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The story is short: We purchased home in 2005 for 218k, put 45k down CASH, moved to another state for job, rented the house in hopes that the market would improve. The market hasn't improved, the house continues to lose value, the renters aren't paying - they know that the rental value is much lower than they are paying now and that we can't replace them for any higher. The house is now worth 110-130k in short sale saturated AZ.
We won't recover the 100k lost for years and years if ever! We just want to be rid of it and count our losses. We have perfect credit - no debt except for this house, no late payments, no liens, no nothin'. I have quite a bit saved up in my business account (self employed), and I'm afraid they won't even think about working with us b/c of it. My husband is laid off, though, so I hear that helps some. We have B of A. Do we call a real estate agent, the bank, or a lawyer?
I agree with VB and will caution that before you call anyone YOU NEED TO DECIDE what your best outcome with each avenue should be.
If you call a real estate agent to list the property it is going to have to be one that has a RECORD OF SUCCESS with short sales, and you have to want to supply the kind of info needed to get the short sale approved.
If you call an attorney you better have a good understanding of the sorts of attorneys that exist and what they will recommend -- those that help people file bankruptcies are unlikely to suggest another option. Those they MAY have helped negotiate a short sale or loan modification are MUCH rarer.
If you contact the lender you should FIRST determine if they are merely servicing the loan or if they hold it. If it is held or backed by a governmental unit there are some pretty clear guidelines that your either qualify for or not. For loans not in those categories the options are less well defined. Most lenders have set up SPECIFIC WEB SITES for those facing problems as well as specific phone lines to deal with folks like you. Have all the info about your loan and personal identifying info, but do NOT share with them anything that would make you ineligible for modification like renting out the home UNLESS you know that you are in the clear with regards to the terms of your loan. Many loans are very clear that the property MUST be owner occupied...
Before you do anything else I would START with these links:
I'd call the bank first and see what they are willing to work out, but BoA can be a pain to deal with, at least in my experience.
A lawyer that specializes in real estate law may be able to advise you on your legal options, and how to protect your business assets from this [presumably personal] debt. If you can find one who's worked with homeowners on a short sale, it's a plus, but I don't know how common that would be in your area.
If you do a short sale, you'd need to call a Realtor, and sooner is better in this case because they can take a while. Just be sure to get an agent who has lots of experience in short sales, and if they've worked with BoA short sales before, that could help even more.
The story is short: We purchased home in 2005 for 218k, put 45k down CASH, moved to another state for job, rented the house in hopes that the market would improve. The market hasn't improved, the house continues to lose value, the renters aren't paying - they know that the rental value is much lower than they are paying now and that we can't replace them for any higher. The house is now worth 110-130k in short sale saturated AZ.
We won't recover the 100k lost for years and years if ever! We just want to be rid of it and count our losses. We have perfect credit - no debt except for this house, no late payments, no liens, no nothin'. I have quite a bit saved up in my business account (self employed), and I'm afraid they won't even think about working with us b/c of it. My husband is laid off, though, so I hear that helps some. We have B of A. Do we call a real estate agent, the bank, or a lawyer?
I would call a lawyer right away, to have him explain the legal options and the ramifications thereof. I would also call the bank pretty quickly, to discuss the issue with them and see what they have to say. They may be willing to work out some modification. Call a real estate agent only if you need the services of a real estate agent. We help people buy sell and rent homes. If you decide to sell it, or to find new tenants (more on that later) then you will need the services of a real estate agent. I always tell people that, while I can give you information about the market & opinions as to the marketability of your house, I'm not the guy to tell you WHETHER you should buy or sell.
As to the tenants. I'd IMMEDIATELY start of action to get them either paying rent or out of the house. I understand that you can't replace them at a higher rent, but if they aren't paying anythinng, then they are COSTING you something. Get them paying, or get them out. Even if you have to rent it to someone else for less than your lease with them demands, it'll be more than the nothing they are paying.
I called my CPA today to make sure I understand the consequences of short sale - she said that we need to expect to pay about 12k for the forgiven debt. yikes. Then I called the bank, who is not at all willing to modify a loan if it's an "investment" property. They said our only option is to list the house for short sale, and they won't even talk to us about it until there is an offer on the table.
We have a good friend who's a realtor (and a professional one) there, and we're waiting to hear back from him. We're not sure if we should kick the renters out and just not pay the mortgage, or continue to let them pay the rent late and continue to make payments. The bank said that a history of paying or not paying doesn't influence their decision on the short sale.
LET IT GO. The best part of wisdom is knowing what is a liability and what is an asset. The house is now a liability. Do the proper proceedures for eveiction on the tenants, knowing they will most likely be there for another 6 months. In the meantime, take the hit of a short sale if you can. If not, let it go into foreclosure. No matter how you do this, your credit will suffer.
We all make mistakes. LET IT GO. Credit can be recovered over time but your peace of mind can not. I hope you make sure tht whatever home you live in now is an asset and not a liability.
ANYTHING that costs you money but does not either pay for itself or makes you money is a liability.
Modifying the loan will not help you, since it will just lower the interest rate but keep the same balance on the loan. Since the lender is Bank of America (the worst bank with short sales), as it has been stated, get a Realtor that has already completed short sales with BOFA. Since short sales take a long time, need to start as soon as possible.
Having a tenant can complicate matters, so, you may need to evict them, since they are not paying, it should not be a problem doing so.
I got my loan through BofA, but it's backed by freddie or frannie. I missed my first payment because my unemployment ran out and about to miss my second. BofA toldt we're not eligible for Making Home Affordable until we're CURRENT!!! Makes no sense. If I could pay it, I would and I wouldn't need the program. The first time I called BofA about 6 months ago telling them that trouble was on the horizon, they told me that as long I was current they didn't have a program for me. The only thing they told me they could do was convert my 5/1 ARM to a 30 fixed and my payment would increase $200. I gotta laugh or else I'd cry, it makes no damn sense. If I'm having trouble, how can I afford the extra 200? I don't get it.
According to that site, you have to be current in the last 12 months for the refinance, but NOT for the modification.
(Although I had thought there was a loophole allowing 1 late payment in the last 12 for Fannie or Freddie on the refinance program, but I am not finding it now)
Last edited by Debsi; 12-16-2009 at 12:13 PM..
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