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Asked by homebuyer1, Weymouth, MA Wed Sep 12, 2012

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Annette Law…, Agent, Palm Harbor, FL
Wed Sep 12, 2012
Your exasperation comes across loud and clear.What you express is EXACTLY the same sentiments of ANYONE who has purchased a home using financing with appr 20% (or less) down since 2004. They are all upside down meaning they owe the bank more than the price for which the home can be sold.
"I have paid the mortgage for 8 years and still owe $280,000. My house is worth $220,000. I will NEVER get back what I paid originally, I can accept that; but why is it "bailing out" if I sell it to the bank for what its actually worth?
During the last 4 years middle class America has lost 40% of its wealth. In most cases this shows up in the value of their greatest (presumed) asset, THEIR HOMES. Your home likely lost 40% of its value.
Why is it bailing out? You may make an economic decision to not fulfill your agreement with the bank. You may decide to 'bail out' of the mortgage contract. By doing so you 'stick' the lender with a projected loss equal to the earnings minus the sold price. UNFORTUNATELY, the lender with whom you may have worked, (Bank of America, Wells Fargo, Citi, Chase or Never Ever Bank of Clearwater FL) is unlikely to be the one you 'stick it to" because the bank sold this asset (the loan) to someone's pension fund. Perhaps part of your 401K has a aggregate real estate component. Maybe your employer is funding payroll through profits from long term investments with includes real estate mortgages. The banks, the ones who set you up with this loan are no longer a party to it and will not lose a dime should you choose to bailout. Today. just like when you bought your home, banks have every intention of selling the loan to an unsuspecting investor or investment group. If all those buyers since 2004 'bail out' they wlll very likely be 'sticking it' to their neighbor, NOT THE BANK.
Bailing out, by the way, should not necessarily be considered a pejorative term. The best action for you depends on your situation and the economics of your area. You may discover a short sale IS NOT possible for you. You could hand the bank your keys and still owe the balance of the mortgage. Every situation is different. Short Sales or very complex and the most comvoluted process you can imaging. They are the 'Wild, Wild, West of Real Estate," where there is an illusion of rules but anything can and does happen.
You really need to consult a professional to explore the possibilities, the probabilities and follow that with what is best for you and your family. There IS RISK in any action you take. Take the time you need to consult with pros in your area. You have many options. Don't take action without ALL THE FACTS.

Best of success to you,
Annette Lawrence, Broker/Associate
Remax Realtec Group, Palm Harbor, FL
2 votes
Tim Moore, Agent, Kitty Hawk, NC
Wed Sep 12, 2012
First of all saying the house will never be worth what you paid in 2005 is predicting the future and none of us are very good at that. it has happened in the past and it can certainly happen again when / if our economy gets out of the mess it is in now. I am sure you have heard that real estate values go up and down in cycles, this is not likely to change now and so someday homes will again be selling for more than they are now. Same with the stock market, it does not always go up. You can't always win in Vegas. I owned a house in 1993 that I bought in 1991 and it was worth about 15% less than when I bought it. In 2006 it was worth 3 times what I paid and it now is about 2 times what I paid. If I had the boo-hoo's like you do I would have bailed out and taken the loss, but I didn't and darn glad I didn't.

Here is why people might say you are bailing out. You bought the house for $315,000 and put down 10% it sounds like which would leave $283,500 on the loan. In 8 years it is down to $280,000. You say it is worth $220,000 and you want the bank to let you off the hook and take it back and sell it at $220,000 and so they would be out $60,000. You seem to think it's ok that the bank has to lose $60,000 that you agreed to pay. This is one of the problems in our current economy these days.

I am at a loss why you didn't sell the house in 2006 or 2007 when it was probably worth more than you paid for it if you hated the area you are in so much. Good luck
1 vote
Carolyn Gian…, , Cape Coral, FL
Wed Sep 12, 2012
My question to Nicole is: Did this ever happen to you with a car?

I think Nicole is playing with us realtors, looking to see what kind of response we would have to her fake (it must be, right?) question.
0 votes
This is kinda harsh wouldn't you say? This is def not a fake question. I wouldn't come here and waste my time if I didn't have a legit question. My question is legit. What does a car have to do with it???
Flag Fri Jan 18, 2013
Adam Wills, Agent, Kaysville, UT
Wed Sep 12, 2012
Not everyone would place that label on the decision to short sell, but some or many might. The reasoning behind that thought process is simply that you agreed to borrow and repay a loan and now you are falling through on your part of the commitment. Some would say that, ultimately everyone else, starting with the bank pays for your choice and that continues on down the line to everyone else who has to pay higher fees in order for the bank to recover their losses.
0 votes
Ron Thomas, Agent, Fresno, CA
Wed Sep 12, 2012
There are many considerations at play here:
You are looking at it from your point of view, and you need to stand back a ways:

There are many, many people who have lost their homes because of a HARDSHIP; such as Medical Bills or loss of a job.
There are many more who lost their homes because of the way their LOANS were written; either an increasing interest rate, or a balloon payment, or both.
There are many who lost because they agreed to a 100% (or more) LOAN; this would include those who took out a HILOC, Home Equity loan, which increased their debts without regard to the VALUE of the property.
Then, we have a whole bunch of people who bailed out simply because the house was Upside/Down: The fact of whether or not they could continue to handle the monthly payment was never an issue.

The important fact that a lot of people fail to realize is that all these people made a COMMITTMENT to the pay their debts: And the Lenders are painfully aware of this.
For some silly reason, the Lenders think that this impacts their future tendancy to pay their future debts.
If this gives some people a stigma that they have to carry for 2 to 5 years; so be it.
If you feel that you are exempt from this stigma, then you can discuss this with your next Lender; they feel they are right.
0 votes
Marc Comisar, Agent, Bonita Springs, FL
Wed Sep 12, 2012
Every situation is different. You did however borrow the money......When you borrow money you should pay it back. You asked why it is frowned upon....that's the skinny.
0 votes
Terry McCarl…, Agent, Cape Coral, FL
Wed Sep 12, 2012
Depending on your circumstances and who your lender is you may qualify for relocation funds at closing. Certain lenders are giving the sellers thousands of dollars when the short sale successfully closes. I recently had a seller get almost 13k when we closed on the short sale.

Feel free to email me of call me for a confidential consultation.

Terry McCarley, Realtor®, CDPE / Jones & Co Realty
phone: 239-707-4575
0 votes
Danielle Sha…, Agent, Cape Coral, FL
Wed Sep 12, 2012
I'm not sure who told you that or why you may feel that way. A short sale is right for different people in different circumstances. Sometimes it is due to necessity, sometimes it is a prudent financial move.

Work with an agent that is experienced and you feel comfortable with, who has some compassion. Whatever your reasons are for short selling there is no that should be making you feel badly. Keeping your payments up while waiting for approval might be a good idea also (if you're able) which would give you the opportunity for a new purchase immediately afterward.

Good luck and don't let mean people get to you!
0 votes
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