Posted on: 02nd Jul, 2010 04:38 pm
I owe 320,000. on my property which has a current value between 100,000 and 120,000. My first is an interest only that becomes principle and interest in 2016 and my second has a balloon payment due in 2021. I requested a loan modification but was denied. I am trying to be proactive as, though I am getting by right now, I will take a pay cut next year and will not be able to sustain these payments. Plus, I feel it is foolish to keep struggling to make the payments just to potentially lose the property in 6 years when the loans adjust. I have been making my payments on time until now (next month I will not be making a payment). I don't know what to do? Financially it seems to make more sense to walk away since I am never going to recoup my loses with this place anyway, but at the same time, I love my home. Any advice?? What are the risks if I do a deed in lieu or short sale - especially since the 1st will only recoup 1/2 of what I owe at best, and the 2nd will get nothing?
hi mtruax,
as you do not have equity in your property, you won't be able to refinance both the loans into one. you've mentioned that the lender has rejected your loan modification. did the lender give you any reason as to why he rejected your request? if not, then you should contact the lender and clarify the reasons. if you wish, you may reapply for the modification once again.
as far as short sale or deed in lieu is concerned, you will lose the property if you go for any of these options. in a short sale, you would be responsible for paying the deficient balance resulting from the sale of the property. as far as deed in lieu of foreclosure is concerned, if both the loans are purchase mortgage, then you won't have to pay the deficient balance. however, if the second loan is not a part of the purchase loan, then you would be liable for paying it off to the lender after the deed in lieu of foreclosure is over.
thanks
as you do not have equity in your property, you won't be able to refinance both the loans into one. you've mentioned that the lender has rejected your loan modification. did the lender give you any reason as to why he rejected your request? if not, then you should contact the lender and clarify the reasons. if you wish, you may reapply for the modification once again.
as far as short sale or deed in lieu is concerned, you will lose the property if you go for any of these options. in a short sale, you would be responsible for paying the deficient balance resulting from the sale of the property. as far as deed in lieu of foreclosure is concerned, if both the loans are purchase mortgage, then you won't have to pay the deficient balance. however, if the second loan is not a part of the purchase loan, then you would be liable for paying it off to the lender after the deed in lieu of foreclosure is over.
thanks
Thanks. Both loans are from original purchase. The response from the 1st was that the could not modify to a payment I could afford. The 2nd responded "we never received your paperwork" when I resent it they said "we received it but lost it." I thought if you short sale the bank would possible forgive the rest of the loan.
I am with a company that deals with "toxic" mortgages (owes more than their house is worth today) which sounds like what you have. Their purpose is to get your mortgage company to reduced your payments to save your home. They do not charge anything unless they can help you. The lawyers will review the paperwork and decide if you have a toxic mortgage, if so, they can help you. You can email me at bernasbusiness at yahoo (dot) com for more information. .
Actually in a "short sale" situation where you cannot afford to pay the balance between the short sale price & the mortgage amount, that amount counts as income for IRS purposes. You owe 320K on a property worth 120K which means that your income would increase by 200K+ for this year in a short sale. And bankruptcy doesn't wipe out tax debt, so that's not really an option either.