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Here's the story: We bought our home in 2010 (FHA loan with Wells Fargo). My husband got laid off in 2011. Found another job 2 hrs from home, so we put our house on the market. After three years my husband found a job close to home and we took the house off the market. Six months later, he got let go of THAT job. Had not been able to find a decent job around our area (very rural area). We put our house on the market again (it's been over two months), no bites so far. My husband has found a job three and a half hours away in a very metro area and has been staying with his sister for the last two weeks.
We have found a home in rent very close to his new job, but there's NO WAY we can carry this mortgage and make the rent. Contacted WF and they told me we need to list it for short sale for 120 days before they'll consider DIL. So, we're submitting the papers they told us needed to be faxed to them on Monday. They then said they'd assign a person to us.
I guess I have two questions...
1. We're not going to be able to pay the mortgage anymore...will that hurt us in regards to being approved for DIL?
2. Do we need to occupy our residence in order to be considered for DIL?
Any advice is very helpful! We know our credit is going to take a dive and we won't be able to buy another home for a few years, but we really have no way to avoid it at this point.
What does your agent say about getting the home sold now?
Not much. She tends to be middle of the road saying, "Some acreages sell, some take quite awhile." Apparently ours is type B.
We just need to be out from under it. We're going to be living 3.5 hrs away and no way can we balance two payments. On top of that, our vehicle isn't going to last too much longer (300,000 miles) and probably won't do too well in city driving, so that's going to have to get replaced.
Not much. She tends to be middle of the road saying, "Some acreages sell, some take quite awhile." Apparently ours is type B.
We just need to be out from under it. We're going to be living 3.5 hrs away and no way can we balance two payments. On top of that, our vehicle isn't going to last too much longer (300,000 miles) and probably won't do too well in city driving, so that's going to have to get replaced.
You need to whatever it takes to put a roof over your heads and put food on the table. Once you commit to doing a DIL, do not put another dime towards the home. Let the Realtor know the electric, water, and sewer will be turned off. Your agent may want to winterize it - more to block the toilets from being overused or damaged. If your Realtor insists on keeping the utilities, at least turn them off at the breaker box, and water at the street. An empty home is cheap to pay, but it also encourages squatters. Do not strip it bare and do not trash it. Leave it in move-in condition and walk it with your agent before you leave. Document (photos) with both of you signing a rental punch list and keep a copy in case there are future damages.
The DIL will prevent you from buying another home for 4 years. While you are considering a DIL, (which has the same rating as a BK, you may want to reach out to a bankruptcy attorney to evaluate your situation. You may want to consider it as well. Ir you are as well. Make certain on the Intention for Real Property form, your attorney selects surrender the asset. If the loan were paid on time it would raise a red flag, something indicating you can indeed pay both..Once you and your spouse make up your minds on what you are doing, get with your agent and ask for their experience with short sales. Ask her/him to tell you about the properties you handled without providing specifics on the other. There are agents that went to a two and one half hour seminar four years ago, while others attended one and two week training. Not all agents are experienced with short sales.
Here's the story: We bought our home in 2010 (FHA loan with Wells Fargo). My husband got laid off in 2011. Found another job 2 hrs from home, so we put our house on the market. After three years my husband found a job close to home and we took the house off the market. Six months later, he got let go of THAT job. Had not been able to find a decent job around our area (very rural area). We put our house on the market again (it's been over two months), no bites so far. My husband has found a job three and a half hours away in a very metro area and has been staying with his sister for the last two weeks.
We have found a home in rent very close to his new job, but there's NO WAY we can carry this mortgage and make the rent. Contacted WF and they told me we need to list it for short sale for 120 days before they'll consider DIL. So, we're submitting the papers they told us needed to be faxed to them on Monday. They then said they'd assign a person to us.
I guess I have two questions...
1. We're not going to be able to pay the mortgage anymore...will that hurt us in regards to being approved for DIL?
2. Do we need to occupy our residence in order to be considered for DIL?
Any advice is very helpful! We know our credit is going to take a dive and we won't be able to buy another home for a few years, but we really have no way to avoid it at this point.
Thank you.
Secure the rental, get things like car payments and other accounts in line, File a Chapter 7 and throw the DIL house into it. The Chapter 7 guideline will over-write the foreclosure guideline, and you can purchase via FHA very soon. You'd be surprised how quickly credit recovers after a BK7. And anyone saying "Ooh! That stays on your credit for xx years" is someone who operates out of fear. It's not that big of a deal. You did your best. God knows banks wrote off bad debt. Hit the reset button.
1. We're not going to be able to pay the mortgage anymore...will that hurt us in regards to being approved for DIL?
2. Do we need to occupy our residence in order to be considered for DIL?
Most lenders won't agree to consider a DIL (or a short sale) unless there is a verifiable hardship, according to their own unique proprietary guidelines.
If payments are current, most will say there is no hardship.
Many banks don't even consider a note in default until at least 120 days of payments have been missed.
Most banks are not eager to take back your property with a Deed in Lieu. Many folks in similar situations have come to the opinion that there is only one way to get the bank's attention.
I recently worked with a senior citizen with a reverse mortgage, in a good neighborhood, near the beach. He could no longer maintain his home due to advanced age, & needed to move into assisted care.
The reverse mortgage documents said their was no recourse, but the bank was in absolutely no hurry to take over the house. They said it could take a year or more for a Deed in Lieu.
And they expected the senior citizen to continue maintaining the house, & carry homeowner's insurance, & pay the HOA & property taxes...even tho he had to move to assisted care immediately, the cost of which all but ate up all of his monthly income.
As soon as we notified the lender (last Spring) that the owner was discontinuing all further payments of these items...the bank told us he no longer qualified for a Deed in Lieu, & that they would proceed with a straight foreclosure, which takes a long time in a judicial foreclosure state.
The house is upside down (the reverse mortgage was issued in 2006, before the crash). He's almost 90 years old, & couldn't care less about foreclosure hurting his credit.
But the house is still sitting there, abandoned...& I have the suspicion it will hang in limbo until well after the owner is deceased.
You could look into a bankruptcy lawyer. A real three dimension person. He'll charge you something. If they are good and pretty honorable and really just filling the need of the last several years' economy, his idea is not to rake you over the coals. Knowing you don't have money is taken into consideration and can be spaced out. Then, it's one stop shopping and he'll take care of this.
Grain of salt though...honorable ones can be hard to find.
1. We're not going to be able to pay the mortgage anymore...will that hurt us in regards to being approved for DIL?
2. Do we need to occupy our residence in order to be considered for DIL?
I did some contract work for one of the largest banks. Typically, it's this:
1. No. The more delinquent you are on your mortgage, the better your chances for a DIL.
2. No. A vacant house increases your chance at a DIL. They hate vacant houses because nobody is there to maintain them and ensure they aren't vandalized, etc.
Thanks everyone for all of your info. We do have the rental secure and are working on getting a loan for a newer vehicle. So far, we're not technically late on the mortgage, but we will be as we just can NOT make both mortgage payment and rent payment.
I've thought about going the bankruptcy route also. Still unsure about that one...
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