Can I sell my house even though I am not current on my mortgage payments?

Asked by Tl, Leavenworth, KS Thu Apr 30, 2009

I am currently a homeowner. However, I am in a huge predicament... I am applying for loss mitigation as Iended up being unemployed for a few months and was only able to pay partial mortgage payments. I want to put my house on the market and then go back to renting for a little while. Can I put my house on the market even though I am not current on my mortgage payments?

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Mike Nielsen’s answer
Mike Nielsen, Agent, Lansing, KS
Thu Apr 30, 2009
TI; there are options available for homeowners in distressed situations. The LAST thing one would want to do is have a foreclosure go on their credit record. It sounds like you were exploring all your options, which is the prudent thing to do. Loss Mitigatation/Restructuring and Short Sales are all possible options. The important thing that you should do is keep your property in good shape. If and when you put it on the market, the better shape the home is in, the more likely to command a better price/terms when an offer comes in. I am a Certified Distressed Property Expert and work in the Leavenworth/Lansing area. If you would like to discuss the options available to you, please give me a call. Mike
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Keith Sorem, Agent, Glendale, CA
Thu Apr 30, 2009
I would suggest you consider these suggestions:

1. Talk with a local Realtor regarding the current market value. Preferably a Realtor with Short Sale experience.

2. Contact your lender immediately and let them know that you are unemployed. If the loan servicing agency contacts you respond, answer the phone , and start a dialogue.

3. I would also look into the possibility of leasing the property. Have your Realtor give you an idea of the lease amount. Talk with a tax professional about the tax implications.

4. Try to find a room mate, someone to help share the mortgage cost. Many people are in a tough spot and need a short term living situation. Make sure that you check their credit.

From the lender's perspective, they would rank order their options this way:
1. Keep you in the house, modify the loan IF you want to stay in the house and IF the prospects of you being able to maintain current payments.
2. Keep you in the house, they might modify your loan structure to make it affordable.
3. Sell the property as a short sale, meaning you pay no closing costs, they absorb a loss, pay for closing costs
4. Allow the lender to foreclose - this is the most expensive alternative for a lender which they would rather avoid.

If you would like a referral to an experienced short sale Realtor, let me know. Good luck.
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