Hi Spacerat,

I am sorry to hear of your situation. As the agents below have mentioned, you are not alone. You should talk to the lender and try to get a loan modification done. Believe me, it is not an easy process but I have heard of some good modifications out there. But be careful with handing over money to loan modification companies since there are some horror stories out there as well. Make sure there is a guarantee of some sort of not just any modification but a satisfactory modification.

You can also do a short sale on your home. It will effect your credit but it is not as bad as a foreclosure. Whatever you do , please do not let it go into foreclosure.

I have been very successful in closing all my short sales. It requires a lot of patience and follow up. It is very challenging and most agents give up. I am currently working on 4 short sales right now. Two of them are my listings and two with buyers. I already have approval on two of them. If I can help, please call me at 510-279-9580

Meena Gujral
Help-U-Sell Achievers Realty
40083 Mission Blvd, Fremont, Ca. 94539
510-279-9580

Hello Spacerat,

You have received a lot of feedback here on your question. First of all, please know that you are not alone. Here in Alameda County 1 in 184 homeowners are in foreclosure status. In Contra-Costa County it is 1 in 121. The unfortunate statistic is that more than 7 out of 10 homeowners go into foreclosure without ever seeking visible intervention!

The first step is to find out what your options are and to consult with specialist. There are three specialist that you may want to consult with, a real estate attorney, a CPA (familiar with the latest real estate tax laws), and a CDPE or Certified Distressed Property Expert.

Just as you would consult with an attorney that specializes in real estate, not a general practicing attorney, you need a real estate professional that specializes in distressed properties, short sales and the other options available to you.

You also may want to attend a Free Foreclosure Prevention Seminar for Homeowners that is being held this next Wednesday evening at the Hilton Pleasanton. You can learn about the different options available and talk to professionals at the seminar.

For more information on the seminar or to register online, you can go to http://www.ForeclosurePreventionResource.com

I hope this helps and I wish you all the best,

Tim Denbo, CDPE
Certified Distressed Property Expert
Realtor, e-PRO http://www.TimDenboHomes.com
925-549-0714
Tim@TimDenboHomes.com

The first thing to look at is the mortgage and notes you signed on the two properties. See if the loans are recourse or non recourse. Then contact the bank an put your cards on the table to see how they will react. The smaller the lender the better with this intial conversation.

Hopefully the bank can structure something through a modification or a forebearance to assist you. Your Options should you be facing Foreclosure
1. Do Nothing- If a homeowner does nothing, they will most likely will loose their home at foreclosure auction. Loan applications generally ask if the applicant has ever been foreclosed. Credit reports also disclose this damaging information. Not the best option.
2. Payoff/Refinance- Completely pay off the entire loan amount plus any default amounts and fees. Typically this is accomplished by refinance of the debt. New debt is at a normally higher interest rate and there may be a prepayment penality because of the recent default. With this option, there should be equity in the home.
3. Reinstatement- Paying the entire default amount plus interest, attorney fees,late fees,taxes, missed payments and fees.
4. Loan Modification- Utilizing the existing mortgage company to capitalize the debt or extend the terms of the lian. This may allow the homeowner to catch up at more affordable level. To qualify, you must prove to the lender you have fixed the problem that caused the late payment.
5. Forebearance- Lender may be able to arrange a repayment plan based on the homewoner’s financial situation. The lender may even be able to provide a tempory payment reduction or suspension of payments. Information will be required from the lender to show that you are able to meet the new payment plan requirements.
6. Parital claim- A loan from the neder for a 2nd loan to include back payments,cost and fees.
7. Deed in Liew of Foreclosure- Give the property back to the bank instead of the bank foreclosing. Banks generally require the home be well maintained, all mortgage payment and taxes must be current. Most loan applications ask if this has ever happened.
8. Bankruptcy- This option can liquidate debt and or allow more time. I can refer you to a qualified bankruptcy attorney.
. Chapter 7 (liquidation) To completely settle personal debt.
. Chapter 13 (Wage earner Plan) Payments are made toward a plan to pay off debt in 3-5 years.
. Chapter 11 (Business Reorganization) A business debt solution
9. Rent the property- when rent will make full payment or you have the ability to make short fall. To do this option, the loan must be brought current.
10 .Sale- If the property has equity (money left over after all loans and monetary encumbrances are paid). The Homeowner may sell home without lender approval through a conventional home sale.
On the other hand a short sale, also known as a pre-foreclosure sale, can be negotiated with your lender by our Real Estate Professional if what is owed is more than the property value

In addition I have attached the fnma underwriting requirements:
https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2008/0816.pdf

Hi,
How stressfull. You have options. Depending on the type of loan you have, the balance, the interest rate, and who your lender is you may not have that hard of a time at all.

