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Old 02-05-2009, 10:37 AM
 
11 posts, read 34,142 times
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Currently in a condo that is valued at $150,000 less than what we owe and would like to sell our condo and take the loss but honor our financial obligation on the $150,000 difference in addition to buying something bigger. Called the bank(Countrywide) to find out if it is possible and they said that the only way to do this is to short sell with a promissary note and your credit wouldn't be effected. But they said that we would not qualify to do a short sale because we have no financial hardships, especially considering we would be buying something more expensive. Is there anyway we can do this maybe using a different bank that would loan the money to cover the difference in our sale and loan the money for the new place we buy???
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Old 03-01-2009, 04:12 PM
 
Location: Wake Forest, NC
835 posts, read 3,534,882 times
Reputation: 646
Quote:
Originally Posted by trd1178 View Post
Currently in a condo that is valued at $150,000 less than what we owe and would like to sell our condo and take the loss but honor our financial obligation on the $150,000 difference in addition to buying something bigger. Called the bank(Countrywide) to find out if it is possible and they said that the only way to do this is to short sell with a promissary note and your credit wouldn't be effected. But they said that we would not qualify to do a short sale because we have no financial hardships, especially considering we would be buying something more expensive. Is there anyway we can do this maybe using a different bank that would loan the money to cover the difference in our sale and loan the money for the new place we buy???

It is commendable for you to want to honor your obligation to pay your morgage in full. Depending on your assets you may be able to get a secured loan against them to pay the difference between your sales price and the current mortgage balance. Definitely worth a try to preserve your credit as it is more important then ever to have good credit.
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Old 03-01-2009, 05:15 PM
 
Location: central, between Pepe's Tacos and Roberto's
2,086 posts, read 6,106,149 times
Reputation: 952
Quote:
Originally Posted by BrokenCreditDotCom View Post
That's an interesting scenario. There's something called 'buy and bail' where someone buys another property and then stops making payments on the current one. To prevent the 'buy and bail', lenders require that the current property have equity for the borrower to buy another property.

Additionally, if you completed the short sale first, based on current regs and because of the unsecured promissory note, you'd be precluded from purchasing another property right away.
This is not entirely true. If the other property is an obvious upgrade (substantially closer to work, more square footage, moving from a two story to a single story for medical reasons, etc.) and the borrower can qualify with both mortgage payments then no lender that I know of or work with will deny a loan. The equity rule is specific to allowing the use of rental income to qualify for the new purchase when converting the existing primary into a rental property, and although FHA and FNMA/FHLMC have this rule, VA does not.

To expand on the second point as well, for all intents and purposes a short sale is the same as a foreclosure. If you short sell your property, regardless of promissory note for the balance of indebtedness, you will not be able to acquire an FHA mortgage for 3 years and you will not be able to acquire a conventional mortgage for 5 years.
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Old 03-02-2009, 02:17 AM
 
Location: Sacramento
2,568 posts, read 5,849,612 times
Reputation: 1905
Have you considered renting out the condo?
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