Foreclosure in Littleton>Question Details

Helpme, Other/Just Looking in Littleton, CO

I owe more than my property is worth, should I intentionally foreclose on my property?

Asked by Helpme, Littleton, CO Wed Dec 2, 2009

I have a two bedroom townhome in the Dakota Station condos for 146,000 back in 2005 when the market was high. I owe 136,000 now. I have two mortgages one in 905.00 a month, the other is 294.00 a month. My HOA is 125 monthly so I pay about 1,324 towards my housing payments. I currently rent an apartment close to work and have renters in my condo that pay $950 in rent monthly. The going rate for rent in that community is about $850-950 monthly. I lose about $374 every month. Should I intentionally foreclose since I am losing out each month? I do not think I can get what I owe on it if I sell it.

I have wanted to refinance or modify my existing loans but have been denied. The first loan is with Indymac at 7.5% and the second loan is with CitiMortgage at 9.75%. I have decient credit at 729 and do not want to ruin my score but see no other option as I just had a baby and my spouse in unemployed. Any ideas?

Help the community by answering this question:


Recovery options will depend on your local state foreclosure statutes as to whether you have pre and post redemption rights and whether you have a judicial (court) or non-judicial (power of sale clause in the contract).

Funny thing about attorneys is they mysteriously charge by the hour and it gets expensive real quick. This property you have is a given that it is underwater in value. Having good credit isn't what it used to be with the new credit card guidelines. Almost all credit card companies are jacking rates to 26.99 percent ahead of the new law going into effect where they cannot charge excessive fees and penalties anymore. So people with 700,800 scores are just closing out the credit card accounts and paying cash or using bank check cards.

If you don't want this property see if you can purchase another property that is a steal right now. Then once you close on it you can let the other one go. You would need to title the new property out of your name into a corp or llc so they could not attach the asset later if they came after you for the other defaulted property.

The first thing an attorney will do is run a search for other properties held in your name to see if you are worth going after. First mortgages mainly write down any loss as a tax write-off. Seconds are the real bears that come after you. They will usually sell to a asset collection companies for say 40 cents on the dollar and write off the rest.

After the foreclosure the collection company will hound you and then they will fill to get a judgement against you. Then they will file an action to garnish your wages or take withdrawals from your bank account. They can only take certain percentages by federal law,

What can you do to stop them? File chapter 7 bankruptcy and blow everything out.
You do not want a chapter 13 bankruptcy. Almost everyone fails sometime during the 3 to 5 year repayment plan and your credit is frozen in the crapper the whole time. Usually if you let the property foreclose you wait until you see if they will come after you or not then file the ch 7 BK. If you file too soon you might not can add the debt to the plan later on and will be stuck.

You could move back into the property as stated and do a loan mod but it will be denied if you make too much income. If the servicer can't show a hardship from the owner they can get sued by the investor on wall street who owns the loan for taking a loss without reason. You could just modify the first loan and tell the second to take a walk. The second will not foreclose as they will be throwing good money after bad having to buy out the first. I know owners who haven't paid a second in 3 years.

Remember that ETHICS is NOT the law. ETHICS is an opinion of what people feel is right or wrong and varies person to person. Stay focused instead on the law and your legal options.

This is not legal advice and I have just scratched the surface of answering your question but you need someone in your area to sit down with and go over your specific situation in detail. Your portfolio will also impact other properties based on if you have recourse or non-recourse loans.
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1 vote Thank Flag Link Tue Dec 8, 2009
I like Dan's answer. Effectively, you're buying the property for $374 a month.

Brian is correct that you should consult a lawyer and an accountant before doing something that could lead to a foreclosure. (I disagree with him, though, on whether Realtors can offer advice on what to do. Of course we can. We just can't offer competent legal or accounting advice, and I certainly am not claiming to.)

And as is pointed out below, you're not going to foreclose on your property. Your lenders would foreclose on you. It's an important difference.

Other than that--and maybe I'm just a little bit cranky this evening: Live up to your responsibilities. You bought the townhouse knowing full well what it'd cost and what the payments would be. You don't explain the circumstances that led you to rent it, or whether it was your intention all along that it be a rental. Nevertheless, no one guaranteed you that the value would go up. And I doubt that anyone guaranteed you that you'd be able to rent it (probably with 100% financing) for a positive cash flow. You bought, and when you bought you promised the lenders that you'd pay back the amount you willingly borrowed.

