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I bought a house before I got married and my wife is not on the title for either the first (owing 360,000) or the second (owing 95,000). I estimate the house to be worth around 300-350.
We can't afford the payments and can't refinance due to my credit score. My wife doesn't make enough to qualify for the 460,000 mortgage on her own. I've been begging with the loss mitigation people for 9 months for anything and have been told short sale or foreclosure are the only options. We are not past due on the mortgages yet, but likely will be starting in January. The well has run dry.
A relative (who works in the industry) has offered to buy the property at a short sale, then turn around and sell it back to my wife at that reduced price. This has to be illegal. What do you think?
I bought a house before I got married and my wife is not on the title for either the first (owing 360,000) or the second (owing 95,000). I estimate the house to be worth around 300-350.
We can't afford the payments and can't refinance due to my credit score. My wife doesn't make enough to qualify for the 460,000 mortgage on her own. I've been begging with the loss mitigation people for 9 months for anything and have been told short sale or foreclosure are the only options. We are not past due on the mortgages yet, but likely will be starting in January. The well has run dry.
A relative (who works in the industry) has offered to buy the property at a short sale, then turn around and sell it back to my wife at that reduced price. This has to be illegal. What do you think?
So let me get this straight just to start off right.
House is worth about $350K max.. but you owe $455K?
If your not late on any payments, why have you been in contact with loss mitigation people for the last nine months?
I've seen people buy their own properties at a sheriff sale. Once your "relative" clears title from the bank, your relative would be totally free to sell it to anyone they wish.
Given the scenario though, I'd be looking to move, letting the bank repo it. Not sure I'd want to first keep paying mortgage payments on a house with a negative $100K equity, and I'm not sure I'd want the hastle of trying to buy it from your "relative".. Are they going to carry the papers?
After you lose the current property to the bank, if you cant get a mortgage now, doubt you will then.
I've been in touch with them because I knew this day would come and I was hoping for some proactive interventions (loan modifications, forbearance, etc) that might have prevented this. the only I've been told is that they will "entertain all short sale offers." My wife and I can't qualify to refi the current mortgage (we've been trying for the last year) and once I'm late on the payments and it's reported to the credit reporting agencies, the damage is done. I won't be able to refinance out of this mess on my own anyway. So, the decision is to try this short sale thing out with the relative, just straight up short sale to anyone and lose the house or just enjoy the ride down to foreclosure. (At least I'll get 6-8 months of free rent out of it, right?!?)
I've been in touch with them because I knew this day would come and I was hoping for some proactive interventions (loan modifications, forbearance, etc) that might have prevented this. the only I've been told is that they will "entertain all short sale offers." My wife and I can't qualify to refi the current mortgage (we've been trying for the last year) and once I'm late on the payments and it's reported to the credit reporting agencies, the damage is done. I won't be able to refinance out of this mess on my own anyway. So, the decision is to try this short sale thing out with the relative, just straight up short sale to anyone and lose the house or just enjoy the ride down to foreclosure. (At least I'll get 6-8 months of free rent out of it, right?!?)
I cant tell you the number of people that have lost their homes because the didnt have a couple of thousand. Planning ahead is a good move and more people should be doing exactly what you are doing.
Prior to making an offer, I'd get an appraisal, and then low ball the offer, and get the agreement with your relative before going to the bank.
OH, heck, just let it foreclose, wait 2 years, keep the rest of your credit clean, then go buy a house you can afford with positive equity
Forecloser and bankruptcy will not keep you from owning a home.
I work in this industry and i talk to the lenders every day. first of all, if you are not behind on payments and upside down $100k, it is unlikely they will approve a short sale. that is not a guarantee. these banks are greedy and they will likely let it foreclose and then buy the house back at auction then turn around and sell it at market value as an REO property. If you can't afford it, move on with your life. Alot of people try to do what you are thinking of doing, and you are just going to end up ruining your relatives credit because of your issues. That's a pretty nice relative you have, and also a stupid one.
I've heard that on a short sale, you will owe federal taxes (& possible state taxes) on the difference. In your case, you owe $455K & the short sale is for $350K, the difference of $105K will be considered income and will be taxed as such. You'll probably owe Uncle Sam $30K or more because of the short sale.
If this is accurate, I don't think you'd be in a position to rebuy your house (whether it's legal or not) when you'll have to come up with $30K+ by April 1st.
please keep one thing in mind.
Should you go with the foreclosure and the mortgage company receives a judgment against you there is the chance that down the road should you buy another home they can use the judgment to attach a lien against the new property. Judgments don't just go away in 7 years like bad credit.
There was a poster that had a thread where this happened .
I've purchased properties in a "short sale" situation many times. I've seen many different "attitudes" and "mindsets" from the bank as to "yes, they will do it" or "no, they won't".
I have one right now that really went bad -- on the day of the closing. It turned out to be "short" by $60k. There were -- we believe -- fraudulent documents, agreements, figures, etc. and everyone is blaming everyone else (nobody is blaming me of course, I was just the buyer, and now it turns out, the victim). It's now in the hands of my attorney (a different attorney than the one who was handling the closing). I am sure litigation is involved and forthcoming.
Regardless, I think that banks will often consider a short sale if all efforts have been exhausted and explored. Of course it all depends on the numbers as well.
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