It might be in your favor to stay with the same mortgage company, but that doesn't mean you can't shop to see if another lender could put together a better package for you on a new home. With regard to applying debt from one home to a new home -- very unlikely unless home #2 is appraised for the purchase price plus the amount of the shortage on house #1. In general, I wouldn't count on the stars aligning for you in this tough credit market. If you are underwater and can delay making a move in the immediate future, you may want to work on adding a little extra to your house payment each month to whittle down the "shortage" that you may be facing when it comes time to sell. The bank with the first mortgage is going to want to be repaid in full for all of the money you borrowed to purchase house #1. I wouldn't expect the bank to forgive a penny of this debt unless you are on a foreclosure track, and even then, it may be difficult to gain their cooperation. Being underwater on your mortgage is not a "get out of jail free" card.

Best wishes.

I honestly have not heard of where a mortgage company would move it over to another home. The best thing to do is talk to your mortgage company. As another gentleman said going short on a mortgage will have an effect on your credit. Mortgage companies would much rather try to work out something with you than go through the expense of foreclosure or legal processes. Talk to them directly and see what your options are.

Jim
You need someone to provide you with some professional estimates of value.
There are three pieces to this puzzle.
One, if you did sell, how short would you be?
Two, normally if you short sale your credit is dinged to the point where you cannot buy. The lender wants YOU to help in the short sale if you have assets...meaning that you'd have no money for a down paynent IF your credit would let you obtain a loan.

Three, is your situation is so bleak that the lender will let you have a short sale, then you shouldn't be able to qualify for one.

Now, it is possible that the lender might issue a promissory note for the difference. However, your question really requires some in depth analysis by a local market expert, and then I would contact the lender as to your options.

Jim,

I would give it a shot, you really have nothing to lose with asking the question. I would think that a reasonable person might be able to convince the bank to do something like that. The only complication is that they probably wouldn't be able to sell the over colaterized loan back into the secondary market. Another option my have is to have the bank give you an unsecured loan for the amount owed. Banks do this all the time and if you think about it, they really have an unsecured loan for the difference right now since they wouldn't be able to sell the house for more than it is worth.

Selling the house short will require an agent with some experience in how to negotiate with the bank. There are some very specific considerations on a short sale that are beyond the scope of this message board. Give me a call if you would like to talk in some more detail about how to accomplish this. I hope that helps.

Cameron Piper
612-839-4202

If I understand correctly, you want to short sale your house because you are upside down on your mortgage. You want to buy a something cheaper, but "on the same level" because there are a lot of nice deals now. You want to ask your lender if this is an option--sell at a loss to the lender, then have the lender stick the loss on your newer, better mortgage. That would be, as you said, "negotiating something creative", you should try college, tap into that creativity. Good luck

My guess is no. If you are dealing with a bank, credit union, savings and loan or mortgage bank, loans gone bad tend to be placed into a completely different department than the one where it originated, and the departments don't talk to each other. I recently made an offer on a short sale property where the same lender (a large national one at that) not only held both the first and second mortgages but also was funding the buyer. None of the three talked to each other, which was dumb because the bank could have sold the house quickly, paid off the first, a good part of the second and "recouped" its losses with the new loan. That was almost three months ago and the house is still sitting there.

You didn't ask, but you might want to seek some advice from a fnancial advisor or really good mortgage professional on how easy or hard it is to get a loan after going upside down. You didn't say what your circumstances are, but your chances of getting another loan down the road can be greatly improved if someone advises you of your options right now.

The only source for a definitive answer is your lender. If the lender says there is nothing that can be done, and your situation is one of want, rather than need, time will get you where you want to go.