Some how my second post was lost. The gist of it was refuting the guilt trip Jason was putting on you.
How many of his buys went into foreclosures or short sale. I think you should start over. Things have improved from last year. Timing is everything, Loft inventory may or may not be lower. I need to know where you are located. Activity in the building is a good indicator. Everything is on the table, money form parents, bank negotiations, assume a loan for the balance. The last thing you want is a credit problem. Employers now look at credit more closely. You will take a 100-200 point hit. You can't buy for 2 years minimum. FHA is going to 690 next January 1. For, all Condo's and TH's tend to be overbuilt, require less land and more gross profit per acre, good for building business, bad for resale. You have to stay longer to be safe.

What happened on the rent investigation? That seems to be your best bet. You may have to feed it every month. There are Tax deduction limits. Little known, Heresy from the Mn Boy, you can deduct all your losses if you are a RE agent. That is not a well known IRS rule. Go get a license. I would be willing to do an appraisal, the market is changing on a daily basis. If you are stuck, then consider some remodeling.
List all your options and then do it again. There is one out there.

If you don't have a hardship, you do not qualify for a short sale. If you have a "healthy income" maybe you can buy a larger home and rent out the loft. It is a really good time to buy. Who knows, maybe the amount you get for rent will cover all or most of the monthly payment for a larger home.

Sounds like your looking for a 'strategic default', where one who can afford to pay the mortgage walks away just because the value drops and they don't want to pay. Not to worry, these are becoming a big time problem as well and will continue hamper the housing recovery.

There are moral values involved in a decision like this but most people don't have them anymore so it really doesn't matter at this point.. There used to be a social stigma involved with foreclosure but that has since been diluted.

All this will continue to lead towards a downward spiral and now your sticking it to your neighbors by walking away and forcing there values as well.

Your best bet is to discuss a strategy with a knowledgeable Real Estate attorney who specializes in short sales. I can give you the name of the one I know here in town. I am not saying the short sale is the way to go but, if you are thinking that way, this company can put together an overall strategy to leave you in the best position at the end of this process. As the others have stated, you can or may have to pay the short off either at closing or some later date.

Joel Friday

612-868-6287

You have three options. All should be discussed with an attorney and/or a short sale specialist Realtor.

1. You can allow the home to go into foreclosure. This will result in a hit to your credit score - you will not be able to secure a mortgage from a lender for a period of time (I've heard two years and five years - consult your attorney). Even in foreclosure, your assets may be fair game for settlement of the debt with the lender - again, consult your attorney.

2. You can attempt a short sale. This requires approval of the lender and is a highly unattractive process (in my opinion) - fraught with delays and pitfalls. Even after receiving an offer which you find acceptable, the lender may take more than 6 months to act on the offer and close the sale. You will likely find that the price you get for your house is lower on a short sale than it would have been if you sold it without stipulation and made up the difference (tapped your savings or credit to pay off the note) at closing. In addition, the lender may require you to pay the deficiency (the amount you are short) by some arrangement - this is where negotiations with your attorney and a short sale professional will be invaluable to you.

3. You can sell your property for market price, even if that is less than the balance on your mortgage(s) and make up the difference at the closing so that the lender is paid in full and all closing costs for which you are responsible are also paid. This does NOT constitute a short sale and it will NOT affect your credit. It also does not have to be advertised as a short sale, giving you a better chance of securing an acceptable offer in less time. However, it DOES require you to pay the difference between the selling price and the amount remaining on the note(s) - and any closing costs. That fact would also need to be disclosed to the Buyer at the time the offer is accepted.

For the sake of your credit worthiness and FAR fewer hassles with selling (this is already a very challenging market), I would recommend Option 3, if it is financially possible. "Walking away from a property" is a horrible misnomer and will leave you in far more financial/credit trouble than simply staying in a property which no longer fits all of your needs. If you want to sell, pay your debts. If you can't do that, my recommendation would be to hold tight and make your move when you DO have the means to make the numbers work without lender assistance.

That's likely not the answer you wanted, but it's the best advice I can offer. Good luck.

-Dan

Hi Dimkawedding

Ok - here I go with my tough love approach / response again!

It's great you have a healthy monthly income and can pay your mortgage!!!! You are very fortunate to be in that position.. I suggest that's what you do for now. Babies are small. I am sure you can manage for a year or two in your loft............I understand your desire to have a single family home, but you have responsibilities to take care of with your loft, first.
I don't see the bank looking at you as having a hardship , as your job and income seem secure (that's great for you!). You simply may be better off to stay put, and make the best of it.

Speaking to a lender might help give you other options, but you say you have already looked into that.

So....should you give the loft up, walk away, and let it go into foreclosure?? Why would you do that and ruin your credit? How will you qualify for a future mortage? That bad credit cloud will be hanging over your heads for a long time. You have a good credit rating now, and you want to turn it into a bad rating? NO!

I suggest you check with your cpa or a real estate attorney to look into the consequences you will have to deal with if you attempt the above actions.

Best wishes to you.........Debbie Rose

In order to do a short sale, the seller must be in a hardship position. Having a baby may qualify you for that. However, in order to do the short sale, you can not walk away with any money or have assets that could have gone towards the loan to reduce the amount of forgiveness that you are asking the bank to do. Check with an attorney to be sure. Doing a short sale will affect your credit score but not as much as a foreclosure will.