Home Selling in Dallas>Question Details

Angelica Nav…, Home Owner in Dallas, TX

Re-asking a previous question about selling my home

Asked by Angelica Navarro, Dallas, TX Wed Feb 13, 2013

I asked this question before, but now I have some more insight as to what my unique situation is, so perhaps this can lead to me finding someone to help me.

I bought a house with someone last year in July. We have decided that it has not been in our best interest and we would like to sell it. So far, it appears we are stuck. The mortgage is still underwater, and we don't have the funds for closing costs.

One person I know put me in touch with a man who owns a real estate company, and wants to buy my home for the amount we still owe on it, and he would assume the loan. The catch? He gets my deed to the property. I have not been given a reason to find this kind of deal shady, but I am hesitant nonetheless. Staying in the home is out of the question, and I don't know the first thing about being a landlord, nor do I want to be one. We are current with our payments, and foreclosure is not an option. A short sale, I fear, would ruin my credit. Any help?

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Answers

11
T.E. & Naima Sumner’s answer
It appears you are faced with a few not so good choices, but some are worse than others.

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.
0 votes Thank Flag Link Sat Feb 16, 2013
This is a commonly proposed practice from what I understand, especially from the "I Buy Your House Today-I Buy Ugly Houses" those kinds of deals, but if I were you, I would tread very cautiously. I also understand that this kind of transaction uses a number of loopholes, and if you purchased your home only a year ago, may be prohibited by your lien holder. If you have an FHA loan, it could be assumable, that's a question you need to ask your lender. If it's assumable then the buyer could potential get you out from under the house, but he would still have to qualify for the loan and pay costs in association with the assumption. It does not seem like that is the direction this guy plans to take - but that is no more than a gut feeling on my part. Ask him to write you an offer, on a written contract, then pay the money to hire a real estate attorney to vet it for you. You need representation in a major way - no two ways about that.
3 votes Thank Flag Link Wed Feb 13, 2013
NOOOOOOOOOOOOOOOOOOOOOOOOO don't do this.

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.
1 vote Thank Flag Link Thu Feb 14, 2013
Bruce Lynn, Real Estate Pro in Coppell, TX
MVP'08
Contact
Find out from your loan company if your loan is assumable, ask for forbearance, and a short sale may help you, however your credit will probably take a hit, but that's going to happen anyway, you should talk to a loan office about that. Maybe deed-in lieu of foreclosure could be an option, but again first thing is to talk to your lender about your options.
1 vote Thank Flag Link Wed Feb 13, 2013
Short sale is your only option. I would not sign over the deed. What if the new buyer doesn't pay the payments. You are only going to end up with that foreclosure that you are dreading. DON'T do the assumable....you are asking for major trouble. Nobody buys a house that is under water
0 votes Thank Flag Link Thu Mar 7, 2013
It all depends on how soon you plan on purchasing again, that will be the major factor in going forward with a short sale. Honeslty, I wouldn't hesitate to turn the property into a rental especially with the help of a seasoned agent you should be able to find an excellent tenant.

Keller Williams Realty
Real Estate Consultant
Joseph Fernandez
Cell: 817-975-7258
Off: 817-635-1028
0 votes Thank Flag Link Mon Feb 18, 2013
Kim and Bruce have provided you the appropriate warning.
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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.
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YOU MUST HAVE SOMEONE WITH EXTENSIVE EXPERIENCE to review any contract BEFORE you sign it.
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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.
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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?
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Often, you must choose the least worst option.
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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
727.420.4041
http://RealEstateMadeEZ.us
Movie Tour
http://youtu.be/g1H-_ny-Mnk
0 votes Thank Flag Link Thu Feb 14, 2013
Bruce always has great answers.
0 votes Thank Flag Link Thu Feb 14, 2013
Hi Angelica,

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.

Dixon
Realtor
http://www.findyourtexashome.com
0 votes Thank Flag Link Thu Feb 14, 2013
1. If he can purchase the home ... where you go to closing (title company) he has either cash or mortgage YES the deed would convey to buyer.

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

Contact my office today where I can show you many amazing homes work with your family specifications.

Lynn911 Dallas Realtor & Consultant
Multimillion Dollar Sales Producer
972-699-9111
http://www.lynn911.com

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0 votes Thank Flag Link Thu Feb 14, 2013
That will be your choice. Your asking it seems for legal advise and Realtors can not comment legally.

Kenny
Turtle Creek Realty
0 votes Thank Flag Link Wed Feb 13, 2013
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