I am behind in my first and second mortgage, I am thinking in forclosure, or shortsale or bunkruptcy, help.?
Sunday, 15. August 2010
I owe 2 houses one under my name, in the rental property I am 1 payment behind in the first deed and 5 payments behind on the second deed. I can’t make the payments no more, I am in home loans, and my paycheck has been reduce soo much. I want to keep only my owner occupied property and let go the rental. Balance is 0,K and 0K on second. I been thinking on calling the lenders to give them the house back, some other friends tell me to do a shortsale, and other to file bankruptcy or forclose the property. at this point all I want is not to have ,500 mortgage payment a month. I can’t refinance because there is no equity, and my credit has been ruined due to the late payments, I don’t want to go to a credit consultant because my intentions are not to keep the house. I need some advise before I go to an attorney .
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saberhilt Says:
These homes are in CA, right?
Do you have any equity in your home? I’d suggest you use a HELOC to get your payments up to date.
Once the payments are corrected, re-fi everything into a 40 or 50 yr fixed, this will dramatically drop your monthly payments.
This will buy you time to sell the second home on your terms rather than be forced to sell it to the bank.
If you’re worried about trying to sell it in the market today, try to get a tenant in there to at least cover some of the mortgage payment.
Again, this buys you time.
With that time, three things may happen:
You might get a better or higher paying job that will allow you to keep both properties.
The market will straighten itself out a bit and you’ll be able to handle both properties. (Long term hold for this though)
You can sell the second home on terms much more favorable to you than what you’ll get from the bank.
rlloydevans Says:
If everything would be alright if you got rid of the rental, my first thing to do is to contact the lenders, explain the situation. Tell them that if you can’t sell it you will have to default and see if they are willing to make concessions to any buyer – either by cutting the rate or providing good financing.
It is a big advantage for the 2d lender especially to do so, since they have $220k in a vulnerable position and that would make everything else easier for everybody.
Don’t even feel that you have to get a set commitment from them. If you show you are actively marketing it then come up with a viable buyer, then it is quite likely one of the two lenders will step up and do something to protect their investment.
One point I’d like to make, you say your credit is ruined due to late payments, but you as a MB must know that there is a world of difference between someone who had many missed payments, but worked out of it, against someone who had a foreclosure, bankruptcy, or both! I think this will especially be true in the next few years because we are just at the start of a ferocious correction and foreclosures are only going to increase over the next 24 months.
Leave foreclosure or bankruptcy as the very final option. In fact, although it may become a depressing problem, delay as long as you can. Market the property and see if you can find a viable buyer (even someone willing to buy it as low as $500,000. Wait until one or both lenders start foreclosure. In fact, let them start proceedings but 6 weeks out of a foreclosure sale declare bankruptcy… which will delay the foreclosure proceedings and you can keep working on selling it.
SO my view is your order of preference should be:
Sell the property
Short Sale Property
and only if you can’t do the above then reluctantly consider:
Let it Foreclose
Bankruptcy
I am a long time real estate investor, and due to a divorce I gave up and allowed my properties at the time to be foreclosed on and I ended up bankrupt. And now not a day goes buy that I wish I hadn’t fought may way through it and not given into the depression and feelings of hopelessness of the time.
If you give up, you’ll likely have a real disater. But if you keep working to find a solution it often does, especially as you are an "insider." Let everyone you know in the industry – real estate agents – lawyers – accountants, know that you have a property you are willing to unload. use you connections and you can escape this.
Good luck
akcpropman Says:
Give a thought to lease w/ option or time share effort.
Contact some insurance agencies, the larger companies some times rent homes for their dislocated clients in the event of an emergency. They may be willing to pay an amount in advance that will help you get things straightened around with your mortgages. Doesn’t come easy , but it definitely can be done. Maybe investigate daycares that may be looking for a larger place. just some ideas. need to look outside the box for answer to the questions that all your friends already have the answers to. best friends –sometimes– worst advice givers. good luck !!!
satarnag Says:
I help people in your shoes in Southern California. Your best bet is to do a short sale in your situation. That way you control your loss. Also, most of my clients find that the lender will not accept a deed in lieu of foreclosure without the owner trying to short sale it.
If you’re in Southern California, let me know if you need any help.
Regards