Posted on: 19th Mar, 2009 09:50 am
I bought my home in VA with my brother almost 5 years ago when the real estate market was booming. I think we bit of more than we could chew with it, but on paper we qualified.
It has been a struggle over the years to make the payments and have fallen behind several times. My brother has taken out two loans to get us current. We are now current on the mortgage but don't anticipate being able to stay current for much longer.
I recently got married and have not lived in the home since. I still pay my share of the mortgage. I am expecting my second child later this year and know that continuing to pay for a home that I do not live in is going to be difficult.
On paper, I'm sure that the mortgage company will find that we can "afford" the property based on our incomes. But in reality, with our other expenses/debt, we really can't.
We can't sell it because the real estate market has crashed in our area and foreclosures are on the rise. The property is not in great condition and would need some work (carpet/paint/minor repairs) and we don't have the money for that. Plus, houses are selling for $60-$90K less than what we owe.
We are not trying to just "walk away" or be irresponsible about our obligations, but our lives have changed and we simply do not need or want the house anymore. We can't get rid of it, but can't really afford to keep it.
Would we be a good canidate for a DIL? We don't want to go into foreclosure because we are concerned about the deficiency judgement. A short sale would require us to put money into the home that we don't have. A DIL seems like the best soulution, but I don't know if our circumstances would warrant it. We know that it will affect our credit negatively but we are willing to take that hit just to get out from under it.
Please help!!!
It has been a struggle over the years to make the payments and have fallen behind several times. My brother has taken out two loans to get us current. We are now current on the mortgage but don't anticipate being able to stay current for much longer.
I recently got married and have not lived in the home since. I still pay my share of the mortgage. I am expecting my second child later this year and know that continuing to pay for a home that I do not live in is going to be difficult.
On paper, I'm sure that the mortgage company will find that we can "afford" the property based on our incomes. But in reality, with our other expenses/debt, we really can't.
We can't sell it because the real estate market has crashed in our area and foreclosures are on the rise. The property is not in great condition and would need some work (carpet/paint/minor repairs) and we don't have the money for that. Plus, houses are selling for $60-$90K less than what we owe.
We are not trying to just "walk away" or be irresponsible about our obligations, but our lives have changed and we simply do not need or want the house anymore. We can't get rid of it, but can't really afford to keep it.
Would we be a good canidate for a DIL? We don't want to go into foreclosure because we are concerned about the deficiency judgement. A short sale would require us to put money into the home that we don't have. A DIL seems like the best soulution, but I don't know if our circumstances would warrant it. We know that it will affect our credit negatively but we are willing to take that hit just to get out from under it.
Please help!!!
Hi Susan,
A foreclosure does seem to be good option for you. It will hurt your credit for sure, but would be a little less damaging than a foreclosure. Moreover, as you have mentioned, you do not have to pay the deficient amount as it will be forgiven. You can also avail tax deductions on the forgiven amount under the mortgage forgiveness debt relief act.
A foreclosure does seem to be good option for you. It will hurt your credit for sure, but would be a little less damaging than a foreclosure. Moreover, as you have mentioned, you do not have to pay the deficient amount as it will be forgiven. You can also avail tax deductions on the forgiven amount under the mortgage forgiveness debt relief act.
Do I need to be in default before I can request the DIL?
Hi Susan,
Usually, the lenders do not agree to do a deed in lieu unless you default on the loan. But if you are not sure of your future income or foresee any financial problem that you might have to go through, you can request the lender to start a deed-in-lieu procedure. You can also send them a hardship letter stating what financial crisis you are in and why you need to do a DIL.
Thanks,
Jerry
Usually, the lenders do not agree to do a deed in lieu unless you default on the loan. But if you are not sure of your future income or foresee any financial problem that you might have to go through, you can request the lender to start a deed-in-lieu procedure. You can also send them a hardship letter stating what financial crisis you are in and why you need to do a DIL.
Thanks,
Jerry