We bought in 2005 and are now upside down in our townhouse. We have great credit and pay our mortgage

Asked by Lisa, Woodbridge, VA Sat Oct 11, 2008

on-time, every time. We will move in 2009 or 2010 overseas (with govt. provided housing). Based on rents I see around us, rent today would be about $1000/month short of paying mortgage, escrow, hoa fees and property management fees. I fear we will be throwing money into a sinking ship. Thoughts or suggestions about how to get out of this mess without destroying our credit.

Help the community by answering this question:

+ web reference
Web reference:


Pat Mulligan,…, Agent, Chesapeake, VA
Sun Oct 12, 2008
I really feel for you, Lisa, and others in similar situations. In 1988, we too, had to sell at a loss. Thankfully, my husband's company covered the cost difference as part of his relo pkg. Maybe that is an option for you?

Keith's advice was right on: you need to get with an experince agent who knows both the rental and sales markets in Woodbridge and who can hook you up with a good tax accountant if you don't know one.

Many find that renting the home is a better option, but as more and more folks are realizing that, the rental market is starting to get softer- ugh! Anyway, not to be negative, but you just have to chose the best option out of some not-so-good ones. The real estate market WILL recover and those who can hang in will benefit in the long run. A short sale, and worse yet, a foreclosures may severely effect your buying power- for everything-- for years to come.

An interesting idea from a conversation with some collegues: in a couple or few years, if a good majority of the average homeowner and previous homeowner's credit is trashed due to late pays, short sale, foreclosures, etc, might we see a "forgiveness factor" in mortgage lending in order to stimulate home sales? An interesting thing to think about-- but I wouldn't count on it just yet.

Good luck and if you need an agent, I know a couple great ones in your area.
0 votes
Peggy James, Agent, Lorton, VA
Sun Oct 12, 2008
You mentioned you will be moving overseas and it's a government move. If you used Finanicing you may be able to consider the VA Compromise Program. This is a low interest loan program set up for Veterans who must leave the area. I helped sell several homes using this program back in 1990-1995 when the market values were down. ( see VA Compromise Link below)

In order to be considered for a compromise sale, several factors must be considered:
* The property must be sold for fair market value.
* The closing costs must be reasonable and customary.
*The compromise sale must be less costly for the Government than foreclosure.
*There must be a financial hardship on the part of the seller.
*On loans that originated on or before December 31, 1989, the seller must be willing to sign a
promissory note.
*There must be no second liens or other liens (unless the amount is insignificant). In
situations whereby there are second liens or other liens, the seller can request that the
lienholder consider releasing the lien and converting the loan to a personal loan.!*The seller must first obtain a sales contract in order to be considered for the program. To protect the seller’s interest, the seller should make the sales contract contingent and/or
subject to the approval of a VA compromise sale.
2 votes
Nathan Corye…, Agent, Alexandria, VA
Tue Jul 10, 2012
The 2 Most Important Factors of the Question are Missing? How much did you Pay for the House? and How much is it currently Worth? Without these two components, its impossible to Render a Clear Solution......
0 votes
By the way, we now live overseas and are renting our Virginia place. However, next year my husband will do a one year unaccompanied tour and our children and I will go to the West Coast for that year. West coast is home, where our support network exists. Wanted to buy something back home, but looks like we will have to rent unless we could figure out how to get rid of our Virginia place without ruining our credit or having to bring a ton of money to the table, or at least make it so our expenses on it don't outweigh our income from the place by over $800/month.
Flag Thu Jul 12, 2012
Perhaps worth $225,000 now. GMAC says will not refi as we have LPMI instead of BPMI. When we took the loan, we were told by USAA there was absolutely NO PMI. USAA sold loan to GMAC. It is guaranteed by FreddieMac.
Flag Thu Jul 12, 2012
Paid $345,000, now worth $220,000.
Flag Thu Jul 12, 2012
Lisa, , Woodbridge, VA
Tue Nov 2, 2010

We are US govt. civilian employees and do not qualify for any of the VA programs. We checked with our bank and other banks. Refi not possible under the 125% LTV program because we would need to bring a lot of cash to the table or find a loan that allows a 140% LTV - not going to happen. Modification and short sale not possible because we can "afford" our payments and cannot show a financial hardship (our income has raised since we bought, not lowered). So, we are renting the place out. Rent does not cover the mortgage fully, let alone HOA fees, insurance, taxes, property manangement fees and repairs. So, we are stuck.
0 votes
Ernest Lewis…, Agent, VA,
Mon Nov 1, 2010
You should do a shortsale. If you are a Veteran you can immediately buy a home VA after doing
a short sale. Call 5712148550 for details.
0 votes
Johnny Yanko…, Agent, Gainesville, VA
Mon Jan 4, 2010
Hi Lisa:

How are you doing?

