can you buy a new home before you short sale an existing home? (banks, property)
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I had a similar situation where the wife's family had money but didn't want to prop up the husband's bad business decision. Are you considering buying in a community property state?
And, as mentioned before, can you purchase the new home on your own without any income from your husband? Can you carry all the joint liabilities?
Once he goes into short sale or foreclosure, he's toast on a new loan. No one is going to indemnify him for an investment property.
Fannie just announced that borrowers that had a strategic default will not be able to obtain a new loan. Look for strategic short sales to be added to the mix. Frankly, I would not be surprised to see more serious penalties imposed for any strategic avoidance of debt - just because you gambled and lost......you could pay, but not you're not. The mood in America is fed-up with those that default for their share of the pie. At least that is my observation.
The best advice has already been submitted; I will just modify it a bit. Consult with a real estate attorney who specializes in short sales and has been doing it for a couple of years. He/She can give you the best answer.
How is this the OP's fault? Her husband bought this before they were married on his own. She shouldn't have to deplete her assets because her husband made a bad investment.
Because when you marry someone, you do so knowing that you're walking into their financial situation, too. I can't believe you think this couple isn't responsible for this house. That attitude is both alarming and ridiculous.
Because when you marry someone, you do so knowing that you're walking into their financial situation, too. I can't believe you think this couple isn't responsible for this house. That attitude is both alarming and ridiculous.
In most situations I would agree with you. The fact of the matter is, if it was only my husband who bought the house, or if I was living in it then I would try to pay it. Unfortunately there are 2 other very unreliable investors involved and I can't afford to pay for three people's bad investment decisions, two of whom are not married to me. Basically I'd throw my life savings at it and then it would go to short sale anyways. Financially that does not make any sense. My husband can pay his part of the investment, but that doesn't matter either. The house is currently 200k underwater probably valued at 100k.
Don't forget that the banks are also to blame for giving out subprime loans and perpetuating the bubble, and they have received a large amount of taxpayer money and made billions of dollars of profit as a result (some of which came from my pocket). But they are not the least bit helpful in refinancing, which would have helped the other two unreliable investors to maintain their payments. The banks can always reject the short sale if they are not pleased with the terms, and then it would go to foreclosure. It's just a market situation. In return, bad credit for 7+ years for my husband (which doesn't affect me). My penalty is that I would not be able to buy a house on my own either.
We did end up consulting a real estate attorney... legally I am not liable to pay for the home and now we have a contract in place so that we are only liable for 1/3 the cost. That was the original arrangement entered into, so we have no further legal (or moral, IMO) obligations than 1/3 of the mortgage. The bank cannot come after any other assets other than the money in accounts associated with their bank.
Until the short sale goes into effect or we miss even one payment, we can still purchase a home to live in. So we are still looking (and paying) for a month more since the housing market seems to have taken another dive. I can't afford to purchase a home on my own yet but it's not a bad renter's market either. Worst case scenario I can buy with help from family.
Because when you marry someone, you do so knowing that you're walking into their financial situation, too. I can't believe you think this couple isn't responsible for this house. That attitude is both alarming and ridiculous.
That is not correct. The wife is not responsible for the husbands debt before they were married (ethically or legally). The wife had no say in the husband decision is not responsible for the debt.
Even in a dower property state - where all monetary assets and encumbrances are shared with your spouse, you have no claim or attachment to this property. Which is good for you!
It was purchased BEFORE you were married - so you are free and clear of this issue from a legal standpoint and as long as YOUR credit and income are good -and you do not need your husband and his income to qualify for a loan, you are OK.
Your husband will have to wait at the very least 2 years before his is mortgageable.
I imagine that he is behind in payments if you are seeking a short sale.
While a short sale is better than a foreclosure, if you can at all afford the payments - make them.
Media: News Releases > Fannie Mae Increases Penalties for Borrowers Who Walk Away (http://www.fanniemae.com/newsreleases/2010/5071.jhtml;jsessionid=XEE0HP2NXF0JNJ2FQSHSFGQ?p=Me dia&s=News+Releases - broken link)
Media: News Releases > Fannie Mae Increases Penalties for Borrowers Who Walk Away (http://www.fanniemae.com/newsreleases/2010/5071.jhtml;jsessionid=XEE0HP2NXF0JNJ2FQSHSFGQ?p=Me dia&s=News+Releases - broken link)
To me, default is default. Whether it's strategic or not. There will be a lawsuit if they pursue this route.
Those strategic defaulters will argue they are unfairly treated. They will argue those who "face hardship" should be imposed the same penalties under this 7 year exemption. Cause it's impossible to distinguish those you overspend beyond their means and those who are responsible and managed to build up a nice nest egg.
Someone who takes out a massive home equity line of credit and spends its recekless and begs for help vs. someone who's managed to accumulate wealth by saving frugally. They are all in the same boat if they've defaulted.
What fannie has decided is to punish those who have money. They need to punish all defaulters. Their new policy won't stand up in court.
To me, default is default. Whether it's strategic or not. There will be a lawsuit if they pursue this route.
Those strategic defaulters will argue they are unfairly treated. They will argue those who "face hardship" should be imposed the same penalties under this 7 year exemption. Cause it's impossible to distinguish those you overspend beyond their means and those who are responsible and managed to build up a nice nest egg.
Someone who takes out a massive home equity line of credit and spends its recekless and begs for help vs. someone who's managed to accumulate wealth by saving frugally. They are all in the same boat if they've defaulted.
What fannie has decided is to punish those who have money. They need to punish all defaulters. Their new policy won't stand up in court.
I am not disagreeing with you one bit. Just putting the facts out there.
This woman's husband may not be able to get a loan backed by F/F for seven years.
OP original question was not a moral or ethic issue, hence no merit here, I am not condoning those that shun their responsibility, but many folks are merely attempting to solve their financial difficulties in this market meltdown/recession/housing bubble.
Easy to vilify others and point fingers, shift the blame to where it should be placed, namely those public and private corporations that have continually been bailed out by the government for years, how soon do we forget the s&l scandal. Look at bear and stearns, the auto industry, predatory lenders, wall street, etc., all which have grossly misappropriated, mismanged funds and cheated all the while gaining huge profits, which were/are ultimately bailed out by the government.
Bottom line here is, Op is not responsible for spouse’s debt, one suggestion to OP is to place new property in a land/personal trust to keep their name out of public property records.
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