Home Buying in Danville>Question Details

Emi123, Home Buyer in San Ramon, CA

Any strategies to get rid of a severely underwater home?

Asked by Emi123, San Ramon, CA Fri Apr 22, 2011

Several years ago homes cost $500k in Oakley, Antioch area. Now they are only worth $180-$200k. Is there any exit strategy? We now see and want to buy a townhome or home in San Ramon, Pleasant Hill, Concord, or Danville because they now cost less than the home we purchased. Excellent credit, good income and never late on mortgage so bank won't help. If short sale, how soon before we can buy again? Is there anyway to get the principal reduced to today's value -short pay refinance? Or Are we stuck with long commute???

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Contact a Certified Distressed Property Expert such as myself. I would be more than happy to hear your situation in detail and help you with all available options you may have. Please call or email me if you would like an assessment. (925)683-7291 Derekdrodrigues@gmail.com
1 vote Thank Flag Link Fri Apr 22, 2011
This question was posted April, 2011.
Is it possible Em is still stuck in the short sale process after two years?
1 vote Thank Flag Link Thu Sep 12, 2013
Hi Emi123,

Some of the comments below are well meaning, but not realistic. Many owners are leaving their severely underwater homes with good reason. Why throw good money after bad is the question of the decade. You would think as an Agent I would embrace the bank bail-out for job security reasons. But truth be known it disturbs me to see so many 800 Fico score homeowners and investors losing their entire life savings over this banking irresponsibility.

I've been processing short sales since 1996 with 100% success closing rate. Call me if you want to talk about your options, and yes, you will most likely be able to do the short sale, if that's what you want, and after you've spoken to a tax accountant or/and tax attorney....which I have contacts for both. Severe loss of value is something banks approve as hardship these days. I've helped many other homeowners like you, and some while they were current on mortgages.

Good luck with your decision. And wishing you a Happy Easter.

Isabelle M.J. Javier
DRE# 01118928
People & Properties
Sotheby's International Realty
360 Diablo Road
Danville, CA 94526
925-209-1370 (direct)
925-837-8569 (fax)
1 vote Thank Flag Link Fri Apr 22, 2011
Do the right thing. Stay where you are, unless there is a severe necessity to move. Why should your neighbors, yourself, and every other taxpayer pay for your decision to walk away from an obligation you willingly entered into? People who walk away without a need bring down the values of every other home in the area (i.e. the area you are wanting to move into also....). And the entire US taxpayer pool is paying for the un-repaid LOANS you were given. Do the right thing, and pay back the money you were lent, when you willingly offered the price you paid for the home you have had the benefit of living in for however long you have been living there. You signed a contract, you obligated yourself to our society, to our economy, to your god, to fulfull your promise to repay what you borrowed.
1 vote Thank Flag Link Fri Apr 22, 2011
The only way to get your principle reduced is to do a loan modification. If you decide to go down that road, contact your lender directly and ask what the procedure to do a loan mod is. Do not pay an outside company to help you do one. If you are not able to do a loan mod, then you have 2 options, short sale or foreclosure if you do not want to keep paying your mortgage. There are a few others, but those are the most prominantly used.

If you do decide to stop paying your mortgage and you want to buy sooner than later, then you would want to purchase your next home before you do your short sale, if possible. Unfortunately, the bank usually won't work with you to do a short sale until you are late on your payments. I am not suggesting you are late or don't pay, I am just letting you know how banks tend to work. Short sale for you might be the best way to go if you want to buy another home and don't need to use credit for anything major down the road after completing your short sale.
Web Reference: http://www.brokerdawson.com
1 vote Thank Flag Link Fri Apr 22, 2011
When you say "exit strategy"...do you need to get out of your house for financial reasons, or do you want to buy a less expensive home because there is an abundant supply of distressed properties selling for less than yours?

If you've never been late, and your income is good, I don't know how you can qualify for a short sale.

"If short sale, how soon before we can buy again?:

Typically, and assuming you are repairing your credit after you do a short sale, it may take an average of two years to qualify to buy another property

And, if you are contemplating a short sale, know that you need to qualify for a real hardship --- just because property values have dropped since you bought yours isn't a justifiable hardship by itself.

What constitutes hardship? Reasons why people apply for a short sale

Reduced income
Medical bills
Too much debt
Death of spouse
Mortgage payment increases
Business failure
Job relocation
Damage to property
Military service
Decline in market value (NEED to sell, for example, in the case of a relocation but property is worth less)
1 vote Thank Flag Link Fri Apr 22, 2011
I would also like to add that I do have a few strategies that may save your credit an allow you to buy very shortly after.
1 vote Thank Flag Link Fri Apr 22, 2011
Feel free to send me a private email and I can share with you the 7 options available to you.
Web Reference: http://www.josephre.com
1 vote Thank Flag Link Fri Apr 22, 2011
My office is in San Diego Ca US-Attorney Network. we have a program that can work for you without hurting your credit.
99.9% of all loans have some type of Federal Violation.
We investigate some of your documents, if we find violations we can negotiate with your lender to reduce your loan amount to 95% of the current market value.
Want more information? 858-945-1047
0 votes Thank Flag Link Tue Dec 24, 2013
If you are interested in selling, I maybe able to help. I buy houses in the Georgia area and I may buy yours to help you out if interested follow up with an email. Good luck no matter what you do, I wish you the best.
0 votes Thank Flag Link Fri Dec 20, 2013
Oh come on! This question is 2 1/2 years old. Don't you think he's figured this out by now? LOL!!!
0 votes Thank Flag Link Thu Oct 17, 2013
You can buy again one day after short-sale or foreclosure with our new "2nd Chance" loan. You would need to have a 660 minimum mid FICO and 20% down payment.
Web Reference: http://www.craigbosse.com
0 votes Thank Flag Link Thu Oct 17, 2013
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
Hello Emi,

