Financing in Benzonia>Question Details

Martin1981, Home Seller in Benzonia, MI

I have a home and have a balloon mortgage that is up in June of 2010, due to the housing value market decreasing the amount owed on my home is about

Asked by Martin1981, Benzonia, MI Sun Feb 7, 2010

30,000. more then what its worth today. The bank that I have banked at says to just sign the deed back to them and it won't look so bad on my credit. Now I don't undrstand how it could look any better than foreclosure? I also have a poor credit score is there any hope out there for me or should I just file bankrupty?

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DO NOT FILE BANKRUPTCY! It's not going to look good if you have bad credit, a foreclosure (bk doesn't always protect you) and a bankruptcy. I agree with Tony. Call the bank and negotiate with them. Let them know NOW that your credit's in the tanker and you can't refinance. Tell them that you didn't understand the implications of the balloon payment (even if you did). Another option, if you have an FHA loan, someone may assume your loan under certain conditions. Call the department of HUD and tell them you are having difficulty getting out of the balloon. Find out what "bad" credit means. You can get a loan with scores down to 580 without an appraisal (depending on the loan size). DON'T sign the papers back with deed in lieu of foreclosure. That's some idiot at the bank that doesn't want to take the time to help you. Go up the chain of command and find someone who cares about not losing yet another house to foreclosure. Good luck!
0 votes Thank Flag Link Wed Feb 10, 2010
Hi Martin
You didn't mention whether you can afford the payments and you are making them currently. What I have been seeing with regard to balloon mortgages is that so long as you've been making the payments most lenders are willing to modify the loans into a fixed rate. It makes sense from the banks perspective because they don't want to take on any more foreclosures than is absolutely necessary.

While it's true that a deed in lieu of foreclosure will not affect your credit as much as letting it go into foreclosure, be advised that it will negatively reflect on your credit scores and it will prevent you from getting another mortgage for at least 3 years.

With that being said, before filing for bankruptcy or letting the home foreclose you should speak with an attorney who will be more capable of addressing your concerns.
0 votes Thank Flag Link Mon Feb 8, 2010
If you are unable to gain any headway with the lender with a loan modification, I would consider contacting an attorney, or the bank and look into the possibility of a short sale. The amount of homes going into foreclosure in Benzie county is one of the highest in Northern Michigan. Possibly try a local bank or credit union as well, to see if they can provide more help than a national bank.

This is a difficult situation, and you are not alone in this circumstance. Best of luck with moving forward.
0 votes Thank Flag Link Mon Feb 8, 2010
Hi Martin,

You may not need to file a bk if your lender is willing to accept a deed in lieu of foreclosure. If you have a bunch of credit card debt and your lender wants to go after you for a deficiency judgment then perhaps a bk is an option.
You have to ask yourself some questions?
Do you want the house?
can you afford the payment?
If your credit is bad a refinance is not an option but perhaps a loan modification is?
Is it better to deed the house back to the lender and buy something cheaper in a few years?

How is your lender going to foreclosure on you?
Do you have a recourse loan or a non-recourse loan?

In any case, Good luck!
0 votes Thank Flag Link Mon Feb 8, 2010
Have you tried a loan modification--if not do try--have you considered a short sale--if not it's another available option--you may also wish to consult with an attorney specializing in real estate--most professionals do offer a free consultation--inform yourself and make an educated decision--what is best for you.
0 votes Thank Flag Link Sun Feb 7, 2010
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