Now that the value has gone down, you want to walk away. Tell me something: If you buy stock from a stockbroker and the value goes down, do you demand that the broker make up your loss? No, I didn't think so. If you go to Las Vegas and lose money on the slots, do you demand that the casino make up your loss? No, I didn't think so. If you buy an antique and find out a few years later that its value has declined, do you demand that the antique store make up the difference? No, I didn't think so.

So tell me: You bought some real estate. It declined in value. Now you're asking your lenders to make up the loss by absorbing the decline in value. Where's the sense in that?

Turn the picture around. Suppose the value of the townhouse went up. How much of that rise in value would you be willing to share with your lenders? Hey, you want them to share your loss. Would you have been willing to share your profit? Well? I didn't think so.

OK. You want a solution? Here's one. Move out of your rental and back into your townhouse. If you're paying $374 or more a month for your own rental, you'll save money by doing so. Maybe your townhouse isn't as close to your work as your rental. That's life. Everyone makes tradeoffs, often in the price vs. location area. Houses near where I live in would cost $200,000 more if they were 15 miles closer to Washington, D.C. And they'd cost $200,000 less if they were 15 miles farther away from Washington.

Again, consult with a lawyer and an accountant before taking any major action. But the issues involved here go beyond that, involving factors ranging from personal responsibility to common sense. There are solutions to your situation if you look closely enough.
5 votes Thank Flag Link Thu Dec 3, 2009
Don Tepper, Real Estate Pro in Burke, VA
look at it from a different perspective. You are buying that place for ONLY $374 a month. Once it is paid for that should be a good deal for you.

Did you ask your current actual lender about the refinance, or did you only ask a different lender? You may find if you talk to your current lender and explain your circumstances they would agree to lower rates so you could keep it. Try several lenders before you give up.
3 votes Thank Flag Link Thu Dec 3, 2009
Ouch investment property that's why you do not qualify for help. You do not want to go into foreclosure, I deal with people that have gone through foreclosure every day and trying to get them back into the game is very difficult, your credit will be destroyed and you will not be eligible for a mortgage for 5 to 7 years. You might want to try a short sale it will not affect your credit as bad and I wouldn't be surprised if CitiMortgage has suggested it they likes those, Indymac who owns them now, the FDIC took them over didn't they. Look at the maturity periods below and think twice before you act you may want to suck it up for a while the market is starting to come back.

Maturity periods after foreclosure:
* Buying After a Foreclosure
The waiting period is 5 years up to 7 years.

* Buying After a Foreclosure With Extenuating Circumstances
The waiting period is 3 years up to 7 years.

* Buying After After a Deed-in-Lieu of Foreclosure
The waiting period is 4 years up to 7 years.

* Buying After a Deed-in-Lieu of Foreclosure With Extenuating Circumstances
The waiting period is 2 years up to 7 years.

* Buying After a Short Sale
The waiting period is 2 years. However, if a seller does not have a 60-day late pay, that seller may immediately buy another home. It's a reason to stay current on your payments while the home is on the market as a short sale.

In addition to the waiting period, some loans require 10% down and a minimum FICO score. The home you purchase must be your principal place of residence, not a rental nor a vacation home
2 votes Thank Flag Link Thu Dec 3, 2009
I see some good advice, but some BAD information in the answer to this question.

First of all, you can modify an investment propertry loan, but the lenders and servicers are so incompetent, they can't seem to get the owner occupied ones done. I believe the reality is, not mater what the government wants them to do, most of the lenders would rather foreclose than modify, since the foreclosure is a 1 time hit to them, but the modification will cost them much more money over a longer period of time. But they ARE supposed to do midifications for investors. If you can get the receiver for IndyMac to modify, Citi should follow cause they are going to get NOTHING if this house is foreclosed.

Second, since you have 2 mortgages you will never be allowed to do a Deed-in Lieu. NEVER NEVER NEVER. Even if you didn't have 2 there is little chance to do one, since the lender's and servicers DO NOT do them as a rule. It is cleaner if they take the property to foreclosure. It wipes out any unseen or hidden liens and legall launders the property. Maybe a better word is sanitizes.

