I just foreclosed on my condo last month because I could no longer afford the payment on my own, could not sell it, and could not get a decent modification. I had an 80/20 loan with adjustable rates! It took them 14 months to finally take over. I put it up for a short sale anyhow, have you considered that? Give me a call and we can talk about a couple of your options.
Best of luck to you.
I respect how you feel about honoring your contract.
Sometimes things happen which do not allow us to honor our promise.
I am sure you have tried.
I am glad you are going to talk with a real estate attorney.
That is a very wise thing to do even before you talk to the bank.
I want to thank you for re posting as well as many times we wonder if our voices go unheard.
Remember the home is still yours until the foreclosure process is done.
I would not suggest abandoning the house if you can stick around.
Some have done that only to be sued by squatters or trespassers by "accidentally hurting them self on your property. If you do end up not making payments for a time period and I do not advise anything here, I will say that many HOA's will come after you down the road for hoa dues.
I wish you the best
So Cal Homes Realty
I know this is overwhelming for you.
You can pat yourself on the back for at least asking the questions.
Most run to file bankruptcy when that may or may not be the right answer.
You do have options
has distressed situation links and as well U S government links with HUD counselors there to answer your questions for free.
I advise you to seek LEGAL, and CPA, advice. Contacting a real estate attorney and or attorney you trust is the first thing you should do.
Run away of people coming to your door stating they are investors. Many are scams.
A short sale or a foreclosure does have tax ramifications and you should consult your CPA
I wish you the best
So Cal Homes Realty
First fact- a short sale will work more in your favor than a foreclosure. There is a tax event with a short sale but current legislation and/or the current IRS capital gains exclusion will result in you just needing to explain the event, not normally having to pay any taxes. I have some documentation prepared by a CPA that explains this better. In addition, your credit will take much longer to be repaired on a foreclosure. Those in short sale, and if they continued to pay the mortgage on time,can recover in a matter of months after a short sale. Each situation is different depending on the individual circumstances. But expect the worst after a foreclosure...7 years in purgatory.
Second fact- the short sale must be an arms length transaction for the sale ( you can't sell it to anyone you know), or have any benefits from the sale. In most situations, the lender absorbs all costs of the sale, but there are situations where they may ask for concessions from you as well. In other words, a short sale doesn't cost youou a penny, but you also don't make any money.
Third fact- second mortgages are almost always Recourse loans, meaning they are still owed unless they agree to accept less than what is owed. Your financial worksheet will help predict how they might respond to your request on the short sale. In a foreclosure the second is wiped out in terms of being collateralized against the property but they can go for a civil judgement to collect. On a short sale, the first mortgagee normally offers the second mortgagee a small stipend to release their lien so their release is in writing...
Call and meet with a qualified short sale specialist, such as myself or others, and then get on the phone with your lender (once you are prepared). Your questions will be immediately answered for your specific situation. Once you're informed this will be a lot less stressful. I promise!!!
I am sorry for your loss.
Do the responsible thing, call your lender and talk with them. The fact that you are retiring and leaving the state might be cause to justify hardship. Your lender might agree to a short sale, rather than foreclose.
Ask your Realtor for their opinion. If you don't have a Realtor, then interview three, have them analyze your situation, then compare their answers.
You will also need to speak with your CPA or tax advisor because there can be signficant differences in the tax consquences between a short sale and a foreclosure. In a short sale of your primary residence, the Mortgage Debt Relief Act did away with much of the tax consequences. Your agent will seek a full release of lien and request that the debt be considered settled. However, every short sale is different, as is every servicer and every situation.
In a foreclosure, you house is sold at an auction, which typically causes the difference of the total amount you owe and the foreclosure sale price to be much greater than in a short sale. This means you could have a higher potential tax liability. In some cases, the banks might even try to obtain a Deficiency Judgment against you.
The key is making sure you have an agent who knows what s/he is doing and that you seek advice from your tax advisor so that you understand the full impact of whatever you decide to do.
I have included a link to a website that will provide you with more information about short sales and answer some of your questions.