Posted on: 09th Mar, 2009 03:36 pm
Hi Friends....So glad I found this site. I live in Florida, 15 years in this townhouse-Two years ago when it valued at $350,000 I took a loan out for $200,000 to buy a little getaway for $65,000, paid off debt, $40,000 went to pay off existing mortgage, and the balance I put in the bank. During this time the bottom fell right out from under my business (I'm self employed artist) and I've already spent $20,000 from savings to keep up. Several townhomes just like mine are in short sale or foreclosure, and have been on market at $179,000 to 190,000 without a sale. Before things get worse I'd like to just move to the condo which is paid in full and walk away from this mess. It seems that since I owe 200,000 and it's worth nearly that much TODAY...I should act fast before things get worse. I don't want to rent it out because of hassels, hurricane season, it takes 3 months to get any repairs done after a storm if your house has damage....So if I've learned correctly from all my reading...the smart thing to do would be put a FOR SALE sign up for 3 months....not pay the mortgage which I can no longer afford (I have no health insurance and don't want to spend the remaining $20,000 in the bank which is in a CD and the other in an IRA CD). If after that time it doesn't sell I'll ask for a Deed in Lieu. Does that sound right? Many thanks and blessings upon you for your wonderful site.
Hello Evita,
That is definately one option. It's hard as a professional to say what you should or should not do.
On one hand people will say that if you have the means to meet your obligations you are morally bound to do so.
Others will say that you should look out for #1 and do whatever it takes to get by in this horribl economy.
Ultimately you are the one who you look at in the mirror everyday so you have to figure out for yourself what the right course of action is. :)
That is definately one option. It's hard as a professional to say what you should or should not do.
On one hand people will say that if you have the means to meet your obligations you are morally bound to do so.
Others will say that you should look out for #1 and do whatever it takes to get by in this horribl economy.
Ultimately you are the one who you look at in the mirror everyday so you have to figure out for yourself what the right course of action is. :)
Of course you are right, but I didn't mean morally am I doing the right thing.... I meant am I going about the situation correctly for what I want to do-which is keep the things under my control while I'm still able to. In truth, once I go through the last of my savings, I'll flat out have to let them just take it from me through foreclosure....right now it's putting a bandage on a cut, in a few months it'll be a financial bloodletting for me and I won't have a choice. And if a hurricane blows through this season and hits the house again, I won't have any room to move left or right, so I'm trying to keep things glued together as best I can. As for morals...I have top credit score, don't think it doesn't pain me to do this....but the banks got bailed out without any shame, why can't I? I owe exactly what it's worth right now, but next month it may well be worth even less. It's not a moral issue for me, it's financially that I want to do the right thing now while I still can. You're sweet to respond and I hope you have advice about the procedure I'm following to properly head in the direction of asking for a DIL. Thank you again.....
evita,
well in that case it sounds like your planning is reasonable.
you should list it below what you owe and push for a short sale the minute you fall 30 days behind on your payments. a short sale will look much better on your credit then giving back the home. keep pushing for that short sale until the last possible moment.
finally if you can't short sell it and they are going to take it back do the ded in lieu as your last resort.
in your situation it sounds like this is a good plan. i'm sorry to hear it's come to that but i know i talk to hundreds of people every month and so many of them are in similar situations. at least you do have that free and clear property to fall back on.
another plan could be to refinance the free and clear property to get some additional capital to hold you over thorugh this down turn. then you will have some breathing room to find renters and help with your debt burden?
well in that case it sounds like your planning is reasonable.
you should list it below what you owe and push for a short sale the minute you fall 30 days behind on your payments. a short sale will look much better on your credit then giving back the home. keep pushing for that short sale until the last possible moment.
finally if you can't short sell it and they are going to take it back do the ded in lieu as your last resort.
in your situation it sounds like this is a good plan. i'm sorry to hear it's come to that but i know i talk to hundreds of people every month and so many of them are in similar situations. at least you do have that free and clear property to fall back on.
another plan could be to refinance the free and clear property to get some additional capital to hold you over thorugh this down turn. then you will have some breathing room to find renters and help with your debt burden?
From what I understand about it, with a short sale they'd still want money from me for the difference if I sell it for less than I owe...and I don't want that. I read that if it doesn't sell after three months on the market then they'll consider the DIL...Can you tell me aside from the credit score hit, what else is the benefit/downside of short sale vs. DIL? I don't want to rent the place out Chris, this island is a nightmare after a hurricane, you can't get roofers for three months (that's experience with three hurricanes that hit my house talking)...and in the meantime the tenant can refuse to pay rent if things arent' fixed from what I've read. Taking a loan on my little Condo for me is out of the question since it is my safety net and I don't want to risk it. Right now it's safe, but if I take out a loan on it I'm just compounding the problems. Thanks for your replies.....
I completely understand your position on that, just wanted to throw another option out there :)
The benefit of a short sale is that the lender agrees to allow you to sell the property and they take a loss on it. Rather than go through the foreclosure process they allow the "short" sale to happen and you are off the hook for the difference. That is a much better scenario for you than a DIL.
The benefit of a short sale is that the lender agrees to allow you to sell the property and they take a loss on it. Rather than go through the foreclosure process they allow the "short" sale to happen and you are off the hook for the difference. That is a much better scenario for you than a DIL.
