Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
Eli Givoni, Director
Short Sale Department, LLC
Serving all 50 states
In my opinion your condo is a bad asset. If keeping your credit good for now is important then you should keep making the payments. It sounds like your condo will need much more time to recoup its value than your credit will need to repair itself. You owe nearly three times what the condo is currently worth. A normal housing market will increase at around 3-5% annually. You do the math! At some point it has to be a business decision. Your future financial picture my look a bit brighter with your home not in it.
You have a hardship only if the bank finds you to be insolvent. If your able to make all your obligations with ease you will most likely be denied on hardship. The bank looks at all your obligations including child care, food, cell phone, private schools, entertainment, etc. You'd be surprised what they find to be a hardship.
short sales do damage your credit. Usually you'll have to stop making your payment. Your credit score will drop an average of 30 points every month you do not pay. You also cannot buy a home for two years.
There is good news too. Many of my clients have reported a speedy credit recovery. Once the two year ban from purchasing a home was lifted many were able to buy another home immediately. All situations are unique. I found this news to be good and worth sharing.
Your first loan should write off with minimal issues. Your second (if it was purchase money only) should write off and release you from liability with 10-20% cash at closing. Since this is your primary home you should have no tax implications.
Now for the disclaimer I need to make. All this information is based on my experience only. I am not an attorney or an accountant. I recommend you speak to both. If you'd like to speak with an attorney I'd be happy to refer one to you. It will be the best $325 you've spent. I have sat in on over 50 attorney/client consultations. It's likely they'll tell you to try the short sale route if you are having trouble making ends meet. If not it may still make since to get rid of that asset.
Speak with a lawyer. NOT A BANKRUPTCY ATTORNEY. They'll recommend you just bankrupt. (that is how they make there money!)
I'm not a great writer, sorry for the terrible grammar. :-)
The answers, below, are all good; but I'd like to add one more thought. You mention that you are current on your payments, but it doesn't make sence to continue paying because the house is worth so little. I've been a full-time Realtor since 1973, and even the 80's recession was not as bad as this! Prices came back then, and continued to increase year-after-year. Prices have never gone back to those levels! We will come back this time, as well. Perhaps quicker than some people think!
The HOA obligation goes with the property, and your investment is the monthly fee. Eventually, if/when you sell the home, the remaining balance will pass along to the next owner. These modifications that do get approved (few and far between) are something to put out of your mind, as "unatainable". So technically, you may have a 'zero" equity, for now.
As long as you have the income to keep up the payments, then it would be good to put it out of your mind for a year, and re-evaluate the situation. You are one of the more fortunate in this recession!
Jean Bradford, ABR,GRI,CRB,CRS
John L. Scott RE
Silverdale, Wa 98383
First, let me say I'm sorry about your circumstances. Have you tried taking your case directly to the credit union's Mitigation Department if there is such a thing and bypass your loan officer. Call their customer service line to get a direct phone number. If they can't/won't help you, then you might consider a short-sale if you need to get out. It sounds like your increased payments due to the special assessment may help you prove a 'Hardship' situation that is required by most lenders. But be forewarned that a short-sale while helping to avoid foreclosure may still leave you with the debt of the 2nd and/or the special assessment. This is a complicated path so do consult a real estate lawyer who specializes in these matters.
These are our Approximate Current Loan Balance:
184,139.57 (1'st mortgage - 30 year fixed @ 6.50%)
35,850.00 (2'nd Mortgage - 30 year fixed @ 7.625%)
39,000 (Special Assesment - 15 year fixed @ 7.875%)
Value when we purchased in May 2007 = $240,000
Current Annual taxes = $1,645.00
The main issue we have is that even though our income has not dropped, due to the special assesment, our payments have gone way up per month. In addition to that, there have been 3 people in our complex who have walked away from their homes and their foreclosures/short sales have negatively impacted our home value.
The same house that we bought for $240,000 now sold for $110,000 (It is listed in Zillow for $170,000) The issue with us is the drop in house value in addition to the new payments of special assesment, not a drop in income. Can we still be helped? and how can we make the case for the same?