Foreclosure in Burbank>Question Details

Tony Harris, Both Buyer and Seller in San Francisco, CA

What is my best option for an underwater investment property which I just received a notice of default? I

Asked by Tony Harris, San Francisco, CA Thu Jul 31, 2008

bought the townhouse investment property in Burbank, CA 2 years ago at $470K with a 10% downpayment but the current market value is only $390K. I'm exploring what is my best option at the moment:
1. Renegotiate with my lender for a loan work out (my credit rating isn't very good but I'd be able to afford half of my $30K outstanding balance
2. Sell the property at a loss
3. Give the key back to the lender

Thank you for your help.

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Answers

9
Tony,

In the last down market we had, 1989 thru 1998 home owners found themselves in an 'upside down' position and so did I, on my own house. I advised all my clients to hold on to the properties and lease them out. In 1998 the market started to correct and property values went up again and that's when those homesellers sold their properties at a profit and kept their credit rating in good standing.

Burbank has always been and will continue to be a desirable city of choice for many people. See what you can do about finding quality tenants, even negotiate a 2 or more year lease for a desirable person/s b/c a year goes by very quickly.

Once the market recoups, and it will - I know b/c I've been selling real estate since 1977 and the market runs in cycles, you will be able to sell at a profit, refinance or move back in. This is an option that is tried & true that was utilized in every down market we've had in the past 30 years.

I hope this helps - wishing you all the best in making a wise decision.

Yona Bello
Yona@YonaBello.com email
Web Reference: http://www.YonaBello.com
1 vote Thank Flag Link Thu Jul 31, 2008
Tony,
Try and renegotiate the loan first. It's always your best bet if the programs work for you.
If you don't qualify for the HAFA or other programs currently available to Owner's who are "upside down" then if you can bring money to the table to sell the property for a loss that's your next best option. If you don't have the money to make up the difference you would be looking at a short sale.
If you are looking into "giving the key back" you may want to think about what you want to do in the next 7-10 years as your credit will take a drastic dive from the foreclosure. If you stop paying your mortgage the bank may not start the foreclosure process immediately so you may be adding more time to that 7-10 years.
Why not try to rent it to help pay the mortgage?
0 votes Thank Flag Link Wed Sep 21, 2011
Attempt to renegotiate with the lender.

Short sales are difficult in any case, but especially so on investment properties.

And let me clarify something: You can't give the key back to the lender. The lender never owned the property. You'd be giving the key back to the seller, which obviously wouldn't make sense. The lender's only involvement was to lend money based on the value of the property. Yes, I understand what you mean, but it's a pet peeve of mine when there's a mention of "giving the house back." It wasn't the bank's to begin with.

Good luck.
0 votes Thank Flag Link Thu Aug 7, 2008
Don Tepper, Real Estate Pro in Burke, VA
MVP'08
Contact
Renegociate. The further behind you get the more willing they are to work with you. You'll need to have a good reason why you stopped making payments-loss of job, medical costs, etc. And you'll need to have a job and show income. With those two conditions in check, you have a good chance of getting a modification. Otherwise you should list it quickly for short sale at a bargin price say $250k just to get offer in. You need to decide which path you will take because it's either one or the other in the eyes of the lender.
Web Reference: http://www.skyminor.com
0 votes Thank Flag Link Thu Aug 7, 2008
You need to act fast! I can lower your mortgage payments without having to refinance your loan! We can stop the foreclosure process with the many connections we have at banks! Call today and start saving tomorrow! 877-822-7468. I look forward to helping you with your present situation!

Danielle
0 votes Thank Flag Link Sun Aug 3, 2008
Wake up! And file a claim against the lender. Get the file audited.

Look! Compliance and acceptance audits are subject to verifable and substatniated findings under RESPA, TILA and FAIR HOUSING ADMIN initiatives. We are auditors, examiniers who see Violations almost everywhere we look ...in Way too many files which is scarey! Is heavy adherence by lenders to strict rules fair? Hell No. But that’s what the government says. Make a compliance error.....no mo loan. Federal judge’s rule...makes a mistake and lose the loan, courts decisions...Rescind. Lawyers need to see this is not a case by case argument with uncertain prejudice in certain cases. It is cut and dry! http://www.borrowerhotline.com
Web Reference: http://borrowerhotline.com
0 votes Thank Flag Link Fri Aug 1, 2008
Tony
I believe in general your options are
1. Lease it out - great tax break, values will re-bound (hopefully)
2. Renegotiate the loan...did you buy it as owner occupied, now your in SFO..you'll have to explain that.,
3. Sell at a loss - maybe take a promissory note for the difference
4. Give the key back, you'd better be a better negotiator than that. Your credit will be trashed.

If you'd like a Burbank market report I'll be happy to send one.
1-888-284-2056 Burbank is turning around.
0 votes Thank Flag Link Thu Jul 31, 2008
Keith Sorem, Real Estate Pro in Glendale, CA
MVP'08
Contact
I don't think you will have all your facts to make the best decision for you until you talk to the lender. See what kind of modification to the loan they can afford to offer you.

Let me know what they say...

Good luck!
0 votes Thank Flag Link Thu Jul 31, 2008
Why not pay the mortgage and rent the property to a tenant? The market could bounce back and yield equity gains over a period of time.
0 votes Thank Flag Link Thu Jul 31, 2008
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