Call me and we can walk you through various options.
Obviously you are not in a great situation.
You do not want to give the deed to anyone who will leave your holding the financing for the next 20 or 30 years and obligated to pay it even if they do not pay you, but are living in the house.
Keller Williams Realty
Real Estate Consultant
For your credit history the worst is foreclosure. You will be barred from getting a loan for several years and your score will drop precipitously. So, any scheme involving not paying is very bad. Some "savior" companies take payments from you but don't pay the lender. They are a) hoping the bank will negotiate the balance down or b) just crooks.
Short sales also damage your credit, but the bar is shorter and the possibility of the bank pursuing you for the shortage is less likely going to happen. Any shortage can become a personal lien in foreclosure or short sale, but Federal law was to forgive the credit the lender gives to do the short sale. Otherwise the shortage becomes income to your for tax purposes.
An investor who purchases your home by simply taking over payments basically leaves you responsible if they don't pay the mortgage. If the bank discovers the sale, they can foreclose under the "due on sale" clause and end the deal. The new owner (investor) would have to pay off the loan balance and nominally you would be responsible for the whatever they didn't pay.
Only by notifying the lender and asking them for permission to move the liability to the new owner (called assumption) can you avoid any liability. More than likely the bank will refuse and leave you in a pickle. If the investor is not a crook, then they won't want the bank to pursue the due on sale payoff. But a crook can simply collect rent until the bank forecloses and pocket the money.
Whether you accept the risk of the investor who took over your payments is your choice, but you should get advice from your attorney before proceeding.
You can try to re-negotiate your loan terms using a loan "mod" to modify those terms. Some banks will do that if their choice is to take a whopping loss on foreclosure. They don't want the principal to drop, but the rate might be radically reduced to keep from foreclosing on you. If you haven't already discussed a loan mod with your bank, do so.
Often the arrearage (the amount you're behind) can be added to the outstanding balance even though the rate is dropped. What the bank is looking for is sufficient income in your household to cover the lowered payment. If there is not enough income, you'll have to resort to short sale or allow foreclosure. Sometimes the bank will take the deed in lieu of foreclosing. They will decide after you supply your financial information what they're willing to offer. If you earn too much, they won't do it, and if you earn too little they won't either.
A forebearance is just a method to pay of the arrearage over a short period. So, if you're behind $5,000, they might offer to keep your payments the same but you would also make an additional payment each month over $5,000/24 or some other period of time. You can see that a forebearance doesn't work if you had an income reduction. But if you have an arrearage and now have income, it can work for you. Ask your bank about it, if this is your case.
Usually when you talk to your bank, they will start with an offer of forebearance and only entertain the other more complicated and costly (to them) approaches if you can't swing the additional payment on top of your current payment.
First fix the arrearage problem before considering renting it out, too.
The right answer depends entirely on the contract you are presented. As a transaction architect, I know there are ways to accomplish this. HOWEVER, these offers are nearly always structured to be 'no risk' to the BUYER!. You've been up late and noticed those "Buy house with no money down, no risk, and make your fortune in real estate!" You are likely seeing the product of those seminars. Unfortunately, there are many, many ways to disguise the true intent of the contract.
YOU MUST HAVE SOMEONE WITH EXTENSIVE EXPERIENCE to review any contract BEFORE you sign it.
As others have noted, the your lender has a big voice in this situation. In my experience, lenders HAVE been very accommodating when presented with a solid proposal. You need to know if your mortgage is assumable (very likely NO) and how the 'due on sale' will be resolved, if at all. If your loan originated with one of those 'too big to fails' this may prove really problematic. They are not included in the "have been very accommodating' group.
You should give Kim or Bruce a call. Take a very pragmatic approach to your situation. If you already have a long list of things that 'are not an option' this may indicate you are incapable of hearing good counsel. What is the best option that has the greatest benefit to your and those important to you?
Often, you must choose the least worst option.
Now, don't use that contact link.
Don't use Trulia email.
If you are serious, both Kim and Bruce provided a phone number in their profile. Just click their name.
Go old school and call.
Best of success to you,
Annette Lawrence, Broker/Associate
Reamx Realtec Group
Palm Harbor, FL
This is a really sticky situation.
Short sale you will have to be at least one payment late. To even able to qualify and it can take you up to 6 months. Its very difficult process and require a lot of work and patience.
I would go ahead and talk to that person will resume your loan and get your deed. You are pretty much selling the house to him for how much you owe that will be the best options you will have that wont affect your credit and you can just walk away from the situation.
2. HOWEVER if he is only going to make your mortgage payments TILL THE loan is paid off in full deed can't go to the buyer
DISCLAIMER: 1, 2 - answered IF I understood the question correctly
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Lynn911 Dallas Realtor & Consultant
Multimillion Dollar Sales Producer
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