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I would appreciate any advice or comments about my predicament.
I bought a new one level condo in 2003 for $122,000. My home is currently valued by the county at $53,000, and it will probably decrease by another $10,000 or so this year. There are about 150 units in the community and around 20% have been sold as foreclosures or short sales in the past 2-3 years. If I tried to sell now I'd take a huge loss, as I still owe about $108,000.
Our community is no longer eligible for FHA financing. Investors and people who actually want to live here are able to buy places cheap, but if home values magically increased then most people wouldn't be able to buy here if it meant a 20% down payment. So I don't see the future being any brighter for ever selling this place without losing a lot of money, or having to stay here for many years -- which brings me to my next issue.
The condo association/community has numerous problems of its own. A number of people weren't paying their dues before the housing crash and since then all the bankruptcies and foreclosures have left our association hurting. We have almost no reserves and are just able to pay all the necessary bills (water, trash, insurance). Many owners refused to vote for dues increases until this year, so we will forever be playing catch-up to our needs as the years go by since the association is responsible for all outside building repairs. The buildings are 5-15 years old and we have already had problems that cost thousands of dollars to fix, and I'm sure there will be more to come.
And if all that wasn't bad enough, our community is tied to another condo association which is actually responsible for the water bill because there is only one meter for the whole place. They have let the balance due accrue to $30,000 to $40,000 on a few occasions, while using our association's share of the water bill money to cover their expenses. AND the county is raising overall water rates by 10% or more each year for the next three years. Several condo communities in the metro area have been condemned when the water was finally turned off because the bills weren't paid. It is a possibility that years from now that could happen to my place.
There's more I could add to each issue but I realize I've already written a novel. My goal is to get out of here before the ship sinks. Renting my unit wouldn't help me escape the financial consequences of being an owner here. I've read stories of people buying another place and then allowing their first home to be foreclosed upon. I'm not in a financial position to do this, and since I live in Georgia I know that my mortgage lender could try to get the savings I do have if I walked away.
I'm not thrilled about the value of my home dropping so much but I could probably live with that. The problem is that due to my neighbors' actions I am now stuck in what seems to be a no-win situation. Yes, I've tried to make things better by being on the board of directors, but after a couple of years I had to resign to preserve my sanity. I fully realize I made my own choices but like a lot of folks out there have discovered, playing by the rules and living within your means doesn't stop bad things from happening to you.
Again, I'd appreciate any advice about how to get out. In the meantime I'm watching episodes of "Disappeared" and taking notes.
We're in a very similar situation in a recourse state (Virginia) and are trying a short sale. Alot of people on here will tell you to let it go to foreclosure but if you're in a recourse state, you'll be liable for the difference between the auction price and the balance due. Not sure what state you're in but if you're in a recourse state, I'd recommend trying a short sale. The only real hurdle in your case may be finding a buyer since your condo complex is not FHA approved and that hurts.
The foreclosure option that others may recommend could possibly be your way out as well though as long as you don't have much in terms of assets or a high income. If you don't have either, you can always file Chpt 7 if they came after you for the difference (they have years to do this).
Sorry to hear of your predicament but like I said, we're in a similar situation (minus the FHA and sticky HOA part) and are not giving up hope. We're attempting a short sale and hoping the bank waives the deficiency.
Regarding the association and their problems, you sound way too caught up in that. If you do a short sale, those issues are not going to be your problem. If you let it get foreclosed on, again, not your problem. Staying there doesn't sound like an option for you - so again, the association = not your problem.
The difference between Virgina and Georgia, if the lender files a Judaical foreclose, they can come after you with a deficiency judgement later. If the foreclosure is a non judicial-foreclosure, the lender does not have that option. In Georgia - in my opinion is the worst state in the entire country, to be involve in a foreclosure. There is no protection.
Eunomia the best way out of your situation is a Deed in Lieu.
If you know the property was going to sell, a short sale is the cheapest and best way to go, but it doesn't stop or postpone the foreclosure. When people are knowingly going to let a property go, they ask themselves why should thing continue paying on it?
With a Deed in Lieu two things happen - a modification is looked at to lower the payment as low as possible. If the home owner shes no affordability, the modification is denied. The second thing is the property is listed for sale for 90 days, after which you could walk after free and clear.
It is important have an attorney handle this transaction, to prevent them to come after you in the future.
Realize when it comes to attorneys, the number of law specialists are as many as doctors. If you needed eye glasses and went to a foot doctor, the result would be only seeing two feet in front of you. Do not go to a bankruptcy attorney, their battles are won in court.
The results can be better working with a mortgage attorney, where their cases are negotiating directly with the lender..
to the OP...sounds like GA is a deficiency judgement state. Even a DIL does not release you from what you owe unless it's states clearly in writing by the lender.
best advice anyone ever told me these past few years...
1- try talking to your lender. putting it in writing, in tactful language, and mail it certified mail is the best option. let your lender know that if they cannot work with you, then BK may be your only option.
2- if that's the lenders choice (not working with you), seek out a BK attorney and file a BK. (a) you do not have to go through with the BK and (b) it should bring the lender to the table
barring the above, you are prob'ly going to be on the hook for the deficiency...
Thanks to everyone for replying. You've given me some good things to think over.
My problem is that I have money in savings and retirement funds (though not enough to make up the difference between what I could sell my place for and what I owe) so I am afraid that my lender would want whatever I have if I tried to get out of the loan (short sale, deed in lieu, foreclosure).
Georgia is a recourse state but it is also a non-judicial foreclosure state. All the anecdotal evidence I've seen about cases in Georgia is that the lenders don't pursue owners for deficiency judgments because those have to be done as part of a judicial foreclosure, which lenders have the option to do but usually they do non-judicial foreclosure. However, I would not want to take the risk of possibly losing my savings and retirement money just so I could move out of a community that seems likely to have major financial problems in the future. The few neighbors I've talked with or heard about from others all did short sales and foreclosures with no worries because they had no assets.
It seems like I should talk with a local attorney.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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Another problem not mentioned is that even if you find a buyer for a short sale, they would not be able to get financing. lenders consider the number of vacant units and the financial position of the association. Condos became popular as affordable first-time home ownership but with the common maintenance they are even worse than a house when upside-down. Water districts can often put a lien on property for overdue bills (not to mention turning it off) so if those bills don't get paid some of that could be added to your mortgage when sold.
If you do try for a modification, be sure to provide everything they ask for,
call weekly to check up on it in case something was missing. The lenders make people really jump through hoops but some actually do get lower payments.
In your case, it sounds like you still have a job and can afford the payments. Your problem is the additional costs for maintenance and utilities, I don't know how the lender will approach that.
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