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Old 11-09-2009, 10:29 AM
 
104 posts, read 181,170 times
Reputation: 39

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Okay, I recently lost my job and my wife and I plan to relocate to the Midwest, since I will not be able to find a job paying as much as I made in my last job due to losing my security clearance.

We want to do everything we can to avoid foreclosure on our house. We have a 30 year fixed mortgage, none of those crazy ARMs or anything. We owe roughly $50k more than it is valued at.

If we just want to sell the house at a loss, how do we make up that other $50k? Is there a way to take out some kind of loan to cover that extra $50k? We have savings that could cover almost half that difference and we have retirement accounts that could pay off the rest if cashed out. We absolutely do not want to touch savings or retirement. We really do not want to foreclose. Renting the house out probably wouldn't be worth it in the long run either.

We are responsible people and do not want to damage our near perfect credit, but we do not know how to stay in our house. We have wanted to move back to Chicago (where I am from) for a while now and now that I have lost my job, nothing is really holding us in the DC area anymore, other than our mortgage that we can't afford.

Any advice on how to sell at a loss and find a way to deal with what is owed after the sale would be appreciated.

DWDC
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Old 11-09-2009, 10:40 AM
 
Location: Sterling, VA
1,045 posts, read 1,862,302 times
Reputation: 558
If you take out a loan to cover the $50,000 you are short what will you use as collateral? You certainly can't use the house. Have you tried talking with your lender about the situation? You may be able to work out what is called "a deed in lieu of foreclosure". You sign over the house to them without the bank having to start foreclosure proceedings which would ruin your credit and is also a major expense for the lender. In return, they may accept a personal note for the difference.
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Old 11-09-2009, 10:41 AM
 
Location: somewhere
3,667 posts, read 5,312,496 times
Reputation: 2051
Quote:
Originally Posted by DoneWithDC View Post
Okay, I recently lost my job and my wife and I plan to relocate to the Midwest, since I will not be able to find a job paying as much as I made in my last job due to losing my security clearance.

We want to do everything we can to avoid foreclosure on our house. We have a 30 year fixed mortgage, none of those crazy ARMs or anything. We owe roughly $50k more than it is valued at.

If we just want to sell the house at a loss, how do we make up that other $50k? Is there a way to take out some kind of loan to cover that extra $50k? We have savings that could cover almost half that difference and we have retirement accounts that could pay off the rest if cashed out. We absolutely do not want to touch savings or retirement. We really do not want to foreclose. Renting the house out probably wouldn't be worth it in the long run either.

We are responsible people and do not want to damage our near perfect credit, but we do not know how to stay in our house. We have wanted to move back to Chicago (where I am from) for a while now and now that I have lost my job, nothing is really holding us in the DC area anymore, other than our mortgage that we can't afford.

Any advice on how to sell at a loss and find a way to deal with what is owed after the sale would be appreciated.

DWDC
Would renting it for the short term maybe give you alittle breathing room and see if housing prices come back up? You would have to have some way to come up with that remaining $50,000 and to me renting it would be so much better than using your savings and then cashing out the retirement. If I am not mistaken you would have to pay the taxes for cashing out the retirement. Cashing out a retirement would be the last thing I would do.
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Old 11-09-2009, 10:45 AM
 
175 posts, read 460,130 times
Reputation: 103
Sorry for your difficulties. You may want to post this on the real estate forum. There are many realtors in that forum with practical experience who may be able to give you some solid advice.
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Old 11-09-2009, 10:49 AM
 
437 posts, read 661,838 times
Reputation: 233
You can sell a house for whatever amount you want, the mortgage company will simply demand that the mortgage be paid in full with a transfer of title to the property. If you have the cash to pay off the mortgage along with whatever you get from the sale, go ahead, if you need to get a loan, then you can do that, the bank doesn't care where you get the money from at closing. They just want to get paid.

If you can't come up with the funds the short sale or foreclosure are the options left probably.

You should also make sure you've got your selling costs right, including commissions, etc. As the seller you're definitely going to get less than just the sale price!
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Old 11-09-2009, 10:54 AM
 
104 posts, read 181,170 times
Reputation: 39
Quote:
Originally Posted by Margery View Post
If you take out a loan to cover the $50,000 you are short what will you use as collateral? You certainly can't use the house. Have you tried talking with your lender about the situation? You may be able to work out what is called "a deed in lieu of foreclosure". You sign over the house to them without the bank having to start foreclosure proceedings which would ruin your credit and is also a major expense for the lender. In return, they may accept a personal note for the difference.
I have spoken to my lender. They are putting together a modification kit that we will receive in the next 45 days (not helpful right this moment). I asked about a "deed in lieu of foreclosure" and was told they are only able to do that if the house is worth more than we owe (which made no sense to me).

As for the collateral, that's a good point, I didn't think of that. I guess we would not have collateral in that case.

If we wanted to purchase a home in the Midwest and then tack on the remaining $50,000 to our new loan, is that something that a bank might consider or is that basically a no-go?

As you can likely tell, I have no idea about any of this stuff. I never thought my wife and I would end up in a position like this. I thought my employment was pretty secure from a lay-off. Turns out I was wrong about that.
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Old 11-09-2009, 11:02 AM
 
2,093 posts, read 1,871,730 times
Reputation: 4297
Quote:
Originally Posted by DoneWithDC View Post
If we wanted to purchase a home in the Midwest and then tack on the remaining $50,000 to our new loan, is that something that a bank might consider or is that basically a no-go?
Your home in the Midwest will have to appraise for an amount greater than it's mortgage + the $50K loan you want to take out to get the lender to approve it. If it doesn't, then once you get the Midwest home mortgage closed, you can attempt to get a 2nd note on the home to cover the $50K still owing on the NoVa house. You may have to carry 2 mortgage payments for a few months while this goes through.
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Old 11-09-2009, 11:11 AM
 
104 posts, read 181,170 times
Reputation: 39
The Deed in Lieu of Foreclosure sounds like the best option we have. Can anyone tell me at what point we would want to request this from our lender? Would we need to have missed payments already or can we request it now that we know that we can't stay in our house, but we are still current on our payments?

Also, is there any chance the lender would actually go for a deed in lieu if we owe more than the house is worth?
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Old 11-09-2009, 11:27 AM
 
Location: Northern Virginia
1,418 posts, read 1,980,797 times
Reputation: 421
I hate to say it but you HAVE the money to pay your obligation...and you just "don't want to"? sorry to be snarky...but that sounds a bit less than honest to me.

I just sold my house and moved and HAD to take money out of my retirement to buy new. Didn't "want" to but the facts are the facts and we didn't have enough.
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Old 11-09-2009, 11:40 AM
 
2,668 posts, read 4,162,156 times
Reputation: 1214
I agree with the suggestion about posting this in the realtor forum. Many other people are in your situation. However, one thing to consider, will you have any better luck finding a job in the Midwest? Maybe consider looking for a job in both places and if you get one here, stay until you're more in balance on your mortgage. Good luck, it's a very tough situation to be in and I'm sorry it happened to you.
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