Third, there are TOO many OPINIIONS about how various things effect your credit. The Foreclosure itself does not effect your credit, greatly, except it will remain on your report for up to 10 years, or as long as the lender decides to keep on reporting it. If they only report for 5 years, it will drop off after 5, if they report it for 10 years, guess what. The damage to your credit score was done, when you go delinquent. And it gets worse every month you are delinquent. The best way to stop the bleeding is stop the delinquency. That is either make payments or sell the house. It does not matter if it is a short sale or a retail sale. Once you no longer owe a monthly mortgage payment, that you are not making, your credit score stops getting worse. That same thing applied to ANY credit dept. Once the delinquency stops your score stops getting worse and the quicker you can start imrpoving your credit.

It is just like bankruptcy. People say, it only stays on your credit for 7 years. Maybe, but only IF you drop out of the bankruptcy as soon as you file it. Lets assume you filed for Chapter 13, and you are in a 60 month program and you complete it and the bankruptcy is discharged. You are actually going to have that bankruptcy reported for 12 years. The 5 you were in it, and 7 more years after you were discharged.
Here is something you might think about doing. List your property with a realtor that; 1. understand the foreclosure process. VERY FEW DO. They will tell they do, to get the listing, but in my experience with realtors all over the country, it is fair to say, MOST OF THEM EXAGGURATE THEIR KNOWLEDGE on this subject. I am a Realtor and I see it EVERY day. Most also have no clue on how to do a Short Sale, they rely on "experts" to do it for them. Those "experts" have NO interest in you, and do not care that they get a good deal for all involved, but only care that they get some deal.

Work with a Realtor that understands the "Option Contract" approach, which has been adopted in CO, and one that works with investors. Right now this is one of the best ways to get rid of property via a short sale.

Make sure who ever is doing the Short Sale negotiation, is going after a deal that will be accepted as payment in full. Althouigh no one can guarantee that, since the bank(s) is/are the only ones that can make that decision. You do not want, the diffenence being sold off to another company to try to collect it, or you don't want to have to give the bank a note back for the unpaid amount.

Since this property is NOT your primary residence, you will be most likely will have to deal with income tax on a forgiven debt. However, depending on your personal finances, there are ways that may allow you to avoid that issue, by doing the correct IRS paperwork and filings.

I wish you the best, but be careful. There are A LOT of real estate agents or Realtors that claim they know or can do a whole lot more than they really know or can do. Interview a bunch, talk to a GOOD real estate attorney, and a competitant accountant.
1 vote Thank Flag Link Wed Jan 6, 2010
I'm not sure that many if any of the people that have posted here really even understand "who" owns your loan or exactly what IndyMac and CitiMortgage can or can't do. You see, those two companies are nothing more than your "mortgage servicers" which means that they get paid a fee to collect your payments, manage your escrows, and forward the principal and interest on to the Trustee for the investors who actually own your loan. The problem, quite simply, is that no matter how logical it seems to the rest of us that the servicer might somehow be swayed into approving some form of loan modification, it is likely that they are legally bound by a document known as a PSA or Pooling and Servicing Agreement that dictates exactly what they are allowed to do. Somewhere in your loan documents, or possibly after you closed at some point, you would have received a document telling you the name of the Securitization Trust that actually "owns" your loan. If you were able to find that name (it would look something like IndyMac Alternative Loan Trust 2005-4) I could pull up the actual PSA and tell you exactly what options your servicers are allowed by law. The servicers will absolutely not do anything outside of that, unfortunately, as to do so would require them to buy your loan out of the security at full face value, ultimately causing THEM to take the write down. Basically the smart guys on wall street that thought up these genius mortgage backed securities also chained them down with a booby trap, so even they can't stop the ticking time bomb. As far as the guy saying that your credit will be ruined for 7 years, that is really irresponsible, and incorrect. It is true that the fair credit reporting act or FCRA allows for this to be reported for that amount of time, there has not been a mortgage lender in 20 years that has a lookback period of more than 2 years to qualify for a new loan. Providing the rest of your credit remains intact, you have several options. if you have made multiple attempts with IndyMac and Citi, your are more likely to get the best possible outcome by buying a new or resale property today (preferably an REO at a huge discount) taking on a new loan at the lowest rates in our lifetime, and kindly letting IndyMac and Citi know of your intentions to hand the property back to them in a process known as deed in lieu of foreclosure. Since this is your primary residence, you are likely to be able to negotiate with them to not even report this on your credit, since you are cooperating in the disposition of this property. This would save them thousands compared to the cost of foreclosure, and because of this, gives you some leverage, and an out. I hate to hear that you and so many others are in this position, but you do have some options. I'd love to help you if I can. Get in touch with me if you have more questions.
1 vote Thank Flag Link Tue Dec 8, 2009
Rather than everyone scolding here, we all have clients that have property not appraising at what the market will bare right now. It sounds to me like you should move back into the townhouse and gain some equity on it while your baby is still little & spouse is still home. Keep in mind if the bank forecloses not only is it going to mess up your credit, but the bank can still come after you for a balance. In a short sale the bank commits in writing not to do that - but your scores will still get messed up badly. You may just want to go back and stay put for a few years until you can break even, or come close to it, on the townhome. I am sure once that little on is walking and on the move, you will want to get a larger place later. It may be worth a few years of long communtes & inconvenient driving. You should definitely consult an attorney, financial advisor and tax expert with these questions.
1 vote Thank Flag Link Tue Dec 8, 2009
Good Morning HelpMe,
Millions of people are in the same situation. Does that make you feel better? No. You have obviously worked hard, paid your bills, and now find yourself in a very uncomfortable position. Ruin your score? No. Intentionally foreclose? No, not when you may qualify for a 'short sale'.

