Short Sale

[azjenn]

What is the name of your state? AZ (does that surprise anyone? )

We are looking into a short sale for our home. We bought our home in 2005 for $286,000 and in April of 2006 we re-financed for $309,000 to cover medical bills and loss of pay for medical reasons. We have an 80/20 mortgage...the "80" was left alone in the refinance, the "20" was re-financed and has since been sold at least once to another mortgage company. Our realtor gave us a basic appraisal, based on comps, of $210,000

We are in need of selling our home and moving closer to my husband's job; he currently drives in excess of 40 miles each way to work. We do not have the resources to cover that difference as we currently live paycheck to paycheck with a small savings that would only cover one month's bills.

We have been given many options...foreclosure, bankruptcy, "stick it out" and short sale. The short sale seems too good to be true, especially since President Bush just signed the law "wiping clean" the tax owed on the difference (?).

We are looking for where to turn...any information that can be provided to help us in this decision would be greatly appreciated.

thank you.What is the name of your state?

[FlyingRon]

First are the two loans with the same bank? If not then you're probably NOT going to be able to get them to both agree to a short sale.

Foreclosure won't wipe out the debts, they can still come after you for the deficiency.

Bankruptcy isn't going to help unless you have other substantial unsecured debts to discharge. All it's going to do is put some brakes on the foreclosure process, but if you're not paying your mortgage it's still going to be foreclosed.

Selling the house and making up with the deficiency yourself (been there, done that about twenty years ago) is the best answer. Won't ruin your credit, keeps the banks happy. Otherwise sticking it out is the other option.

A short sale if possible, or a deed in lieu (you have the same issues if the notes are held by different people) are probably the next best.

[HUD-1]

Possible solutions:

1. Rent out the place and try to cover expenses including using tax write-offs.
2. Negotiate with both the first and second lien holders for a short sale. Not easy as they both would take a hit. Get a written promise that they will not pursue a deficiency.
3. Driving 40 miles to work isn't the worst thing in the world. You could stay in the home until market prices catches back up to the debt.

[nextwife]

Originally Posted by HUD-1

3. Driving 40 miles to work isn't the worst thing in the world. You could stay in the home until market prices catches back up to the debt.

I agree. 40 miles is not that big a deal.


If a commute was not desirable, then why did you buy so far from work in the first place?

[azjenn]

Thank you for the advice. Unfortunately, the loans are with two separate banks so we understand the difficulty with getting both to agree to a short sale. And, renting would also be difficult since we are surrounded by 3 houses for rent, not to mention the other ones in our neighborhood. I guess we will give the short sale a shot, doesn't hurt to try, and probably end up waiting it out.

No, 40 miles doesn't seem that far on paper, but it equals 3 hours of driving each day, not to mention the cost of gas and maintenance.

And nextwife...we didn't intentionally buy that far from home...we aren't stupid...my husband did not have this particular job when we bought the house...it was a necessary change as his company was downsizing and he was going to be laid off.

[nextwife]

Originally Posted by azjenn

Thank you for the advice. Unfortunately, the loans are with two separate banks so we understand the difficulty with getting both to agree to a short sale. And, renting would also be difficult since we are surrounded by 3 houses for rent, not to mention the other ones in our neighborhood. I guess we will give the short sale a shot, doesn't hurt to try, and probably end up waiting it out.

No, 40 miles doesn't seem that far on paper, but it equals 3 hours of driving each day, not to mention the cost of gas and maintenance.

And nextwife...we didn't intentionally buy that far from home...we aren't stupid...my husband did not have this particular job when we bought the house...it was a necessary change as his company was downsizing and he was going to be laid off.

Has he looked into finding a comparable job much closer? Even if a bit less money, it might be better than a forcelosure, cut commuting costs and make life easier? How far is
your commute?