[danj55]

This is a great forum. Long time reader, first time poster.

I'd like to move but it'd probably cost about $50k to get out of this home.

I purchased a nice home in 2007, after a month of looking for homes, this one was the best value by far and probably about 15% off of the peak bubble price at time of purchase. It's a home I could afford and I put 20% down. I also paid extra points to get the loan down to a 5% fixed. The monthly payments, which I haven't missed, pose no particular hardship for me and my finances are solid.

So, my question is, is there any sort of assistance for someone who was responsible? Had I been more irresponsible with my purchase, it seems like there would be some help. But as far as I can tell, if you were responsible, you have to take the full brunt.

Are banks receptive to negotiations knocking, say, 10% off the loan amount? Is this something a lawyer could do?

It seems that a short sale wouldn't work for me since the bank would just say I owe them the difference anyway.

I have little ethical problem with this sort of thing since the banks made out like bandits in the bubble they helped fuel, and then socialized their losses to taxpayers like myself. It was the biggest breach of contract in American history.

[007 license to sell]

Originally Posted by danj55

This is a great forum. Long time reader, first time poster.

I'd like to move but it'd probably cost about $50k to get out of this home.

I purchased a nice home in 2007, after a month of looking for homes, this one was the best value by far and probably about 15% off of the peak bubble price at time of purchase. It's a home I could afford and I put 20% down. I also paid extra points to get the loan down to a 5% fixed. The monthly payments, which I haven't missed, pose no particular hardship for me and my finances are solid.

So, my question is, is there any sort of assistance for someone who was responsible? Had I been more irresponsible with my purchase, it seems like there would be some help. But as far as I can tell, if you were responsible, you have to take the full brunt.

Are banks receptive to negotiations knocking, say, 10% off the loan amount? Is this something a lawyer could do?

It seems that a short sale wouldn't work for me since the bank would just say I owe them the difference anyway.

I have little ethical problem with this sort of thing since the banks made out like bandits in the bubble they helped fuel, and then socialized their losses to taxpayers like myself. It was the biggest breach of contract in American history.

There are different types of modifications in the works but all geared to the home owner who can prove hardship.

In your situation you are fortunte that you are only $50,000 upside down there is a possibility your could recover in 5 years if the homes around you don't continue to depreciate due to foreclosures and short sales.
Who knows if that is likely as long as there continues high unemployment causing more people to have to lose their homes.
I am sorry about your situation and lord knows everyone that has purchase a home in the last 6 years can relate to you in one way or another.

[olecapt]

I suspect you are among the select few that can't win whatever you try.

YOu can of course walk away. As a practical matter they won't go after you for a deficency judgement and it is not automatic. If you are actually willing to do that you could also do a short. You have to have a credible threat of walking away before you can get any consideration.

Best case you could end up with a short sale and very little damage. Worse case you will end up with a foreclosure on your credit report...

I think I would try and ride it out. Depending on what the monthly damage looks like.

[jpk]

There is some assitance for responsible owners that are underwater and want to refinance from a high fixed rate or ARM to today lower fixed rates. The program allows you to refi without PMI even if you don't have the usual 20% equity. That program is supposed to end this month. However, your rate is already 5% fixed, so there isn't going to be any benefit for you.

You're in a reasonbly good situation, do you HAVE to move or just want to move?

[danj55]

I think the damage is worse than $50k, it'd probably be about $85k lost, including agent fees, if I tried to sell it like normal. That is not including the $60k down payment and equity payments lost.

I have to move. I run a business and the next big thing is sending me overseas indefinitely.

I just got off the phone with a real estate agent who made it sound like I had a good chance of a good short sale. But does it really work this way?

I tell the bank my situation: I have to move for business and I'm very underwater on the loan. It's so bad, I may even walk away.

But I offer the short sale option. We do a short sale, the bank does not take any further deficiency action against me, but I take a medium hit to my credit score. And we go along our merry ways.

That has about 0% chance of happening, right? The bank will simply look at my financial numbers and see that I can pay the mortgage indefinitely and say "tough luck", right? And any short sale scenario would involve a deficiency-type payback, right?

[olecapt]

Originally Posted by danj55

I think the damage is worse than $50k, it'd probably be about $85k lost, including agent fees, if I tried to sell it like normal. That is not including the $60k down payment and equity payments lost.

I have to move. I run a business and the next big thing is sending me overseas indefinitely.

I just got off the phone with a real estate agent who made it sound like I had a good chance of a good short sale. But does it really work this way?

I tell the bank my situation: I have to move for business and I'm very underwater on the loan. It's so bad, I may even walk away.

But I offer the short sale option. We do a short sale, the bank does not take any further deficiency action against me, but I take a medium hit to my credit score. And we go along our merry ways.

That has about 0% chance of happening, right? The bank will simply look at my financial numbers and see that I can pay the mortgage indefinitely and say "tough luck", right? And any short sale scenario would involve a deficiency-type payback, right?

Actually it is simpler than that. You convince the bank you will walk and they let you sell short and walk away with no defiency and little or no credit damage. Worst case you get foreclosed and walk away with bad credit and 85K and however long you chose to stay in the house.

YOu seem to be ducking on what your monthly problem is...If you don't have a problem why play games...ride it out by renting it.

[jpk]

I would do what olecapt says and go for a short sale.

There is supposedly a lot of financial engineering (scamming) that can happen on both sides of a short sale. On the banks side, they can make out like bandits in some cases, but they are also leery of getting conned by you (selling to another family member, for example). The Obama folks are now working on a short sale incentive program, which will probably make it even easier for the banks to make money no matter what way the sale price goes.

A year or two ago short sales were impossible, now they are a much higher percentage of sales in LV. Hope that all this means you get through this faster.

[danj55]

I appreciate all the help, especially since it's from the native experts that I recognize from browsing these boards.

On the question of renting it out vs short sale....

If a short sale can really be that neat, then that is the superior option since I could just be done with the situation and focus on other things.

But renting it out isn't so bad either. I think I could get about enough to carry the home indefinitely with little additional cost, though perhaps still $1-2k per year extra out of pocket. But this depends on finding a good property management company I can rely on totally as I will not be coming back to Nevada potentially for years. And owning a leveraged asset in a very shaky market is obviously more risky than not.

Having the responsibility of this home for 10 years renting it out only to break even is obviously inferior to a neat short sale.

[olecapt]

Originally Posted by danj55

I appreciate all the help, especially since it's from the native experts that I recognize from browsing these boards.

On the question of renting it out vs short sale....

If a short sale can really be that neat, then that is the superior option since I could just be done with the situation and focus on other things.

But renting it out isn't so bad either. I think I could get about enough to carry the home indefinitely with little additional cost, though perhaps still $1-2k per year extra out of pocket. But this depends on finding a good property management company I can rely on totally as I will not be coming back to Nevada potentially for years. And owning a leveraged asset in a very shaky market is obviously more risky than not.

Having the responsibility of this home for 10 years renting it out only to break even is obviously inferior to a neat short sale.

Rent it...the short sale is a crap shoot. The rent is certain.

You are not that far down...you will get out in less than five...or at least you will be able to work something over that period.

[danj55]

Another concern with renting it is that it will likely make me ineligible for whatever scheme the government comes up with next for homeowners. It's possible this new short sale scheme will really grease the wheels for the short sale process, and thus I wouldn't want my property to be considered an investment property as opposed to a primary residence.

Another bet I could make is to get no renter, and just pay the monthly expenses, and hope for a broader loan modification plan in the next year. Probably not a good bet, but it illustrates a point.

And if I may say, this all illustrates the perverse incentives one has to deal with in this environment.