Here is how I explain to my 'short sale' clients the period you are going through: Think of your entire life as a twelve inch ruler. Draw a line from Zero to 6. Skip to 6 & 1/8th and draw the line to 12. That 1/8 of an inch is the blip in your life that it will take to get through this period. Because millions of people are going through the same as you are, the stigma from mortgage companies, etc. is not what it once was.

Find a Realtor who has a proven track-record (and preferalby not one who has a deluge of foreclosure/short sale listing) and uses a negotiator to deal with the mortgage companies.

Wish you well,
Randy Morrow
Keller Williams Realty
Arlington VA
1 vote Thank Flag Link Tue Dec 8, 2009
You have already received some great info here. And not to nitpick, but you cannot foreclose on your property, your lender(s) may opt to foreclose. You can allow it to go into foreclosure.

So it seems that your options are:

1. call the helpline
2. call an attorney
3. talk to an experienced short sale agent

or some combination of the above. If I were in your shoes at this time, I may want to look at #1 and #3...good luck.
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1 vote Thank Flag Link Thu Dec 3, 2009
Brian is right that you consult and attorney and an accountant and I would add that you should talk to a real estate agent that is experienced in short sales. I have done a ton of them and I can explain to you all the ins and outs of doing short payoffs and in particular with investment properties. This is a very important decision and you must become knowledgeable in all aspects to make the best decision for you and your family. Call, text or email any time if you have any questions.
Michelle Hall
Keller Williams Preferred Realty
Cell: 720-394-4620
1 vote Thank Flag Link Thu Dec 3, 2009
You should consult a Lawyer and or an Accountant. Realtors can not give you Advice on Foreclosing.
Please do consult a Lawyer before doing anything you may regret.
1 vote Thank Flag Link Thu Dec 3, 2009
I must agree with Brian that no one should intentionally foreclose to get out of a committment they knowingly made.
0 votes Thank Flag Link Thu Jan 7, 2010
Remember every preceived problem has a SOLUTION. In my opinion I would contact a qualified CPA to see if the loss your taking is going to be an advantage. Ask you CPA if you can deduct the loss from the total amount of taxes you pay at the end of the year. Your getting more than half of your mortgage every month from your renters.

Here is the goverment web site regarding loan modifications etc.... In my opinion I don't think you can modify the loan besides the renters are paying a large amount towards your mortgage every month. Check out this great website it has a lot of information for you.

