lovinglife Posted March 4, 2013 Share Posted March 4, 2013 I just posted something about short sales but just wanted some other perspectives. We are planning to relocate in a few months but are terribly underwater in our mortgage. We are considering attempting to rent the home ( although I am not sure if we have the funds we would need to be landlords), putting the house on the market as a short sale, or worst case scenario facing foreclosure. Any words of advice from more experienced people? We have lived here for 4 years, the market has continued a steady decline since we bought and houses in our neighborhood seem to sit on the rental/sale market for months at a time. Our neighbor two doors down recently had her home listed (similar style) for a full 100k less than we owe and it STILL did not sell. We are excited about the move for other reasons, but trying to better understand our options in regards to the house. Also, we bought with a VA loan. We cannot use that again, right? TIA if anyone can offer any advice! Susie Quote Link to comment Share on other sites More sharing options...
Momof3littles Posted March 4, 2013 Share Posted March 4, 2013 Have you talked to your lender about a short sale yet? I'd find the pros in your area who handle a LOT of short sales and talk to several. Have you explored the credit hit you'd take with a SS vs. a foreclosure? Quote Link to comment Share on other sites More sharing options...
Mrs Mungo Posted March 4, 2013 Share Posted March 4, 2013 You can only have one VA loan out at a time. So, you would need to sell your current home before you can take out another VA loan. There is actually a program called the VA Compromise Sale program designed to help people with VA loans who are upside down on their mortgage. But, it is not for people on active duty. There is another program called Homeowners Assistance Program for those on active duty. Quote Link to comment Share on other sites More sharing options...
lovinglife Posted March 4, 2013 Author Share Posted March 4, 2013 I just looked up the VA compromise program, I had not seen that information before. Thanks! Quote Link to comment Share on other sites More sharing options...
.... Posted March 4, 2013 Share Posted March 4, 2013 Hi, we were just in that situation. It took 3 years to get rid of our house after our relocation. I ended up taking out 3 different loans + saving a sum of cash to pay off the difference between the pay-off of our mortgage at closing versus the buyer's purchase price. I had to bring almost $30,000 to closing (and ours was a really cheap house to begin with). I closed on that house by the skin of our teeth. I mean, I had maybe a $200 buffer. :eek: First, you need to figure out how underwater you actually are... Also, do you have cash anywhere that you can pull out to make up the difference? (401K, etc) Some 401Ks...you can pull money out of. My dad pulled a huge sum of money out of his once to help my uncle with HIS underwater house. Also, we were landlords once, too. You do need to have some disposable income for that endeavor. Stuff breaks and you have to fix it. Our insurance was also more expensive. You may end up hiring a management company to deal with the rental. If you're looking at giving the house back to the bank, look to see if you are in a recourse state. You might end up in bankruptcy if you foreclose on the house. :grouphug: I think I lost 10 years of my life going through that house ordeal. We just sold ours in December. We moved out in 2009 (?). Edited to say: My EYE started twitching after I typed that out! LOL! Quote Link to comment Share on other sites More sharing options...
Paintedlady Posted March 4, 2013 Share Posted March 4, 2013 You could also sell the house and take out a loan to repay the difference of what you still owe. This seems to be an unpopular option, but I believe it's the right one. Do you really need to move, or do you just want to? You could always decide to stay in the house if you don't really need to move. Quote Link to comment Share on other sites More sharing options...
lovinglife Posted March 4, 2013 Author Share Posted March 4, 2013 That is a tough question. We live 3000 miles from family, and my FIL is dying (hospice for melanoma). We have 6 kids, ages 6 months-9 yrs. Dh lost his job Dec. 2011. He was able to find another job last August. This job makes much less (30%) than previous one but we are scraping by. However, he has no benefits, commutes for approx. 3 hours a day, and has a VERY erratic schedule that is prone to change at the last minute. He is soldiering on ( actually a former soldier (; ) but it is slowly killing us with the strain. We have an opportunity to move to a steady factory job and my parents have graciously offered to help us out by letting us stay in their 1700 sf basement to get back on our feet. It would be a different field, but right now my dh's field, international affairs and intelligence, is Not looking promising. This would allow us to be with family, enjoy more time together and recoup some sanity. So do we have to move? For the sake of our sanity, yes. Please don't flame me, this has been a wrenching decision. We strive to be ethical and honest, do all the right things, but sometimes life just gives you miserable choices. We both have advanced degrees, he has served our country, we are trying to raise good citizens, but we find ourselves in a tough spot. Quote Link to comment Share on other sites More sharing options...
Mrs Mungo Posted March 4, 2013 Share Posted March 4, 2013 lovinglife, that's why there are programs designed to help you. I don't think it unethical to use the programs out there for people like you. Here's the full info: http://www.benefits.va.gov/roanoke/RLC/forms/COMP-SALEProgramTrainingVaBeach.pdf One thing to keep in mind with this? Should VA agree to pay the difference between the sales proceeds and the total debt to complete the compromise sale process, the portion of the homeowner’s entitlement used to guaranty this loan will remain tied up until VA is reimbursed in full. Quote Link to comment Share on other sites More sharing options...
