What will we be responsible for when our FHA loan forecloses?

We have tried like crazy to do a short sale and we have extensions and they will all be up Jan. 31st. We had an investor who didnt like the banks price but was still trying to find a buyer and hasnt. We have a short sale price the bank has ageed to yet still no buyer - we thought about getting a personal loan (10,000) and using cash offered to buyer as incentive the investor said this could be illegal - which makes sense. He also said that theres no real reason to that is. We were under the impression well be responsible for the remaining loan amt minus the auction price (at least 40,000) he said because its FHA wed be responsible for the 2nd morgage (only 15000) but that we would not be sued for the first mortgage. Is this true that in the end after it gets autcioned off that no matter what it auctions for well only have to pay the 15000?

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  • michr
    Lv 7
    1 decade ago
    Best Answer

    if you have an FHA mortgage you have mortgage insurance which protects the banks investment.

    depending on the loss and your personal circumstances the FHA may or may not go after you for the difference.

    you can pay a down payment for a buyer just not if they are also using the FHA to guarantee the loan. if it is bought by someone using conventional mortgage you can assist in the down payment as part of the sale contract.

  • 1 decade ago

    In the end, you will owe somebody the difference between the sale price and the amounts owed to the mortgages. If you default and FHA pays, they do not eat that money. They will come after you for it.

  • 1 decade ago

    If you owe a State or the Government money for a loan, yes, they will make sure that you pay it back, including taking your tax returns.

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