You have a great credit score keep up the great work. You will be successful keep your asset... Find a way to recoop the monies your loosing... Call A qualified CPA!
Web Reference:
0 votes Thank Flag Link Wed Jan 6, 2010
No one should intentionally foreclose on a home.
0 votes Thank Flag Link Wed Jan 6, 2010
Reo Fund Manager I would like to contact you myself, very informed and I appreciate that.
0 votes Thank Flag Link Thu Dec 10, 2009
Excellent advice, Don Tepper.
0 votes Thank Flag Link Thu Dec 10, 2009
Hi, Helpme,

You should get in contact with three professionals: First, a professional Realtor in your area, who can help you with a short sale, if that is how your other professionals think you should go. There is some good info on this site about how a short sale can affect your credit, but there is other information on here urging you to do a short sale without knowing all the facts. Be aware that the short sale WILL affect your credit, and we as Realtors can only tell you what our history with this has been, not what the law is or what the tax ramifications are.

Second, you should consult with a real estate attorney (not one of the yellow pages personal injury attorneys nor one of your friends who happens to be a lawyer, but a REAL real estate attorney) who knows the law and can advise you properly about what your options may be.

Third, a certified public accountant, who can advise you as to the tax consequences of a short sale. Realtors (unless they are also a lawyer and/or a tax accountant) should not advise you about any legal or tax consequences, and should not advise you to do a short sale, until you have consulted with the other pros, and they have told you that is your best option.

If I were you, I would try to hold on and save your good credit. Unless the $374 per month is causing you real grief, it might be a good idea to try to wait it out until the market comes back, which it surely will do at some point. (I've been through 3 of these markets as a Realtor - and my best advice to my clients is always to try to keep your property until the market comes back or you are forced to seek other remedies.)

On the other hand, if your situation is really causing stress, then you should get in touch with an agent who is well-versed in short sales in the Dakota Station market. That means they have "real-life" experience at handling short sales, not just the wannabes. Ask the agent for a list of their clients whom you can contact to see what their experience with the Realtor has been. If they won't (or can't) give you that information, move on to the next Realtor.

Under no circumstances should you "let" your property go into foreclosure, if you can avoid it. A foreclosure is a "black eye" in the credit market, and will remain so for at least 7 years on your credit report. Although you may be able to buy another property in 2 to 7 years, your credit will indicate that you have had a foreclosure, and you will probably end up paying a higher interest rate and more fees, than you would without the foreclosure on your record.

Good luck to you,
Tracy Howard
Real Estate Consultant
Keller Williams Realty Downtown Denver
0 votes Thank Flag Link Thu Dec 10, 2009
Hi -As you're aware, you're in a situation that many others are in. With a great credit score like yours, think hard about trying to get the bank(s) to work with you. See our website for some options. Doesn't sound like you have a so called "hardship" so a lender may not accept a short sale option. I'll keep my fingers crossed for you!
0 votes Thank Flag Link Tue Dec 8, 2009
Dan's point is fabulous.

And, I'd keep calling CitiMortgage and remind them that you'd like to make the payments, but if they make it too difficult, you'll have to stop and they'll be the first ones to not get paid.
0 votes Thank Flag Link Tue Dec 8, 2009
0 votes Thank Flag Link Tue Dec 8, 2009
Do a short sale. Keep all other loans up to date. In the future you can compose a letter to any one you are applying to for a loan and xplaining the 2009 U.S. economic situation. They will more than likely will approve. Every one was having problems!!!
I am 81 years old. I have been through several of these. I know that will work. I have went broke two times through over-leveraging. I have recovered three times. Each time doing better than before. So will you.
If you see you can not handle the heat, don't throw good money after bad money. Conserve every penny you can. You can renew your credit but you can not recover money thrown down a hole.
Good Luck,
Friend Gino
PS; checkout http://(
0 votes Thank Flag Link Tue Dec 8, 2009
Do anything you can to keep your properties. Your credit report will retain records for 7 years, so while your credit score can change frequently in that 7 years, that foreclosure will drag your score down for 7 years. And remember, you may spend 3-4 years on a really tight budget (and we all know how hard it is to do with a little one in the house) while you keep that property but when the market recovers you'll be able to sell the property. At that time, whether you make a profit or not, you will have retained your credit score.
Secondly, keep applying for a loan modification. With some banks it's a lot like applying for an insurance claim, they have an entire department devoted to denying claims but when you apply so many times they get sick of seeing your paperwork, they finally approve you. Just make sure that the banks are not placing multiple inquiries on your credit report because that can bring your score down too. Also look into any relief programs your state may have set up for families in your position.
0 votes Thank Flag Link Tue Dec 8, 2009
Congress passed the Toxic asset recovery program earlier this year to take care of home owners like yourself who owe more on the property than the present value (up side down). The banks have been given government money to go through their "loan book of business" and negotiate with owners like you. The bank is just waiting for you to act.
Here is the process, call an experienced real estate agent ( or REALTOR who hold themselves to a higher code of ethics) to list and sell your property. The bank will pay the fees to the agent and the cost to sell along with figure out what to do about the difference between the present value and the total of liens you have against that house. Often they ask you to sign a promissory note for some of all of the difference. Many times the lenders just write off the difference and use the toxic asset money the Feds set up for this.