Some lenders are very easy to work with, some are much more difficult. Wells Fargo, seems to be easier. We can settle second loans they are easy to work with. Other lenders though take a more knowledgeable interaction. So depending on a few factors you may be able to get modified.

I would try, rent it out and then you will be very happy you did. If you have any questions please feel free to call. Either way you go, loan mod or short sale you should ask very specific quesitions.

Dont just walk away, that is the worst for your credit. and for the neighborhood. Did you use your existing home, the older home and take money out to buy the new home? If you did then you will run into problems. I work for an attorney and we specialize in Loan Modifications as well as Sort Sales. I am also happy to answer questions just to make sure your on the right track.

Best of luck.

JoAnna Jensen

You have time to resolve these challenges, but please seek professional assistance.

PROFESSIONALS WHO CAN HELP
On real estate issues, consult a realtor. On tax issues, consult an accountant. On protecting your assets, a real estate attorney. Don't guess, don't assume, don't ask people who are not qualified to answer.

HARDSHIP
You have an unexpected hardship that you can present to the bank to try to work out a solution to get your loan modified so that your mortgage payments can be lowered (your mortgage term may become longer, but for the time being you need quick relief)

Since you are not able to pay for both homes, and your rental income isn't sufficient to cover the current mortgage and you say you are upside down on the first house, then certainly you should consider selling it as a short sale.

SHORT SALE VS FORECLOSURE
Don't just walk away without attempting a resolution --- by walking away from your first home, are you resigning yourself to a foreclosure? DON'T do it until you have first attempted a short sale. The effect on your credit is devastating, as well as other activities like finding suitable employment, qualifying for loans in the future, even qualifying to rent another home should you surrender your first and second homes to foreclosure.

TALK TO YOUR LENDER
Try to talk to your lender first and outline your hardship:
1) loss of income
2) lower market value of your home
3) higher expenses than current income can cover

MORE HELP
Also check with: http://www.HopeNow.com

It is important to then find a realtor who is experienced in marketing and handling short sales.

Related post: http://activerain.com/blogsview/1247082/dear-homeowner-don-t…

We can, and we will help!

As any informed real estate professional would tell you, I recommend that you contact your tax accountant and attorney for advice before you make any decisions, just so you know what you're up against tax-wise and legally. That said, I can share some "real world" experience about the sequence of events that so many others have been, are going through, or may go through in the future.

First, I suggest that you contact the lender regarding a loan modification. In a perfect world, you wouldn't have to be late on your mortgage to get a loan modification...but the reality is I understand that most lenders will not talk to anyone wanting to modify a loan that is less than 90 days delinquent. In most cases I've heard about recently, loan modifications will lower your interest rate and remove any negative amortization (if applicable) to make the numbers work if it is going to be a rental. Rarely will they reduce the principal balance, but I won't say that it's impossible...I've just never personally heard of it.

NOTE: I strongly recommend you contact the lender yourself and I hope you DO NOT enlist the services of ANY loan modification company. IMO, it's a waste of money and I've heard nothing but bad experiences from people who gave money upfront to these companies to get nothing in return. One couple I know lost money twice to two different loan mod companies without success, then called the lender themselves and got a loan modification done in 2-3 months.

If the lender does not approve a loan modification, or you simply don't want to go that route, you may consider a short sale. Just be aware that the lender also needs to "approve" you for a short sale, so it is vital to have your financials and paperwork ready. Also, be prepared for a long ride should you choose to go this route...I think they call them "short" sales just to be deceiving!

Walking away is what it boils down to for most people who are unsuccessful with a loan modification and/or short sale. Although I don't believe the lender can attach a lien (for your first house) to your new house, this spectrum of questions regarding legal ramifications should be directed at the professionals in that field. Real estate agents are not qualified to offer legal advice.

Best of luck to you,
Leilani

The bank cannot go after your current home if you are current on your mortgage. The collateral for the loan is the house. A lien cannot be placed on your current home for a delinquent mortgage on a different home. You should read my article "Possible Ramifications of a Short Sale" located at http://mikepollak.yourkwagent.com/atj/user/AdditionalGetActi… . This will help clear up your concerns on what may happen with a short sale.

Pre-foreclosure Specialist Certified
Michael Pollak