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My heart goes out to you. I know someone who had a house on the market for 18 months for less than what they owed (and they were relocated out of state). They had one opportunity for a short sale, but the lenders (1st and 2nd mortgage) weren't cooperative. They realized that as long as they were paying their mortgage every month they were not even on the lenders' radar screens as being in trouble.
They felt like their only option was to stop paying. They didn't pay for 2 months and then they mailed the keys to the lenders and said, It's yours.
They figure they are ultimately going to be *so many* families with foreclosure on their credit reports it's not going to mean much anyway.
Here is a personal experience, I had a home in CA. back in 1988, could not make the payments on. The home was financed on a VA loan, I let the house foreclose, There was no reprocution to me after the foreclosure. I ended up buying another home with in 4 years,
We are thinking of foreclosing because the short sale just doesn't seem to be working. Again, we bought a home in SW Florida in 2005 for 159,000. We have had the home on the market since February and started out at 174,000. We are down to 139,000 and still no lookers. Our realtor just keeps telling us to see every two week and if no lookers to drop again. We talked to the 1st lender and they said they might short sale depending on the price. They had their own appraiser in but won't tell us what she said. Our realtor said around 135,00 but it keeps falling. We know we cannot afford to live here anymore and can't keep up the payments. We are both working 2 jobs and have a 12 y/o daughter here. We read in the fine print yesterday that in January 2008 it will go up 300 more dollars a month. We are willing to go back to the midwest and rent for 3-4 years and then try to buy again after we get our credit back on track and not go with an ARM. Right now we are not late on our mortgage but know we cannot physically work each two jobs and maintain our life and also with our daughter. Our marriage is falling apart. We are thinking of calling up the lendors and just walking away. Any help we could get on the reprucussions of this would be greatly appreciated. We are so deparate for help. We are living so frugally and have depleted every bit of our savings. Please advise if you can. A foreclosure doesn't even scare us anymore we are so desparate.
I want to apologize in advance...my thoughts are all over the place with ideas to help you and your agent get your house sold. I'm just throwing things out as they come to me, hopefully you'll be able to make sense of it.
If you're going to let the bank foreclose, you may as well be filing bankruptcy. The damage is exactly the same. At least with a short sale, you can salvage your credit and won't have to deal with the stigma of foreclosure. If you foreclose, it will be difficult to rent or get any kind of credit for a long time; so be prepared to face lots of rejection before finding someone who will work with you, OR be prepared to have to pay double security deposits.
First...since your payments aren't behind, the bank won't consider selling short. You will be expected to have the difference at the settlement table.
Next...how experienced is your agent with short sales? Have you authorized your agent to discuss your mortgage information with your lender(s)? If so, he/she needs to be communicating on your behalf with your lenders and he/she needs to do it OFTEN. Your agent will have to work his/her way up to speaking with the Loss Mitigation specialist that will handle your file. The specialist will be able to help your agent get an idea of where to price the house to sell it. Typically the bank will take 89-90% of the appraised value. Your agent should be able to get the appraised value from the loss mitigation specialist.
As ridiculous as this sounds, your agent needs to be sympathetic toward the bank and he/she needs to do a very good job of helping them understand your position. He/she needs to find a way to build rapport with the key players, and keep your file fresh in their minds. With the short sales I work, I'm on the phone with lenders 5 or 6 times per day until we settle. I don't care that sometimes I have to sit on hold for 45 minutes just to get one minute of the loss mitigation specialists time. When I have that specialist on the phone, I am super nice and empathetic toward him/her. Your agent should be equally as nice to the service reps who answer the phone...I've been able to get email addresses and direct numbers (not toll free where you sit in a queue forever...a direct line) by making nice with the service reps. When your agent gets through to the specialist, he/she shoudl do everything possible to make sure they remember him/her. Those folks have tough jobs and they usually have people yelling at them all the time. By using honey instead of vinegar, I have been able to get them to pull my clients file and put it ahead of others. I go above and beyond what's requested in a short sale packet. I provide a thorough explanation of EVERYTHING so that no one has to call me with questions. They are ecstatic to have files that don't require much effort on their part. I'm working on a short sale now that was supposed to go to foreclosure almost a month ago. The bank is giving me time to get the kinks in the deal because I've done most of the work for them. It all sounds excessive, but it works.
If you end up selling short, the bank will do one of the following: put you on a plan to repay the difference, 1099 you for the amount that's short, or chalk up the loss and let you walk away. More than likely you'll be 1099'd...which means the shortage the bank took will be reported as income to you (even though you really didn't get anything) and you'll be taxed on it the following tax year. Check with your tax advisor to discuss how that will affect you.
Last edited by Tish Thompson; 08-10-2007 at 10:45 PM..
