FORECLOSURE, SHORT_SALE, DEED IN LEIU OF FORECLOSURE Or WALK AWAY: The Home Value Has Decreased And We Are Moving Out Of State. What Should I Do?

Asked by Melissa Arias, 96762 Mon Apr 5, 2010

The Home Value Has Decreased And We Are Moving Out Of State. What Should I Do With my House? We Cannot Afford To Rent It Out Since We'd Only Bring In 50% Of What We Are Paying Each Month For Our Outrageous Mortgage

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Manu Kapoor, Agent, New York, NY
Wed Apr 7, 2010
I would not advice any other than a "Short Sale". Even as the Obama Administration introduced the new short sale plan in which home owners recieve cash back.
Do read my blog as attatched.
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Bob Movin-On, , Hartford, CT
Wed Apr 7, 2010
Well the Realtors are right if you want to give up and make a life changing move. Nobody told you to contact your bank and start working with them they do not want a short sale, deed-in-lieu-of-foreclosure, or foreclosure, they have enough of them already. Their are many programs out there for people in your situation and so many just walk away or take the advice of a Realtor and short sell without attempting to save themselves for a life changing event.
Short Sale, deed-in-lieu-of, deed-for-lease, and foreclosure are all forms of foreclosure and carry life changing ramifications.

Ramifications of Foreclosure, Short Sale or Deed-in-lieu-of-foreclosure

Here are some of the ramifications of foreclosure, short sale or deed-in-lieu-of-foreclosure, there are many more like your job, yes employers are checking credit records these days.

Your credit score will be reduced by 200-400 points, short sale a little less 100-200 points.

All forms of foreclosure stay on your credit report for 10 years.

After you have gone through foreclosure, short sale or deed-in-lieu-of-foreclosure there will be what is known as the "waiting period", this period of time varies for each and can be reduced if you had some type of extenuating circumstances that caused the foreclosure:
Waiting Periods to Buy After Foreclosure
* Buying After a Foreclosure
The waiting period is 5 years up to 7 years.
* Buying After a Foreclosure with Extenuating Circumstances
The waiting period is 3 years up to 7 years.
* Buying After a Deed-in-Lieu of Foreclosure
The waiting period is 4 years up to 7 years.
* Buying After a Deed-in-Lieu of Foreclosure with Extenuating Circumstances
The waiting period is 2 years up to 7 years.
* Buying After a Short Sale
The waiting period was just upped from 2 to 3 years. However, if a seller does not have a 60-day late pay, that seller may immediately buy another home. It's a reason to stay current on your payments while the home is on the market as a short sale.
In addition to the waiting period, most loans require a minimum down payment of 10% and a minimum FICO score of 680. The home purchase must also be the principal place of residence, not a rental nor a vacation home.

Lastly, most loan applications will ask the dreaded question "Have you ever been foreclosed on?" this stays with you for life, many think that because it will not show up on the credit report after 10 years they can answer "no", well lying on a loan application is a felony that carries a major jail term, so be aware.
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Carlos Ramir…, Agent, Mesa, AZ
Mon Apr 5, 2010
Hi Melissa,

As a general rule your best options are 1) Short Sale and 2) Deen in Lieu of Foreclosure, in that order. Generally the last solution is to just let it go into foreclosure. But the final decision, and your best option, will depend in many factors. Your best route right now is to discuss your personal circumstances with a local agent. After that you might also want to consul with a tax expert and a lawyer.

I live an speciliaze in the east valley and will gladly help you.

Carlos J. Ramirez, PC, ABR, CNE
Associate Broker/Realtor, HomeSmart -
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Anna M Brocco, Agent, Williston Park, NY
Mon Apr 5, 2010
Not knowing any of your finances/assets--consider consulting with any reputable attorney who specializes in real estate first and check out all your options--then make an educated determination.
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Heather Wern…, Agent, Gilbert, AZ
Mon Apr 5, 2010
Hi Melissa,
So you can tell that the general concensus to answer your question is: it depends! I don't want to be redundant, but everyone else is correct. The best option for you will depend on the type of loan(s) you have, and the rest of your financial situation. You can start by meeting with a professional Realtor, who should be able to make a recommendation based on your whole financial picture, but before you move forward with a short sale, you should talk with an attorney (bankruptcy/real estate) and tax advisor. These professionals can explain the legal and financial responsibility you may have by completing a short sale. They also might bring you peace of mind about your decision, especially if they can document that your loans are non-recourse loans, and that there could be no tax implications. Talking with an attorney and tax advisor will give you the information to make the best "big picture" decision for you and your family.
If you decide to move forward with a short sale, you should interview several Realtors/Brokers to ensure that they are professional, educated and experienced. Not all Realtors are alike. You'll be working with this person for several months, and trusting them with one of the biggest financial investments of your life, so you want to really make sure it's a good match.
If you have any other questions, please let me know! :)
Best of luck to you and your family!

Heather Werner, Broker/Realtor
Ravenswood Realty
Gilbert, Arizona
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Doug McVinua, Agent, Gilbert, AZ
Mon Apr 5, 2010
Hi Melissa

As a Gilbert resident myself I understand your frustration and challenge. You do have options to consider as you prepare to leave. The options likely have more questions than a format like this one would endure without 50 opinions that might not be relative to your situation.

We could have a conversion and potentially determine some avenues that make the most sense for you to explore further. We have completed a number of Short Sales and understand the pros- and cons of that as well as the other possibilities. In the end we can provide you with attorneys that will consult with you also for a very reasonable amount.

Don't despair, lets talk and find a solution that fits your needs.

Doug McVinua
Choice One Properties
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Tina Rospond, , 85004
Mon Apr 5, 2010
Hi Melissa,

This is not easy to answer in this forum, too many variables. However if you have to move out of state for work that CAN BE considered a hardship if you can prove that the rent you get + your income could not cover the expense of the loan. But if you have other hardship that would factor in as well.

There is so much more to say on this topic, I am a CDPE designated realtor. Tina Rospond. 602 618 4417 I would be happy to consult with privately with you one on one on your topic of discussion.
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Denise Pias, , Gilbert, AZ
Mon Apr 5, 2010
You do have some options Melissa. I am a realtor w/RE/MAX Alliance Group in Gilbert and assist many homeowners like yourself Short Sale your home in the event you choose that option.
I always suggest you speak with your tax advisor and real estate attorneys to make certain that you are making the right decision for yourself. I have some charts and Q&A's that might be helpful and I'm always happy to sit down with you with no obligation to discuss your options in further detail in the privacy of your own home. Denise Pias 480.694.2320
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