Tess in the Burbs Posted March 4, 2013 Share Posted March 4, 2013 I know this is a hard decision. Take the emotion out of it and the chance people will say you aren't responsible b/c of the choices you made. This is simply a business decision. Is it time to cut your loss? Are you willing to take the financial toll of walking away? We had listed our home for short sale 3 years after buying. Market plunged and dh's company was going under. No offer locally was enough to make the payment and stay afloat. Couldn't rent it. Dh found a job making much less 4 hours away. We chose to leave and put up for short sale. We had offers. Plenty of offers. Bank went out of it's way to come up with issues every closing date we had. It was always stupid....dates on papers don't match and it's bank issue and when fixed will get a new due date....do you think they bothered to fix it? We went to our 3rd closing and they did it again. Buyer walked. Interesting enough the house was auctioned off and foreclosed less than a week later. Um, not legal?? We feared this would happen and worried about the ramifications. You need to know the laws. The bank sent a 1099 on the 80% loan but hounded us for the 20% loan(considered home equity loan). They kept offering half off what was owed. But since the house had been sold at auction to another bank and sold/lived in by a new person we didn't give in and pay. Sure enough we got a letter last week saying a 1099 will show up next year for taxes. Waiting it out benefited us in the long run. So yes, it's on the credit report as way past due. I believe the house loan stuff shows up finally as a modified loan. I expected it to say foreclosure. Perhaps with the last part done it will change. It has affected dh's credit. I wasn't on the loan and mine is still perfect. Once we embraced the idea that this business choice had gone bad and put emotion out of it we could proceed without issue. Before that Dh was too emotionally involved to consider this option. We have no regrets now. Ironically we ended up back in this area 16 months later. We are renting and are happy. We do include a statement on rental applications about our foreclosure/short sale issue but we have rented 3 twice since the foreclosure. When it was all happening the landlord knew we had it up for short sale. Being honest is important. Dh has clearance and they have known every step of the way of the situation. It doesn't have to be horrible. And it hasn't been for us. It's a hard decision and not one to make likely b/c it affects credit for awhile. But don't rule it out thinking it's the wrong choice. Quote Link to comment Share on other sites More sharing options...
happypamama Posted March 4, 2013 Share Posted March 4, 2013 I think going into foreclosure, if you exhaust all other options, is a perfectly ethical and moral choice, especially if you took out the loan with the intent of paying for it normally -- you made the best choice that you could at the time with the information you had, but circumstances changed. The deal with the loan is: you make the payments, or you give back the house. As far as I'm concerned, either is a perfectly moral and ethical choice. You're not attempting to get something for nothing. Just consider the credit ramifications and all carefully -- but if you have no choice, you have no choice. That being said, depending on the state, if you let them foreclose, and they can't sell it for what you owe on it, they may be able to sue you later for the difference between what you owe and what they sell it for, and that might be hefty. If you're in the position of possible foreclosure and are certain you don't want to stay there (which it sounds like you don't, and I can't blame you -- my DH commutes 1.5 hours a day, and I can't imagine 3 hours!!), ask your lender about a deed in lieu of foreclosure. That's when you voluntarily give back the house, before they have to go through the process of taking it away from you. It is faster, I think, and some say it's a bit less damaging to your credit, but it should save the lender money because they won't have the attorney fees and all necessary for a foreclosure. Sometimes it's matched with a "cash for keys" program, whereby the lender will actually give you some cash to relocate, in exchange for you leaving the house in decent condition. I have heard that they can't offer the deed in lieu to you, but that you have to ask. If you think you might want to stay after all, I would talk to your lender about a loan modification. These can be tricky to get, but if you have reasonable reasons for the difficulties, and you aren't too far behind, it may well be a good option. Quote Link to comment Share on other sites More sharing options...
.... Posted March 4, 2013 Share Posted March 4, 2013 You could also sell the house and take out a loan to repay the difference of what you still owe. This seems to be an unpopular option, but I believe it's the right one. On my phone so sorry about grammar. But it's next to impossible to get approved for that kind of loan right now. We tried. It's unsecured - there's no collateral to repo when you default. Quote Link to comment Share on other sites More sharing options...
indigomama Posted March 4, 2013 Share Posted March 4, 2013 We recently had to short sale our house. I still do not know the exact difference owed, but upwards of $60,000. We are still waiting to hear back from the lender on exactly how much we will owe and how long we have to pay it back. We had to move for a job. It seemed like the most practical thing to move for the job, but once we start having to repay the loan, it might very well take away any profit we made it moving for this new job. I am still stressed to the max financially. Quote Link to comment Share on other sites More sharing options...
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