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What's the best option for the owner assuming they no longer stand to make anything on the sale of the house? Does the deed option save any of my credit? My credit scores before this mess were all over 800.
And yes, I've tried to sell for 5 years. Then tried the short sale as well. I've been through it all. I've spent a boatload of money keeping/trying to sell that albatross. I'm retired with a small pension and my SO was laid off so continuing to pay is not an option. It pretty much wiped out our savings.
I did have a consultation with a bankruptcy attorney and we qualify. He says we need to file if the mortgage company tries to go after our assets. We own outright a home in another state.
What's the best option for the owner assuming they no longer stand to make anything on the sale of the house? Does the deed option save any of my credit? My credit scores before this mess were all over 800.
And yes, I've tried to sell for 5 years. Then tried the short sale as well. I've been through it all. I've spent a boatload of money keeping/trying to sell that albatross. I'm retired with a small pension and my SO was laid off so continuing to pay is not an option. It pretty much wiped out our savings.
I did have a consultation with a bankruptcy attorney and we qualify. He says we need to file if the mortgage company tries to go after our assets. We own outright a home in another state.
I would do a deed in lieu all day long before even considering a bankruptcy. In a BK, bank can still foreclose on your home if they get a stay. Deed in lieu is much better on your credit then either a foreclosure or BK. Don't let a BK attorney talk you into doing a BK. They are only looking out for themselves. A BK will destroy your credit and your life! TRUST ME! IMHO
both will kill your credit and prevent you from getting a new mortgage for a while. When you apply for a new loan, the new mortgage company will view Deed in lieu, short sale, or straight foreclosure all of mortgage defaults. With that said, deed in lieu is probably better than straight foreclosure.
FOR YOUR SITUATION this is mostly clear cut. You have a FULLY PAID FOR HOUSE in other state. You MUST do everything you can to protect your equity in that property, and that will be tricky.
A lender will not be eager to let you off the hook if they find out you have a pot of equity to go after. Without getting too specific here, it may be prudent to consult with NOT a bankruptcy attorney but one who has experience structuring trusts and other 'generational wealth transfers' / ongoing care agreements...
If the home that is underwater has been ACTIVELY marketed, is in good repair, has not been abused in terms of being a 'HELOC piggy bank' to support your other home, and could conceivably marketed with relative ease by the lender at a more realistic price then coming to agreement with the lender to offer them the deed in lieu of foreclosure is far and away the best solution for you.
Yes this will be a negative on your credit, but you do not seem to need to buy another house / have a mortgage/ take out a major loan anytime soon, so that is not terribly important.
Without knowing if you have other debt I cannot offer an opinion on bk, but in general I think that is not something that would be a way out for someone that has a free & clear home. Depending on the value of that home your total asset picture may be something that you do not want to have to change... It is one thing to plan for a retirement that may be forced upon you earlier than you were prepared, quite another to attempt to defraud the Federal courts.
The biggest hurdle that is probably between you and a 'clean' d-i-l situation is almost certainly the LENDER'S PERSONEL -- they do not want to help you transfer real estate to them. They want you to pay them the loan you have! If you have health problems and / or no hope for getting a job (like not just laid off, but laid off from a company that is broke in a sector that is in decline i.e. automaker...) then the lender MAY have some channels setup to deal with this. Ideally you can communicate to this area of the lender's staff in such a way that they will ask for only standard income information and other data related to the home that you have a mortgage on. If they do ask for other asset information you MUST plan for that ahead of time and retirement is a valid asset class that even in bk is generally not liquidated...
The attorney you talked to may have been talking in a general sense about using bk to protect your OTHER home, and that may be a valid strategy, but ultimately if the lender can be convinced that the home that is underwater is the best asset they can get from you (and they agree to accept it with no other consequences, save for outright fraud / misrepresentation...) that may not be needed.
Last edited by chet everett; 08-22-2009 at 03:24 PM..
FOR YOUR SITUATION this is mostly clear cut. You have a FULLY PAID FOR HOUSE in other state. You MUST do everything you can to protect your equity in that property, and that will be tricky.
A lender will not be eager to let you off the hook if they find out you have a pot of equity to go after. Without getting too specific here, it may be prudent to consult with NOT a bankruptcy attorney but one who has experience structuring trusts and other 'generational wealth transfers' / ongoing care agreements...
If the home that is underwater has been ACTIVELY marketed, is in good repair, has not been abused in terms of being a 'HELOC piggy bank' to support your other home, and could conceivably marketed with relative ease by the lender at a more realistic price then coming to agreement with the lender to offer them the deed in lieu of foreclosure is far and away the best solution for you.
Yes this will be a negative on your credit, but you do not seem to need to buy another house / have a mortgage/ take out a major loan anytime soon, so that is not terribly important.
Without knowing if you have other debt I cannot offer an opinion on bk, but in general I think that is not something that would be a way out for someone that has a free & clear home. Depending on the value of that home your total asset picture may be something that you do not want to have to change... It is one thing to plan for a retirement that may be forced upon you earlier than you were prepared, quite another to attempt to defraud the Federal courts.
The biggest hurdle that is probably between you and a 'clean' d-i-l situation is almost certainly the LENDER'S PERSONEL -- they do not want to help you transfer real estate to them. They want you to pay them the loan you have! If you have health problems and / or no hope for getting a job (like not just laid off, but laid off from a company that is broke in a sector that is in decline i.e. automaker...) then the lender MAY have some channels setup to deal with this. Ideally you can communicate to this area of the lender's staff in such a way that they will ask for only standard income information and other data related to the home that you have a mortgage on. If they do ask for other asset information you MUST plan for that ahead of time and retirement is a valid asset class that even in bk is generally not liquidated...
The attorney you talked to may have been talking in a general sense about using bk to protect your OTHER home, and that may be a valid strategy, but ultimately if the lender can be convinced that the home that is underwater is the best asset they can get from you (and they agree to accept it with no other consequences, save for outright fraud / misrepresentation...) that may not be needed.
You bring up a very important fact Chet, regarding the title of the free and clear property. I would consult a trust attorney. I would protect that asset first and foremost by placing it into a trust. Consult an attorney that specializes in this FIRST before doing anything. Thanks for catching that CHET.
We recently had our supplier of live chickens stop dealing with several farmers in arkansas, we opted for a deed in lieu of foreclosure as we still owed 177,000 on our farm without any income coming in. how long will this hurt our credit . we have hadgreat credit up until this.
The simple answer is the negative entry will be there for seven years.
What you probably need to know is how long will this prevent you from getting a loan to buy another home/farm. If the FHA rules don't change, and you otherwise would qualify for an FHA loan you might be able to get such a loan in as little as three years time.
Good Luck!
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