Nevada Foreclosure, Deed in Lieu, or Short Sale? Investment property purchased as primary residence (Las Vegas: foreclosures, lease)

speedway121 · 06-07-2009, 02:46 PM

Ok Guys,
Here is my situation, I need some good hard advice.
Please do not respond to me saying "youre a dead beat, pay off your loans" etc of anything of that nature.

I have held all my bank accounts with Bank of AMerica for 15 years.

I am a California resident.

I bought an investment property in Las Vegas Nevada for $225k in 2006 (my first property EVER).
The loan was through Countrywide, and was originated as a "investment property"

I then refinanced the property in 2007. I have a single mortgage through COuntrywide (now BofA). The mortgage is listed as a primary residence loan.

I purchased a Real Primary Residence in 2009 in California.
I have quite a bit of equity in this property in California.

The property in Las Vegas is a loser and is down approx $1800 a month. It does not make sense to keep it, I cannot afford to find a renter.
The loan balance is $200k.
THe property is worth approx $120k MAX.

Should I pursure a short sale?
The bank will see all my assets (especially my house in CA which has over $160k in equity).
I dont want them to reject the short sale, especially after they have seen all I own. They will definitely say NO, is my opinion.
THey then can go for a deficiency judgement if I go into foreclousre. and they would be going into a deficiency judgement knowing full well everything i own!

It maybe better to let it go into foreclosure. From what I have read on these forums, the chances of them coming after me for a def judgement (especially across state lines in CA) is slim.

Any comments?

What about the 1099 tax? Because the loan is showing as primary residence, should I be worried?

Can they slap a lien on my house, or worst, force me to sell it?

How long is my credit affected?

Please help.

Thank you,

airics · 06-07-2009, 08:58 PM

do you or have you had a mortgage on the house in cali? if so, they will see it on the credit report anyway... if you have that much equity in the house in cali, you can pull the 160 and put it towards the vegas house.. you may not like that, but if i was a bank and found out about the other house, hell yeah i would go for the deficiency..

airics · 06-07-2009, 08:59 PM

does ca have the homestead exemption like nv has.. that may save your house..

olecapt · 06-07-2009, 10:51 PM

You are in to lawyer territory. I would suggest a Nevada RE Attorney. I have one if you need. Ask by DM.

It is possible to get a deficiency judgement in Nevada but it is not easy or cheap. And it can be at least partially defended.

I see a potentially better outcome in the short sale. You might be prepared to buy them off a bit. Taking a $10 or $15K note might be there price for doing the deal.

Where are your payments? Are you current?

$1800 is the total cost of the joint. But it will easily rent for 1200 or a little more. so your problem should be more like 600 or 700 a month. You should rent it regardless. If it bothers your conscience tell the tenant that you are likely to get foreclosed but that they should have six months. You may actually find a number of people who want a 6 month lease.

A short sale is a much lesser deal than a foreclosure. Particularly if you get the lender to handle it correctily. Another place where you need an RE lawyer.

With all do respect to AIRICS you are not in any danger of losing a big hunk of your equity. But you should make as good a deal as you can to avoid getting hit in the credit dept any more than neccessary.

speedway121 · 06-07-2009, 11:03 PM

"You are in to lawyer territory. I would suggest a Nevada RE Attorney. I have one if you need. Ask by DM.

It is possible to get a deficiency judgement in Nevada but it is not easy or cheap. And it can be at least partially defended."

I heard that the mortgage companies are now hiring law firms who get a percentage of the judgement, so in fact they would be inclined to do this.
IF the law firms can actually collect.

"$1800 is the total cost of the joint. But it will easily rent for 1200 or a little more. so your problem should be more like 600 or 700 a month. You should rent it regardless. If it bothers your conscience tell the tenant that you are likely to get foreclosed but that they should have six months. You may actually find a number of people who want a 6 month lease. "

I cant rent, I have gone through 3 property management companies. The most I could get is $1000 for rent, and that last tenant is moving out saying "the neighborhood isnt as good as it used to be" .. before that i was VACANT for 8 months (rent = $900 / month)
this is a 3 bd, 2 ba condo with garage, built in 1990. granite kitchen, new counter tops. gated community, 2 pools, 2 jacuzzis, etc. right next to Summerlin.
Now the prop management companyh wants to drop the asking rent to 900 again, and see what happens. i cant take that hit.

