home as a short sale and what the process was like, and was the "short" amount fully forgiven? In general on short sales is the "short" difference amount fully forgiven?
I would suggest hiring a realtor. They are trained to work with you on getting your house sold as a short sale. What state are you located?
I am in a similar situation as you guys have described. Direct USDA loan on a home that is worth 50% less than what I owe. The house is too small and my kids need an additional room. I went back to work and my house payment doubled. Now I'm trying to get out of my house. Seems there's no way out I can't even rent this house out to someone cuz it states in my contract that results in default. These loans are the worst!! Stay away from usda.
Would love an update from everyone on where their short sales / foreclosures with USDA are now. We are renting a short sale home that we put an offer on. We have submitted an offer, the seller accepted and it's been sent to Chase bank for approval. That was in early Nov 2014. It's now March 1 2015 and we JUST found out that this is a USDA Rural Development loan home. We didn't know that. I guess it's just been submitted to USDA for approval.
Does anyone know how long the USDA short sale approval takes and what their criteria for approving a short sale are?
I am in the debt settlement process.
i short saled my home....u will owe the usda....the deficit PLUS realtor commission PLUS attorney fees And they make You pay all closing costs..
my $21,000 deficit turned into $44,000
I bought my home for $175,000....right before the market crashed
5 years later, Its worth $139,000
Everyone told me to short sale it because you will owe NOTHING because the banks dont make you pay it back.
Well guess what happens when you short sale? Sure you get the full amount you ask for, what its appraised for ($139,000). But then your realtor fees (because realtors KNOW your mortgage company HAS to pay their fees because the seller doesnt have it)...you end up paying all closing costs, the attorney fees. YOu are assigned EVERYTHING.
so my $22,000 deficit became $44,000.
Not only that...they dont contact you...so they just ASSIGNED me a $1,200 payment and I only found this out because I ran my credit.
Now I applied for debt settlement and I am SO MAD because this is so unfair. I paid my payments ON TIME for 5 years and the only reason I sold Short sale was because EVERYONE said you will owe ZERO...lies!
And by the way, if anyone has settled a debt with the USDA, let me know what percentage they settled for.
I feel I should pay ZERO dollars for NO years.
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Where are you at in the process?
I can't even rent this house out to someone cuz it states in my contract that results in default. These loans are the worst!! Stay away from usda.