The agent you hire needs to work with your lender and let you know what your lender requires. Some banks will demand a note, some will write it off. Then you decide if you like the terms and sell or let it foreclose. Every late payment affects your credit score and foreclosure stays in your credit for many years. The Feds can say no to ANY future applications for home loans to those who have had a foreclosure and most home loans are government back loans.

It is always in your interest to work with the lender and not just close your eyes and let it foreclose.
0 votes Thank Flag Link Tue Dec 8, 2009
Hello Helpme,

Foreclosure is just about your very last action in this matter. If you go to forclosure you can forget about your credit score for quite sometime. I would recommend that you talk with a real estate professional (Realtor) to get their opinion regarding your situation. I would suggest that you give consideration to talking with your condo renter to see if they would be interested in a Lease2Purchase program.
A well thought out L2P program may well get you to a break even or positive cash flow situation. The other consideration is a short sale of the condo. The SOS (Short On Sale) option does not impact your credit rating like experiencing a forelosure. However, in this situation your and your realtor would need to have your bank's approval for an SOS.

Also, you are obvioulsy paying more than $374 rent being closer to work. Unless their are other things not stated moving back into your condo as soon as your renters can move out eliminates your $374 problem.

Pursue all your option before going to foreclosure. Be smart! Secure your credit rating and your real estate investment. The market will come back and you will be able to see with equity.
0 votes Thank Flag Link Tue Dec 8, 2009
Your question is a situation that many people are faced with today. Is it possible to move back into Dakota Station even though you have to drive further to work then can wait out the market? Projections for 2010 are up from 2009 and that might give you some relief.
0 votes Thank Flag Link Tue Dec 8, 2009
Speaking to a real estate attorney is a great idea. Many homeowners who purchased in or before 05 are in the same situation. If you can move in and occupy the condo, would be a good step. If you start living there as a primary residence, you would probably qualify for a mortgage consolidation of your 2 mortgages at a lower fixed rate. I don't know if you have asked your primary lender if you can do a one time loan modification agreement. It makes no sence to have out of pocket expenses from an investment.

Foreclosure as others have said should be a last resort. If you, are thinking you can avoid foreclosure through a short-sale, keep in mind that a short-sale is an option for homeowners who find themselves in a true hardship, have no savings, or investments. Income verification, tax returns, and financial statements are required to be eligible. I wish you the best and hope you make a good decission.
0 votes Thank Flag Link Tue Dec 8, 2009
The solution to move into your condo instead of renting an apartment is the best option. Prior to that, contact the lender and seek a loan modification because of your new circumstances. I would ask for a 36 month reduction of $400.00 per month which should provide enough time for the real estate market to recover and allow your family to reorganize financially. The lender could do that by extending the terms or adding to the principal, everybody wins and you avoid foreclosure

Without more information about your financial assets, liabilities, debt service and your condo loan, it's impossible to offer you the best solution. Find a Realtor who is also a financial advisor that can help you or a real estate attorney to explore your options.
0 votes Thank Flag Link Tue Dec 8, 2009
I have read all the responses and believe they all offer a great perspective. You should consider all and a combination of the suggestions given.

If you do exhaust all options and selling the property is your only option, do your best not to let it foreclose as this hurts the local housing market and the impact to your credit and family is greater.

Legal and tax advice should come from an Attorney and CPA. ALL Realtors should direct you to those professionals but they can also advise you to some degree or speak from experience.

Visit the web reference to see foreclosure vs short sale matrix.
0 votes Thank Flag Link Tue Dec 8, 2009
It sounds like you're getting some good advice from the other respondents, the best of which is to talk to your tax accountant and/or lawyer and get their advice.