"A short sale is a much lesser deal than a foreclosure. Particularly if you get the lender to handle it correctily. Another place where you need an RE lawyer. "

olecapt · 06-08-2009, 08:12 AM

Quote:

Originally Posted by speedway121

"You are in to lawyer territory. I would suggest a Nevada RE Attorney. I have one if you need. Ask by DM.

It is possible to get a deficiency judgement in Nevada but it is not easy or cheap. And it can be at least partially defended."

I heard that the mortgage companies are now hiring law firms who get a percentage of the judgement, so in fact they would be inclined to do this.
IF the law firms can actually collect.

"$1800 is the total cost of the joint. But it will easily rent for 1200 or a little more. so your problem should be more like 600 or 700 a month. You should rent it regardless. If it bothers your conscience tell the tenant that you are likely to get foreclosed but that they should have six months. You may actually find a number of people who want a 6 month lease. "

I cant rent, I have gone through 3 property management companies. The most I could get is $1000 for rent, and that last tenant is moving out saying "the neighborhood isnt as good as it used to be" .. before that i was VACANT for 8 months (rent = $900 / month)
this is a 3 bd, 2 ba condo with garage, built in 1990. granite kitchen, new counter tops. gated community, 2 pools, 2 jacuzzis, etc. right next to Summerlin.
Now the prop management companyh wants to drop the asking rent to 900 again, and see what happens. i cant take that hit.

"A short sale is a much lesser deal than a foreclosure. Particularly if you get the lender to handle it correctily. Another place where you need an RE lawyer. "

Sounds like good old Soaring Gull. All the people that bought there ought to get together and sue the developer. You got took. I believe that place is looking up (as a rental) though in recent months. Have you checked lately?

I can't believe that BofA would go to court over that place. It would be easy to raise the question of incompetence on their part on the 2007 refi. The place was the pits by then

There have been a few attempts at deficiency judgements though all the ones I know of where by the PMI people. I think that a bit nutty as the PMI clients are the ones almost certain to file BK.

I would not worry a whole lot about disclosure. I doubt it would take a bank or law office very long to discover your equity in your CA house.

So I would have a heart to heart with the bank.

And just to continue the good news I don't think a 3/2 in there is worth more than $75K.

Worth RE deal ever in Las Vegas with perhaps the exception of some of the strip hi rises.

speedway121 · 06-08-2009, 10:50 AM

I know, I feel like i have been taken. I think I have put liquid 40k into it (down payments, repairs, refi costs), EXCLUDING the montly payments.
Im sick of it.

What is the damage to my credit if I just walk? FOr how long?

airics · 06-08-2009, 12:53 PM

7 YEARS on your credit report and if by chance they do get the deficiency judgment, 7 years from date of judgment.. foreclosure will lower your score 150-200 points at first and then will slowly go up.. you will be able to buy another home in 3 yrs or so but not at the best rates... also, be aware that most of your credit cards will be closed when the 60 day late hits your credit report... You may doubt this but go to creditboards dot com and you can get it all there

LV_Underwater · 06-15-2009, 10:22 AM

I am in a very similar situation as Speedway- except that my loan was originated as a primary residence. I owe 185k can rent it for 900 and eat 700 a month. I have actually been renting it out for a year... but I cant continue taking that hit. I am thinking about foreclosing on the property to end the bleeding. I would pursue a short sale, but on paper I can afford the damned place. The unit comps are only selling as foreclosures in the 120k range. My biggest concern is foreclosing and having them pursue a deficiency judgement for 60k... and while I do not own any other property, I did get married last year. My wife owns a house with appx 40k in equity, but my name is not attached to the loan. Could they come after the equity in her home if they pursue a deficiency judgment? Does anyone think they will pursue the judgement? Its with Countrywide and I have been paying PMI since starting the loan in late 2005.

speedway121 · 06-15-2009, 10:27 AM

LV_underwater: where do you live? NV?
Do you have a 1st and a 2nd?
Since you said you have PMI, I assume you have only a 1st.
I have been told that "there has not been one deficiency judegemtn in NV on any 1st mortgages ever" could be a load of BS, could be true.
I know for a fact there are a few deficiency judgements on 2nds, primarily by servicers of the loan, and not the lenders themselves. For example, Wells Fargo is the lender, but they give the loan to be serviced by some other insurance corp. the insurance corp supposedly sent after some people.