Reason: clarification
I have a question for you and it might be an alternative? Does your mortgage include escrows? If so, see if your lender will do a streamlined refinance. This is a refinance of the same mortgage with the same lender but with different terms. To say a 30 year fixed and no escrows included. It usualy is baised on your past payments and no appraisal needed, it is on the amount you still owe. Do either you or your spouse get commissions or bonuses with your job? You could use that to pay the taxes and insurance if they come due before you sell. This way you might be able to lower your monthly payments and have a fixed rate during the time your house is on the market. Lenders usually do this at no or very low fees. They want to work with you to avoid foreclosure or short sales, especially in this particular market time. Just a thought.
The other side is are you sure your house is being as marketed as it could be? Is there anything you can do to your house to make it more marketable at the price it is now? Have you looked into the real reason as to why no one is looking at your house? Just some thoughts. I do feel for you and wish you and your family all the best. Do what ever you can to keep the family together and happy. Money isn't everything, family and love is.
I feel very bad about your situation. I replied to your other post before I read this one about looking at a short sale. I briefly managed a Consumer Affairs dept for a large bank where I dealt with nothing but homeowners in distress and in many cases I negotiated payment arrangements that created a win/win for both sides. The job was brief - too empathetic for what the homeowners were going through as I found many of them really didn't understand the loan they got so I quickly changed careers and spend my time on the side educating young people about managing finances.
Since you are not late on your loan payments you're in a slightly precarious position because your lender isn't feeling the distress that you are feeling. It's a strange system but they will probably be more responsive when you're 60-90 days late because that places them in the mode to begin foreclosure proceedings which they don't want to do. Of course, I'm not advocating that you be late on your loan. PM me and I can suggest some other options for you.
The other thing you need to investigate is why your home is not selling. I sold my home at list price in 3 weeks while others in my neighborhood with similar layouts and sqft are still sitting on the market - some for almost 6 months at the same price or lower than my home. The difference between my home sale and their home not selling is often in the presentation. When I checked out some of these homes with my realtor, we saw unkempt homes, homes that smelled of pets or other strong odors, very specialized tastes in wall colors and decorations, no landscaping or weeds everywhere. All of these things served as distractions and I barely recognized some of these homes as being from the same builder and having the same layout as my own. If you have not done so, have your realtor hold an open house for realtors only and get feedback from them. You may find out why your home isn't selling as quickly. Homes are selling slower in almost all markets but the typical "in good shape" home is selling within 30-75 days in most markets.
Make sure you talk to the Loss Mitigation Department at your lender, if you have a 1st and 2nd sometimes the 1st will settle but the 2nd lenders have been not so forgiving. In most instances the 1st mtg holder offers the 2nd $1,000. I would get a preapproved short sale amount and the paperwork from them both the 1st and 2nd and sell it and not have to make any more payments. With a Short sale there can be tax consequenses as the IRS may see the difference in your sale price and what you owed as Income and the lenders will report this to the IRS.
how you get into a 1750 monthly payment for a home of $135k?
with 7% Interest your Interest would be 788$ /month with tax + insurance + pmi + principle...i dont know how you get into a 1800 month..that's just nut! look into refinane..unless your credit is so bad..to start off
Packerman, what city is your home in? Have you listed your home on the CD classifieds yet? If not, I'd suggest doing so immediately or at least put on the link for the MLS listing. There are a lot of people who look through the CD classifieds for houses in Florida and yours sounds reasonably priced. People here are looking for second homes and vacation homes. Post the particulars and some pictures for the people who are not in Florida, but could be potential buyers.
In some way, the banks / mortgage holders must be making some big bucks with so many people going into foreclosure because of higher rates going into effect on ARM loans. IF the banking / mortgage industry TRULY wanted to avert a crisis, the obvious solution to the crisis would be to simply keep the lower rate in effect until the crisis blows over.
blessings....Franco
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We are thinking of foreclosing because the short sale just doesn't seem to be working. Again, we bought a home in SW Florida in 2005 for 159,000. We have had the home on the market since February and started out at 174,000. We are down to 139,000 and still no lookers. Our realtor just keeps telling us to see every two week and if no lookers to drop again. We talked to the 1st lender and they said they might short sale depending on the price. They had their own appraiser in but won't tell us what she said. Our realtor said around 135,00 but it keeps falling. We know we cannot afford to live here anymore and can't keep up the payments. We are both working 2 jobs and have a 12 y/o daughter here. We read in the fine print yesterday that in January 2008 it will go up 300 more dollars a month. We are willing to go back to the midwest and rent for 3-4 years and then try to buy again after we get our credit back on track and not go with an ARM. Right now we are not late on our mortgage but know we cannot physically work each two jobs and maintain our life and also with our daughter. Our marriage is falling apart. We are thinking of calling up the lendors and just walking away. Any help we could get on the reprucussions of this would be greatly appreciated. We are so deparate for help. We are living so frugally and have depleted every bit of our savings. Please advise if you can. A foreclosure doesn't even scare us anymore we are so desparate.
Begging the question
