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So it is not an option to sell for less than what you owe and still continue to pay on the shortage? I would think this would be something I would want to look into--then you don't have to worry about renters--you are morally free--and can go on with your life with a small payment in order to finish it out--maybe you even have a family member to spot you the cash so you can pay them back? A parent or grandparent?
So it is not an option to sell for less than what you owe and still continue to pay on the shortage? I would think this would be something I would want to look into--then you don't have to worry about renters--you are morally free--and can go on with your life with a small payment in order to finish it out--maybe you even have a family member to spot you the cash so you can pay them back? A parent or grandparent?
I guess it depends what the shortage is. In our case, it was $100,000, and no, we could not afford to pay that back on top of paying rent for a new apartment. That would not be a "small payment" each month. We do not have relatives who would be able to "spot" us a hundred grand, nor would I ask them to. People who are doing short sales are typically not going through all of the hassle for a few thousand dollars.
If the neighborhood has turned for the worse where there is violent crime, there really is no question on what needs to be done. You need to get out of there and just get rid of the house.
If the neighborhood has turned for the worse where there is violent crime, there really is no question on what needs to be done. You need to get out of there and just get rid of the house.
^^^I understand what you mean. The violent crime hasnt happened in our subdivision, but a few subdivisions away, so it's definitely out there. It's so weird how this part of FL has changed so drastically, especially the last 5-10 years.
First of all, I'm very educated. Second, my advice comes from first consulting my cousin (who's a partner in a big law firm in DC with over 20 years experience), my own tax advisor, and my own financial planner so I do know what I'm talking about. I've run my own business for over 5 years and know all the ins and outs of taxes.
To clarify matters on the moving as "hardship" You just cannot say "I am getting a better job offer in another state so I want to get out of my house with a short sale. The bank will not look kindly at that, as long as your current job income can support your current mortgage. You need to prove hardship. That means telling the bank you were laid off from your job in one state and have to move for another job in another state. Other real examples of hardship besides job loss, include divorce, medical illness, death, bankruptcy. If you were involuntarily being transferred for a job in another state, that's a different situation and most banks would consider it as hardship.
Second, you need to get your finances in order. The banks will want to see tax returns, bank statements, any taxable and nontaxable investment accounts. If you have significant assets, it's best to do planning months in advance to shield those assets. The bank may ask you to sign paperwork or even ask you to pay back and X amount on the loan at very favorable interest rates (like 0 percent over 10 years if you have the income to support it)
Third, if there is a home equity loan taken out on the property that was not used to improve the home (say home equity loan to pay off credit card/student loans), it will make for a tricky situation. You should read the
The Mortgage Forgiveness Debt Relief Act and Debt Cancellation on the IRS website. There a big difference between home acquisition debt vs.home equity debt.
Short sales are in a "gray area" in terms of credit bureau reporting. Like I said some may report "agreed to less than owed" This will make a huge hit on your credit score. Some may not report it.
Look short sales are confusing. There's a reason up to 80% of short sales fail. The only reason short sales have even become an option because the government has given people a "sense of entitlement" by giving them this get out of jail card for free. Just remember, prior to to the temporary Mortgage forgiveness act, most homeowner who even consider short sale would have been hit with a 1099 at the end of the year and would have had to pay taxes on the amount forgiven by the bank. That's a big deterrent and the real reason no one did short sales before this law.
I believe my advice is sound. My wife is very close friends with our real estate agent who has over 25 years experience in the business. I have financial planner, my own personal lawyer and my own CPA working for me.
Proceed with caution, do your research. Everyone's situation is unique.
I have a HUGE problem with this...
My husband's company was shutting down in the area in which we were living.... closing their doors. This was completely unexpected as they had just built a brand new R&D center the year before.
We just built a home with the expectation that we were going to be there for a very,very long time.
Built a home well within our means, decent down payment,no ARM,etc...
We built a home that we could most certainly afford.
My husband had to look for a new job when it became clear that everyone was eventually going to loose their jobs.... Offered a great position in a different state.
We knew that the market wasn't good,but we had absolutely NO idea just how bad it was or how bad it was going to get.
We have now been living in our new area for almost a year, other home still on the market with absolutely no activitiy, it is BRAND NEW, of course we don't have a lot of equity in it, have tenants who can't afford what we asked for in rent, so we are still pitching out money every month for that home in addition to the home we are renting.
We have tried to get a mortgage adjustment however,the banks will not hear of it because of my husband's salary.
He makes a very decent salary, however ,that doesn't mean that we can afford to continue to pay for 2 homes at the amount that we are paying out.
We have been doing it for almost a year,and we feel that it is a HUGE financial hardship and the banks should acknowledge that.
We moved because we had too, there were no job offers coming in from the area in which we were living and needed stable income....
The ironic thing is that the banks WILL help you much quicker if you have already defaulted and are ready to go into foreclosure. We are choosing the responsible route and meeting our obligation to pay our mortgage,however, this cannot continue for very much longer.
How many people can pay for 2 homes,cars,utilities,HOA's,etc.. for much longer than that?
I am a stay at home parent and have been putting my resume back together, however, I don't think that me working at night is going to make a huge difference right now.
We will have to find after school care for our children and possibly longer than that when my husband travels. It is absolutely ridiculous and infuriating that the ones getting the help are the ones who chose to be irresponsible to begin with.
I am sick about it and want to know why in the world a relocation and inability to sell a home due to the current market situaion is NOT a financial hardship??
I think that we shouldn't have to use the foreclosure properties as comp's to our house either. That is making matters even worse!
