Foreclosure in 33809>Question Details

Thomasgun, Other/Just Looking in 33809

i bought a house in 2006 for $170,000 as my primary house, $30,000 down, in 2009 i inherited $170,000 and purchased a second property, twice the size

Asked by Thomasgun, 33809 Thu May 13, 2010

in a nicer area of florida. This second property was paid off in full and we now live in it. im currently renting my first property out for $800 a month but i have to make up the remaining $400 myself. is there a way for me to get away from my first house without losing other assets ( cars for example ) or leans on the second property, or deficiency payments etc? i really dont want the first property anymore and they are now selling for around $100,000

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Ruben Pizarro’s answer
Thomas I understand where you're coming from as well as where Daniel Burrows is coming from. As a short sale specialist sometimes i feel as if it doesn't make much since to keep a Lost, Depreciating, Expense Investment, it's like renting.... BUT... The market will eventually rebound. Think outside the box for a second. You need to look at what could potentially happen if you let go of this property. I'm not an attorney but i always research to better sooth my customers frustration with these situations its my job... It is true that on a Primary Home, commonly referred to as a homesteaded property, unless it's a tax lien the banks cannot force the sale to satisfy a lien. *Florida* But they can attach a deficency judgement, and all it's little goodies (attorney fees) to your primary resident, and even though they cannot foreclose on you if you ever try to sell it, the lien must be satisifed before you can offer clear title. Something to really think about.
So lets estimate $400 x 12 = $4,800 a year for 7 years which is $33,600.00; It could goto auction and sell for $70k, now you have a $50k deficency. Best of luck, call me if you need to talk 863-409-1734, i know $400 goes a long ways in this economy, but simply said if you can afford it, keep paying it. Best of Luck :-)
0 votes Thank Flag Link Wed Aug 25, 2010
Thomas you are being short sighted and a bit greedy. As of right now your are probably paying $150 or so of that $400 towards Principle if I am not mistaken. This is not a cost it is an investment. Plus you get tax breaks including depreciation so of the remaining $250 per month "loss" you are probably getting all of that and more back in tax breaks, or at least you should be. So the rental property is really not costing you anything.
Down the road prices will go back up and so will rent and you will have a retirement income that paid for itself. Why would you want to mess up your credit to get rid of that?!?!?
1 vote Thank Flag Link Wed May 19, 2010
I like Marie's answer a lot. Basically you got a much better house and all it's costing you is $400 a month. Why do you think the lender on your first house would let you walk away? Just because you don't want it? Hold on to the first house until it's value recovers to the level of the mortgage and then dump it.
1 vote Thank Flag Link Sat May 15, 2010
Hi Thomas,

Lenders want to see a hardship. Doesn't sound like you can prove a hardship and in fact you are in a better position that most people.

Florida is a deficiency judgement state so they can get every penny back from you, including attornney fees, late fees, etc. They can attach your wages to get it once they get a deficiency judgement. Your homestead is probably safe from judgements but not cars, bank accounts, stock accounts (I think retirement funds may also be safe, too).

Lastly if the lender was foolish enough to forgive your debt, they will report it to the IRS on a 1099 as "ordinary income" so you may end up with a substantial tax bill!

You may have to continue to lose about $5k per year... unless you want to just get rid of it and refinance your primary residence to pay the loss on the rental house. Rates are very low, about 4.75% for a 30 year fixed so now may be the perfect time to do that refinance.

Hope this helps.

All the best,
1 vote Thank Flag Link Fri May 14, 2010
Even if you had used the inheritance to pay off the first house, sold it, and used the proceeds to buy the second house, you would still have a monthly payment so it's not all bad. You could sell the first one at a loss, but take out an equity loan on the 2nd house to pay off the first one. I think you should consider to continue renting it if you can so that someone else is paying off 2/3 of it for you.
1 vote Thank Flag Link Thu May 13, 2010
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