I have been assisting distressed home owners with free loan modification assitance for over 3 years now. I would be happy to look at your particular situation and advise from there. People usually can purchase a home after 2 years on a short sale vs. 7- 10 in foreclosures.
0 votes Thank Flag Link Mon Apr 25, 2011
Personally I'm not fond of the loan mod process. Obama promised 4 million of them. We've to date had somewhere around 400k with over a 50% re default rate within 6 months. Not a very impressive track record to say the least.

Additionally, as other have so aptly stated, You're too golden for a LM. Good credit and employment track record and no hardship? They won't even talk to you. If you're really that intent in leaving your neighborhood then find an experienced distressed property agent/broker and do a short sale. With your credit and employment and a 25% DP you shouldn't have any problems getting financed. I've seen folks get re qualified almost immediately after a short sale if they're solid and have ample flesh in the deal.

But if the only reason you're wanting to move is because you're under water but still like your home and neighborhood and can afford it you may want to just hang in there. My home has gone from 1.6m to a Zillow Zestimate (which I don't give much credence to) to about 750K. But ask me if I care. My wife and I raised our 5 children in this home during the past 30 years and now our almost bakers dozen grand-kiddies are frolicking about picking fruits and veggies from our property.

Sometimes it's just about quality of life. It will probably take us the rest of our lives to revisit the paper loss we've incurred on our hyper-inflated property but Oh Well. We didn't care when it was valued at 1.6m and frankly we don't really care that it's only valued at 750k now. We just love our home.

It's sad that so many folks just trivialized the most important investment of their lifetime as a mere ATM machine. A home is supposed to be where the heart is. But so many homeowners today just wanted to use it as a slot machine. Sorry about the rant but it just hurts to see this going on day after day.
0 votes Thank Flag Link Sat Apr 23, 2011
Highly recommend that you listen to someone with a CDPE designation and be careful taking advice from people or agents that give you advice based on what they have heard from someone else. A formal education on the subject clears up any misunderstanding that agents may have. Not occupying the property may have a very negative affect on getting an approved short sale if you end up needing it a year later. The way that a bank will approve a short sale is if you have a hardship. If you are trying to sell because you just wan't to move, many banks won't forget the debt. With a licensed proffesional you can create a
0 votes Thank Flag Link Sat Apr 23, 2011
You might try short pay refinance. Some lenders are participating in this program. In order to qualify for this program, you must have good credit and be current on your mortgage. Essentially you are asking your lender to reduce the principal to today's market values and applying for a new FHA mortgage.

If you would like details on how this program works send me an email.
0 votes Thank Flag Link Sat Apr 23, 2011
Hi Emi123,
This is certainly the six million dollar question these days with ethical and business strategies bumping heads! There are banks which are allowing short sales for underwater homes just because of the values declining and allowing you to buy within six months if you are current on your mortgage payments. My suggestion would be to try a loan modification (as an owner/occupant) to see if the bank will grant you one. You can do that yourself by contacting the bank and asking for the paperwork you will need. As someone else pointed out, do not pay for someone to do this; there are a lot of "scam artists" taking advantage of people right now.
There is also the possibility of renting out your home in Antioch/Oakley area until the market turns around and going into the area in which you would like to live and purchasing a townhome/home simultaneously. With good income, credit and a bonifide signed lease for your Antioch/Oakley home, you may be able to qualify for that closer commute location. If you need recommendations for loan officers to discuss your qualification, I am happy to provide.

Carolyn Zeigler, CRS, CDPE
Re/Max Accord
0 votes Thank Flag Link Sat Apr 23, 2011
It appears based on the information you have provided that a loan modification is your best alternative. Take the savings from the mod, if you are successful, and then position yourself for future investments. This is an investment market. The best advice is to speak with either a real estate attorney or financial planner, both of which I can refer you to some of the best.
Good luck to you,
Suzanne Looker
0 votes Thank Flag Link Sat Apr 23, 2011
If the short-sale turns out to not be an option, then you still do have other alternatives. One option is to acquire 1 or more distressed properties at deep discounts, reposition them, and use the additional resulting equity to offset your negative equity (as well as the additional income to offset any negative cash-flow [if any] provided you decide to hold those properties). Essentially, this is similar to--but not exactly the same as--a dollar-cost averaging play in stocks. You could eventually sell all of those properties together as a portfolio for a gain, or could flip the winners sooner and pay down your balance.
0 votes Thank Flag Link Sat Apr 23, 2011
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