Foreclosure in Richmond>Question Details

Neige, Home Seller in Tacoma, WA

Short Sale or Foreclosure?

Asked by Neige, Tacoma, WA Thu Jan 15, 2009

I purchased my first house in good part of Richmond during the peak in 2005. My house is now worth $150K to $200K less then my purchase price and $100K less then my mortgage balance. I don't see any hope that the value of my house will recover in the near future. My fiance just purchased a house in South Bay, so I will move in with him. I rented my house out, but I still need to come up with $1,000 a month to cover the difference between mortgage payment and rent income. The house market is hopeless and life is short, so I am considering short sale or foreclosure. I heard that both options will just hit your credit as hard. And I heard that short sale requires to submit a lot of documents to the bank, and you might get into trouble if the bank found out that your income was overstated when you purchased the house. To save money, time, and trouble, should I just go straight into foreclosure? Does anyone know any good real estate attorney who can guide me through the process?

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5
Don't be so glum chum!

You see, in America, there is a solution to ANY problem!

For you, the solution is to "Buy 'n Bail"! It's today's Fix 'n Flip!

http://online.wsj.com/public/article_print/SB121314811278463…

Remember, with under-the-bus capitalism, you can privatize profits and socialize losses!

So don't get thrown under the bus!

-Bus Driver
1 vote Thank Flag Link Thu Jan 15, 2009
Bus Driver, I happen to agree with you (if that's the right word)... I think the real estate agent in that article quite frankly should be ashamed of herself. Many people think they can walk away without consequence, and most banks are wise to that too. Its harder to do the buy and burn strategy - if not impossible with most major lenders today. I would like to think it would be harder to find a real estate agent to help you with it. There are consequences when you walk away from a debt you promised to repay. Last year it was easier for people to do all sorts of "creative" things to walk away, now, not so easy. Credit will be hurt. Loans will be sent to collections. Many will be forced to contend with a years long collections action or bankruptcy. Certainly not sure of what the right answer is for many folks . . . if they have to move for their job, or if they've had a death, illness or divorce - those are unavoidable life changes. If their interest rate spiked and they haven't talked to their lender about adjusting - they should. There are non profits and there is HUD ... admittedly not much help to many but many jump to foreclose without even exploring options. As you said, its become the new fix and flip. It (along with many other factors) is destroying our communities. Real estate shouldn't have been thought of a short term investment. But for many, they gambled and won... now others, are left holding the proverbial bag. No one has a crystal ball...
0 votes Thank Flag Link Thu Jan 15, 2009
First talk to your attorney and cpa. Get professional advice, from a Realtor, of what the current market value of your home is. Find out real facts about all of your options and consequences. There isn't an easy solution. The most important thing is for you to continue to move forward through your process.
0 votes Thank Flag Link Thu Jan 15, 2009
You do need to talk to a real estate attorney before you do anything else. If you "overstated" your income, that is considered fraud. Do you have more than one loan? That may further complicate matters in a foreclosure, however it depends on what kinds of loans you have and when/how they were obtained (i.e. when you originally purchase or later such as a refinance or equity line). Call the County Bar association for an attorney in your area. I know a couple in my area (Central Contra Costa) but I do not know any near Richmond at the moment.
Web Reference: http://www.ccshortsales.com
0 votes Thank Flag Link Thu Jan 15, 2009
A short sale is an option for your situation. You MUST find a short sale specialist in your area. It is very important the agent prepars the file in advance to accepting an offer and submitting it to your bank. If you hire an agent that does not fully understand the process it will be a huge mistake. Ask the agent how many short sales they have closed successfully and verify with the acting broker of the real estate office. IF you can successfully close a short sale instead of foreclosure it will be a better solution for your problem. Check with your accountant on the tax implications involved in a short sale.
0 votes Thank Flag Link Thu Jan 15, 2009
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