A foreclosure would definitely impact your credit history and buying power for the next several years, and it is not the responsible thing to do if you can afford your payments. If the rent you receive from your condo is more than the rent you pay for your apartment, you are ahead of where you would be if you just lived in the condo. In that case, just be happy and more importantly, keep the renters in your condo happy!

One item I would like to make sure is clear about a short sale, is that a short sale in itself should not impact your credit score. It is the late/missed credit payments that often accompany a short sale situation that affect your credit score. A short sale simply leaves a comment like "debt settled for less than owed" on your credit report. You should be able to go out tomorrow and buy another home after successfully completing a short sale if you did not destroy your credit in the mean time with other issues and assuming you had a way to resolve any judgement from the lender or taxes owed on the forgiven debt.

In order to qualify for a short sale, 1) you need to owe more than the home is worth, 2) you need to be able to prove that you have a hardship (something has affected your financial situation to where you cannot afford your mortgage payments any more), AND 3) you need to be insolvent (meaning you have no more money to pay your bills). The 4th item, which is not always necessary, is you need to be behind on your mortgage payments. Some lenders may approve a short sale if you are not behind on your payments if you can show that this would be eminent.

Again, talk with your tax accountant and/or lawyer and get their advice.

Have a great day! Vince
0 votes Thank Flag Link Tue Dec 8, 2009
Additionally, if you decide to move forward with a short sale or foreclosure, consult with an accountant, an attroney that specializes in real estate transactions and don't forget the most important...a Realtor.
0 votes Thank Flag Link Tue Dec 8, 2009
It really depends on what your goal is. If you intend on staying in the same area you currently live and you are considering foreclosure as a business decision, not an affordability issue, you should also consider the ethical implications to foreclosure.

If you are considering foreclosure because you can no longer afford the home, try a short sale first.
0 votes Thank Flag Link Tue Dec 8, 2009
Based on the information you provided, you, very well, could qualify for a 'Short Sale'. The main
qualifier would be your current 'Hardship' situation. Was your spouse working and part of your
qualifying for the loans originally? If so, you may qualify.
Call 2 or 3 Short Sale Realtor Specialists in your area for an interview. Ask how many Short Sales
they have done...are doing and especially if they have delt successfully with your 2 lenders. Choose
your Realtor carefully, you will share a long bumby road together.
If you opt for a Short Sale, you will receive nothing from your investment, however, it seems
like you are just starting out with a new family and short selling would be preferrable to a
foreclosure, in that your good credit score would be impacted to a lesser degree and for a much
shorter time...(20-24 months).
Good Luck to You,
Tangi Walker
Coldwell Banker Sun Ridge Real Estate
Lincoln, CA
0 votes Thank Flag Link Tue Dec 8, 2009
Everyones situation is unique. Please contact an attorney to get legal advice. Your CPA is another person whom you should be in conference with on this difficult situation.

It's unfortunate many people are just walking away from their homes because they are upside down. The domino effect is not good for our economy.

Again get legal advise and see what your options are... There are more answers and solutions that your attorney can advise you...
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0 votes Thank Flag Link Tue Dec 8, 2009
You should consult a Lawyer and or an Accountant. Realtors can not give you Advice on Foreclosing.
Please do consult a Lawyer before doing anything you may regret.
0 votes Thank Flag Link Thu Dec 3, 2009
Also, call 877-601-HOPE for options and advice.

0 votes Thank Flag Link Thu Dec 3, 2009
Hey there-
Sorry for the position you are in.... you are not the only one dealing with this problem unfortunately. I just closed on a 2 bedroom in Dakota Station fro $114K with my buyer...
If you allow it to be forclosed on, your credit will be "shot" for 5 years according to the latest info available. If you list the property and are able to sell it for less than is owed (a short sale), your credit will be "shot" for 2-3 years. You will potentially be liable to the lender for the difference....although the thinking is that they will not go after such a "little fish". No guarantees, though.
Your property MUST appraise by the Buyers bank which will look at all of the sold properties in your subdivision in the last 3-6 months.
Give me a call and we can discuss it further. I can have my short sale specialist walk you through the process.
Best of luck..
Kimberly Ryan
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0 votes Thank Flag Link Wed Dec 2, 2009
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