Carol, Other/Just Looking in Rancho Cordova, CA

I'm retiring and leaving the state. My condo is underwater and I am currently facing foreclosure. I'm not interested in keeping the condo

Asked by Carol, Rancho Cordova, CA Fri Jan 29, 2010

since I am retiring, cannot afford the payments, and cannot sell it. The problem is a second mortgage for $50K. It was used to help purchase the condo. What happens to that once foreclosure happens and my wages are gone?

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Answers

12
I was just looking through old post and I noticed yours. If you were not able to refinance at the time of the post, I can certainly help you out now. You can call me at 408-352-5147 or email me at AGreer@themortgageoutlet.com. You can check us out at http://www.TheMortgageOutlet.com. I will look at your situation and present you with some options.

Alex Greer
NMLS #1056079
0 votes Thank Flag Link Thu Aug 15, 2013
Hi Carol,
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.
0 votes Thank Flag Link Wed May 19, 2010
I know that is a very hard place to be right now. It sounds like you are taking the right steps and I wish you the best.
James
0 votes Thank Flag Link Sat Jan 30, 2010
Hi Carol,

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
Harold Sharpe
So Cal Homes Realty
http://southern-california-home.com/
0 votes Thank Flag Link Sat Jan 30, 2010
From Carol - Rancho Cordova. Thanks to all of you for your informative answers. I'll get in touch with a real estate lawyer right away. I have talked with a CPA friend of mine. I have to admit that I have not talked with the lender lately. I tried for 2 years to sell it with no offers and finally I realized that this was going to become a big problem for me. Their debt collectors call every day but I have not been ready to discuss it with them. I tried to talk with the lenders before the house sunk to its current level, but they were unwilling to refinance or help me in any way. The only answer I got from them was "no" or "you don't qualify". When I asked why I didn't qualify, they told me my payments were current. It was so frustrating since I was willing to do whatever I could to sell it. This is not easy - the worst part is the feeling I have about not honoring a contract I made for this home, but I feel boxed in. Other condos in my complex are selling for as little as 1/2 of what I paid, so I know that I can't wait for the value to return and with no job, the payments will be out of reach for me. I had planned to sell it and use whatever equity it had as part of my retirement funds and that is also now gone. Again - thanks for the good advice.
0 votes Thank Flag Link Sat Jan 30, 2010
Hi Carol,
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
http://southern-california-home.com/
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.
http://www.southern-california-home.com/nod_avoidthescams.html
A short sale or a foreclosure does have tax ramifications and you should consult your CPA

I wish you the best
Harold Sharpe
So Cal Homes Realty
http://southern-california-home.com/
0 votes Thank Flag Link Sat Jan 30, 2010
Carol, the answer lies with your lender but I suggest you be prepared when you call them. They will ask you a series of specific questions but the main 'gate' that they're trying to determine is if you have a hardship. The second determination for them is whether your financial situation warrants them receiving any proceeds back from you when you shortsale the property.

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!!!
Web Reference: http://www.suearcher.com
0 votes Thank Flag Link Fri Jan 29, 2010
Carol, as long as the second loan was used to purchase the condo it is considered non-recourse money. That means that they cant come after you once the property is gone either through foreclosure or short sale. Your also going to want to talk with an account to discuss the tax ramifications of letting the property go as well as a realtor to discuss a short sale.

I wish you the best of luck. Call me if you have any more questions.
James
916-521-1214
0 votes Thank Flag Link Fri Jan 29, 2010
Carol
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.
0 votes Thank Flag Link Fri Jan 29, 2010
Keith Sorem, Real Estate Pro in Glendale, CA
MVP'08
Contact
Definitely speak with an agent on help with deciding wether to let it go or do a short sale. Letting it go may have some consequences your not aware of.
Web Reference: http://www.lennyfrolov.com
0 votes Thank Flag Link Fri Jan 29, 2010
Carol.....I recommend you contact an agent to help you with a short sale vs. letting the home go to foreclosure. A short sale means getting the bank to accept less than what is owed as payment in full.

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.
0 votes Thank Flag Link Fri Jan 29, 2010
Give me a call and maybe I can help you.

Keisha Mathews
The Short Sale Lady
916-266-4835
0 votes Thank Flag Link Fri Jan 29, 2010
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