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Long story short - live in Southern CA, and are completely upside down on our mortgage ($100k). Our once nice neighborhood has fallen into ruin - gang presence, drugs, scum bag renters, abandoned and dilapidated homes. There have been police raids, our cat was killed by pitbulls, our dog brutally attacked by pitbulls while walking him on the leash, our car has been broken into, home vandalized, we've heard shootings....it has become a nightmare.
So bad in fact that I'm moving my family out. Our lives and their safety is #1. My wife and I also will have employment opportunities in about a year in another state. We are going to live with my parents meantime, until we are able to get out of Southern CA.
In our situation - yes, we're walking away - should we try for a short sale or foreclosure? Keep in mind, we do not want this home. My wife was never on the loan or the title, so we can work off of her credit in the future.
How do we work this in a unique situation like ours - where we're not struggling to stay in a home we actually like? We just want to move on with our lives, and I will protect my family at all costs.
Thank you if anyone has advice to share, and please no responses about how this is "my fault" and "my responsibility" blah blah blah...
It would be incredibly foolish to just accept a foreclosure. I would try very hard to market the house at a 'break even' price, but being $100K upside down would seem that a short sale is more likely.
If you finances are in good shape the lender may be reluctant to forgive your indebtedness, but a short sale is almost certainly better for them than a deed in lieu of foreclosure (which would be a bit better than foreclosure...).
If you can track down an investor that wants to expand their holdings and does not care about the neighborhood that is the best bet, but it sounds like even some "slum lord" types would have their hands full in your neighborhood...
I guess I never thought about the deed in lieu.... so if a short sale wasn't accepted, then I should do that rather than foreclose?
I'm not worried about any type of recourse, as both my primary and my HELOC were purchase money loans used to secure the house at time of purchase (so they are both non-recourse loans).
The only negative is my credit being hit for 7 years, but since we would work off of my wife's credit, that isn't even that big of a deal I suppose
If you bought between April 2005 and July 2007, you are eligible for the Mortgage Forgiveness Act of 2007. It goes until 2012. If you do a short sale, the balance is forgiven and then you fill out form 982 for the IRS - all done, all gone.
Now, you just need to short sale it.
I'm sad for you and your Cali neighbors. It's really a shame.
If you bought between April 2005 and July 2007, you are eligible for the Mortgage Forgiveness Act of 2007. It goes until 2012. If you do a short sale, the balance is forgiven and then you fill out form 982 for the IRS - all done, all gone.
Now, you just need to short sale it.
I'm sad for you and your Cali neighbors. It's really a shame.
Thanks for the info and the understanding Bette. Yes it is a sad situation...and I'm sure I'm not alone.
I put money down originally in October of 2004.....but that was before the home was built. I actually finalized all loan docs and took possession of it in September of 2005....so would I qualify for the Mortgage Forgiveness act?
Thanks for the info and the understanding Bette. Yes it is a sad situation...and I'm sure I'm not alone.
I put money down originally in October of 2004.....but that was before the home was built. I actually finalized all loan docs and took possession of it in September of 2005....so would I qualify for the Mortgage Forgiveness act?
You should qualify. The day all docs are signed and finalized should be the day homeownership officially started.
If you bought between April 2005 and July 2007, you are eligible for the Mortgage Forgiveness Act of 2007. It goes until 2012. If you do a short sale, the balance is forgiven and then you fill out form 982 for the IRS - all done, all gone.
I read the mortgage forgiveness act and I didnt see where it stated that you had to purchase the home between April 2005 and July 2007. It made it sound like the debt had to be incured (taxed) between 2007-2009 (but it was extended out to 2012). Its my understanding that when the purchase was made is irrelevent. Its based on when the short sale/foreclosure or the balance is taxed. For more accurate information for your County & State check with your county CDA.
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Short Sale
