Help!! Deed in lieu, short sale or foreclosure?

[moomoo72]

What is the name of your state (only U.S. law)? IDAHO

Hello to anybody that can help us!

We are in the same boat as many others are and can no longer afford our home that we bought 3 years ago (with a higher income).

We bought our home for $272,000 and we owe (with all fees) $218,000. Market Value is maybe $195,000.

We are not yet late on any payments, but this month is absolutely the last month we can pay our mortgage. We have exhausted ALL available funds (all bank accounts, credit cards, kids accounts, retirement fund and borrowing from family).

We've been talking with our bank (BofA) for the last few months to go over options (I tried this ahead of time as to not just slam them with another default). We can't refinance due to value vs. what is owed, we don't qualify for any modifications as we don't have a Freddie Mac or Fannie Mae loan, and we talked to them about either a Short Sale or Deed in Lieu of Foreclosure.

We've been told that since our credit is good and we are not yet late on our payments, they will want a "cash contribution" to cover the deficiency with either the Deed in Lieu or the Short Sale.

DUH! If we had $ to come up with for a "contribution", wouldn't we be able to pay our bills?

We feel like we are being discriminated against just because we've done everything right all of our lives, but the economy has hit us the same as people who have screwed off all of their lives, yet continue to qualify for all types of government help or loan modifications.

As of today, we can not pay our mortgage any longer. Our home has been on the market for almost 6 months with not even 1 look. It's on the higher end of market value, but none the less, still within market value. We have just decreased the price by $20,000. It's not enough to cover the amount owed, so IF someone actually puts an offer on the house, it will be short.

Again, since our credit is good, they want a "cash contribution" if we go into short sale, but if we don't want to damage our credit and just do a regular sale, we'd still have to come up with the difference of what we'd be offered.

What's the best way to go?

Can we just throw the keys back at them and tell them they now have the collateral for that loan and call it good? Would they consider that a foreclosure?

We want to minimize the damage to our credit, but can't stay in our home.

Thankfully, we have a rental secured starting in the next month or two, but what do we do about our current home?

How can we buy a house in the next couple of years if we walk away from our current home?

Someone with knowledge on this......PLEASE HELP!!!!!

Thanks so much!

[nextwife]

What has changed in YOUR ability to pay (not in the value of the property)? If you want to retain the ability to buy, you should try to work with your lender. Will they agree to let you carry a note at a very manageable interest rate for a deficiency contribution?

[moomoo72]

A significant decrease in income. We bring home $2700 and our mortgage is almost $1700. We also have 2 rentals (we cannot sell or re-fi due to debt/value ratio) that we have to pay the difference of almost $200 to cover those mortgages. Basically, we have $1900 in mortgage on $2700 bring home.

Are you saying we could carry a note on the difference? If so, is that still considered any type of negative remark on our credit, or is it still considered paid in full?

We've been trying to work with our lender for that last 4 months with not much luck. Like I said in my original post, we're not yet late, and we have good credit, so they want the world from us.