Were you able to get a loan modification?

Because, the banks are now being "incented" to approve more of these loans at this time.

The demand for townhouses in Northern Virgina has picked up considerably.

What did you end up doing? I am interested to know.

Johnny "Culdesac" Yankoviak
Weichert Realtors
Gainesville, Virginia
0 votes
Vicky Chrisn…, Agent, Purcellvile, VA
Fri May 22, 2009
Lisa - At the moment you are stuck. Trust that everything happens for a reason, and in the long run I bet you'll be happy you are being "forced" to maintain this investment property. You can pay your obligations, and should. Honestly, I doubt a short sale would be approved for you; and it is bad for your credit. A foreclosure would ruin your credit... and it won't result in forgiven debt. So, keep paying the mortgage, get a renter in place - in a few years, I suspect you'll be glad you did.
0 votes
Mohammad Ali…, , Woodbridge, VA
Fri May 22, 2009
Hi Lisa,

I am currently working with a similar situation for one of clients in woodbridge..he had to move out of the USA. we got the short sale approved last week and we are closing in three weeks.
all i can say is , your credit will take a much less hit if you keep paying on time until the house is sold and closed...by the time you are back from overseas , your credit will bounce back...everything is negotiable with the lender. let me know if you need any further information.
0 votes
Lisa, , Woodbridge, VA
Sat Mar 21, 2009
I spoke with our lender, they will not give us any help as our credit scores are over 800, our debt-income ratio is at 25% and we have not, nor expect to have trouble making the payments. We will be moving for sure in 2010. Foreclosures in our area are very high and the value of our home continues to plummet (bought for 345k, now worth 220k--if we're lucky), and still owe $298k. Our neighborhood continues to deteriorate, etc. . .When we leave this townhouse, we will never return to it. Current rental value would put us $1000/month under what our expenses for the home would be. We are stuck, there is no help for people like us.
0 votes
Irina LaMar, , Fairfax, VA
Tue Oct 14, 2008
Depending on how short the rental price vs mortgage payment and other fees, renting out can be the best solution in the long run. Say, it is between $200-$400/month. This can be viewed as 2,400-4,800 annual investment, say 4,800-9,600 for two years. When you are back from overseas trip in two years, you will have a home to live in, the market will get better and in case you decide to sell the house it will be worth more than now plus 3 to 4 times the investment you made.
Additionally look into loan re-negotiation/re-financing and similar solutions - you need to contact your lender to find out what programs are available through them. This usually means staying on hold for a long time, being re-directed from one person to another, etc. But it is worth doing to save your credit.
Don't give up.

All the best!

List with LAMAR - Matching People to Homes
0 votes
Vicky Chrisn…, Agent, Purcellvile, VA
Mon Oct 13, 2008
Lisa - Without knowing more about your situation, I can't make a recommendation. However, if you CAN comfortably afford to keep the home as a rental, you will regain your investment - but not in 1 or 2 years. Over any 10 year period, ALMOST without fail, you can count on a minimum of 3% average annual return from real estate. It's not high, but coupled with other things, like tax advantages, it's not so bad. Plus, if you plan to return at some future point, you'll have your home. And, you'll have the mortgage locked in.

Good luck.
Web Reference:  http://www.vickychrisner.com
0 votes
Keith Sorem, Agent, Glendale, CA
Sun Oct 12, 2008
I was in exactly the same situation. Here is what I found out:
The most important thing you need right is to learn your options, the pros and cons of each, so you can make the right choice. In my situation I got bad advice. It worked out okay in the long run, but it was painful. Let me help you.

First, I would be happy to refer you to one of our top Realtors in your area that can discuss current market condtions. You won't have to guess how much your home is worth, how much you might be able to rent, etc.

Second, our option was to rent it out. Talk with a CPA regarding the impact on your taxes. Retaining the property as a rental might be stressful initially. We had a tough time the first couple years. At the end of seventeen years of ownership the property was worth three times what we paid and was generating positive cash flow. It could be that this will be a great addition to your retirement portfolio - just look at the stock market.

Third, it is possible to consider a short sale. The agent that I refer to you can answer your questions and explain how that might work for your situation. Note that that selling the home at a loss and having the lender absorb that loss is normally for people who are flat broke, so based on your post that does not sound like your situation.

The truth is that many people are in your situation. Most people were not complaining when the market went up, right? But now it's gone down, they want out. Real estate is a long term investment.

Carefully gather information, analyze your options, then act prudently.

Good luck. (The referral does not obligate you nor cost anything).
0 votes
NonRealtor, , 23456
Sun Oct 12, 2008
Don't move. Just keep the townhouse. Good Luck
0 votes
Search Advice
Ask our community a question

Email me when…

Learn more