To make sure I've got this right, I'll put an ad in the paper that it's for sale, and 30 days after my payment is overdue I start asking for a short sale repeatedly and tell them that I've got it listed at x amount and it hasn't sold, and would they do a short sale.....but what if it takes several months....who would pay the taxes and insurance on it at the end of the year if it doesn't sell? How much time do they allow for a short sale? Many of the places on my street have been in short sale for over a year...wouldn't the DIL be more financially prudent? Thank you again
Hi evita,
If you are not concerned about your credit score, then deed in lieu can be the best option for you. In a deed in lieu, your property will be sold by the lender to recover the debts. The deficient amount resulting from the sale of the property will be forgiven by the lender. Depending upon the state laws, the taxes on the forgiven amount can also be forgiven.
Thanks
If you are not concerned about your credit score, then deed in lieu can be the best option for you. In a deed in lieu, your property will be sold by the lender to recover the debts. The deficient amount resulting from the sale of the property will be forgiven by the lender. Depending upon the state laws, the taxes on the forgiven amount can also be forgiven.
Thanks
That is what I was thinking too...until today I didn't even know a deed in lieu existed! I learned of it by reading posts other people had written to with questions. I will pursue my course of action then...can you please tell me if I can put the house for sale myself or does it have to be through a realtor? Does it make a difference which way it's put up for sale to the Countrywide mortgage people do you think? I wholeheartedly appreciate you and Chris for spending time with me on this. I will sleep well tonight....after many nights of insomnia due to worry of what to do....
Hi evita,
It will be your decision whether you want to list the property in the market yourself or whether you want to take the help of a realtor. However, you will first have to write a hardship letter to the lender informing him about your financial situation. If the lender is convinced, then he will consider your request for a deed in lieu. I hope this will help you.
Thanks
It will be your decision whether you want to list the property in the market yourself or whether you want to take the help of a realtor. However, you will first have to write a hardship letter to the lender informing him about your financial situation. If the lender is convinced, then he will consider your request for a deed in lieu. I hope this will help you.
Thanks
evita, you're going to have to be able to come up with a rationale for the value of the home being insufficient to pay the mortgage in full. generally, this is where a realtor's expertise can be put to good use. now, i realize that the marketplace is pretty crummy all over the globe, and that you ought not to have to "prove" your case, but it's profitable for you to do so (i believe) because it will get your lender to look at your case with more credence than if you simply said "short sale request" without any backup.
whether you use a realtor or not is, of course, your choice. you might want to get a market analysis done right away, though, with a local realtor; and also check with zillow or any of the other sites that offer free value analyses.
a smart lender will look at what you've provided and adjudicate the situation more rapidly. now understand that i'm not saying that every lender is smart - just that a smart lender would act wisely.
whether you use a realtor or not is, of course, your choice. you might want to get a market analysis done right away, though, with a local realtor; and also check with zillow or any of the other sites that offer free value analyses.
a smart lender will look at what you've provided and adjudicate the situation more rapidly. now understand that i'm not saying that every lender is smart - just that a smart lender would act wisely.
I currently owe $197,000 on it. The home across the street from me is identical to mine....it went to foreclosure, sold for $179,000 after several months, and two months later it was sold by the person for $224,000...so even though there are short sales in my neighborhood and have been for ages....they are priced at 190,000...so I think perhaps Countrywide won't be taking much of a loss if any.....BUT....this morning I awoke with the thought that "Hey! What if the house really does sell when I put it on the market"! And I don't have to ask for Deed in Lieu! I have hope in my heart again........I think from all I've read in the past 48 hours-for the situation that I have which is house is worth enough to cover loan, I just can't make payments anymore.... leads me to think that a DIL rather than short sale would be best route for me....if it comes to that...which I hope it doesn't now that I actually believe that the house may sell and I don't have to worry! But I can't pay mortgage this month.....first time in 15 years I'll be late paying anything.....and I can't pay next month either.....that's why I'm panicking....I need to get out from under this. Thank you kindly for your advice, it is much appreciated
That is an EXCELLENT suggestion....no sense in putting things off. I know I should call them and talk to someone before sending the hardship letter, but my stomach goes into knots every time I think of it.....I'm going to have to just bite the bullet and call them today.....I've learned lots of VERY VALUABLE information by reading posts and articles in the last 48 hours....now I have to take that info and see how it applies with my lender and the variables that come up. Thank you again most kindly
I've just read that because I took out the 200,000 loan against my home equity that I wouldn't qualify for Countrywide's Deed in Lieu.....is this true? I owed 40,000 on it when I took out the loan which of course was paid off and then I got the balance of 160,000....do I qualify for DIL still do you think?
hi all....okay maybe i got confused here......i misunderstood the term junior loan which i don't have.....no second mortgage or etc.....only the one loan from countrywide which of course was approved on the basis of the equity in my home. i don't think that's the same thing as a home equity loan that they're referring to as jr. loan....am i correct? thanks all
"they" being countrywide, i gather?
a junior lien is one that sits behind the first lien, and if you have no other lien, then this one is really the first lien. it sounds like they don't know what they're talking about.
a junior lien is one that sits behind the first lien, and if you have no other lien, then this one is really the first lien. it sounds like they don't know what they're talking about.