Someone needs to help the responsible people, not the irresponsible ones!
I have a HUGE problem with this...
My husband's company was shutting down in the area in which we were living.... closing their doors. This was completely unexpected as they had just built a brand new R&D center the year before.
We just built a home with the expectation that we were going to be there for a very,very long time.
Built a home well within our means, decent down payment,no ARM,etc...
We built a home that we could most certainly afford.
My husband had to look for a new job when it became clear that everyone was eventually going to loose their jobs.... Offered a great position in a different state.
We knew that the market wasn't good,but we had absolutely NO idea just how bad it was or how bad it was going to get.
We have now been living in our new area for almost a year, other home still on the market with absolutely no activitiy, it is BRAND NEW, of course we don't have a lot of equity in it, have tenants who can't afford what we asked for in rent, so we are still pitching out money every month for that home in addition to the home we are renting.
We have tried to get a mortgage adjustment however,the banks will not hear of it because of my husband's salary.
He makes a very decent salary, however ,that doesn't mean that we can afford to continue to pay for 2 homes at the amount that we are paying out.
We have been doing it for almost a year,and we feel that it is a HUGE financial hardship and the banks should acknowledge that.
We moved because we had too, there were no job offers coming in from the area in which we were living and needed stable income....
The ironic thing is that the banks WILL help you much quicker if you have already defaulted and are ready to go into foreclosure. We are choosing the responsible route and meeting our obligation to pay our mortgage,however, this cannot continue for very much longer.
How many people can pay for 2 homes,cars,utilities,HOA's,etc.. for much longer than that?
I am a stay at home parent and have been putting my resume back together, however, I don't think that me working at night is going to make a huge difference right now.
We will have to find after school care for our children and possibly longer than that when my husband travels. It is absolutely ridiculous and infuriating that the ones getting the help are the ones who chose to be irresponsible to begin with.
I am sick about it and want to know why in the world a relocation and inability to sell a home due to the current market situaion is NOT a financial hardship??
I think that we shouldn't have to use the foreclosure properties as comp's to our house either. That is making matters even worse!
Someone needs to help the responsible people, not the irresponsible ones!
That's exactly it. My wife and I are going about it the responsible, moral way. We know we could skip payments on the house for a year before giving into foreclosure or a short sale. But here we are paying every mortgage pyment on time and trying to go about this best way. I know people in our situatuion are not paying their mortgage and pocketing that money, and getting away with it for a year before the bank finally kicks them out. We are doing the complete opposite, but on paper, we look just as guilty as the others when we are going about it in a totally different way.
is everyone on here who is in a short sale current on their mortgage? We are current and intend on staying that way until our house sells, even if that means that we have drained through every penny that we have saved since graduating from college 22 years ago!
We have just been told by Bank of America today that because we are current on our mortgage and have not even been late in this past year while paying for 2 homes, that a short sale would be approved in no more than 3 months..... wonder how much truth there is to that....
The OP should consider renting an inexpensive place near his new job and visiting the family on weekends etc... still paying current mortgage of course. Friends did this for a few years. Not fun but it was the right thing to do.
But this whole discussion is the crux of the problem for most people. Unfortunately, there is not enough negative consequences to a short sale. As a matter or fact, in some ways it is less painful than doing the right thing.
If I have a home with negative equity, let's just say $100,000 negative for ease of the math. If I short sell and walk away from the negative balance, our current tax law does not even require you to pay taxes on that amount forgiven.
Now, let's say you "do the right thing" and work out a way to pay off that $100,000. You would have to pay $1980/mo to pay off the $100,000 (7% interest) in 5 years. Then you have to save to purchase your new home. Most can't afford to pay off that sum in 5 years, so it would be more like 10 years. Then you need to start saving money for a new home. So you are most likely looking at 15 years before you are back to being able to afford a home.
The person who walked away from the debt, even with a credit hit is probably whole again in 5 to 7 years - credit repaired and down payment saved for a new home.
That is the fundamental problem. Do something to encourage people to take the right path. Offer a capital gains loss on taxes for folks that do the right thing. AND reverse the tax decision - make folks pay the tax on the forgiven loan amount.
And before anyone argues that I don't know what it is like, we did have to sell our home for a six figure loss and I did come to table with money and I am still working to get back to even two years later.....
is everyone on here who is in a short sale current on their mortgage? We are current and intend on staying that way until our house sells, even if that means that we have drained through every penny that we have saved since graduating from college 22 years ago!
We have just been told by Bank of America today that because we are current on our mortgage and have not even been late in this past year while paying for 2 homes, that a short sale would be approved in no more than 3 months..... wonder how much truth there is to that....
NYMD67... I really hope that is the case.... but I wouldn't hold your breath
The Bank doesn't care about you. This is just business to them. You are diligently paying back your mortgage... You are using all of your savings to pay them back. In their eyes, that's "guaranteed" money. And after your short sale (unless you are in a state like California), they are still going to come after you with a deficiency judgement since it sounds like you can obviously pay for two homes. And even if this is California, you can still be hit with a deficiency judgement or 1099'ed and possibly still have to pay taxes on the balance...Especially if you are trying to sell your second home (as opposed to your Primary residence).
I hate to say it, but if you continue down this path, you will be ruined financially for a bit.... The good news is that it sounds like you make a good living so you can rebuild... Let's just hope you don't lose your job.
I'm not going to say what is morally right or wrong here... I can argue both sides of the fence....
The point of my post is... don't believe a word the bank says.
Good luck!
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