Upside Down On Mortgage (loan, how much, attorney)

[JCK7778]

By posting in an open forum you are going to get an array of different opinions on both the situation you have put yourself in as well as opinions on how to "fix it". Unfortunately the only person you should be seeking advice from is an attorney or a realtor to try and get you out of the mess that you have caused for yourself...the bank did not cause it for you, the housing market did not cause it for you, you caused it for yourself by over-mortgaging on your first home (80/20 loan with a downpayment????) and then geniously deciding to purchase another home and take on yet another mortgage. I am guessing the savings would have been a whole lot more then $200-300 if you downgraded to a smaller or less cushy rental vs. purchasing a new home.

Or instead of putting your savings towards a downpayment for new home that you could not afford, why was that money not put towards your current home in order to try and pay it down to prepare to sell? Why is the savings that you are currently getting from purchasing vs. renting not being put towards paying down that first mortgage.

Instead of trying to find a way out of having to pay for your first home, why do you not try to think of ways to pay it off or at least pay it down enough where you could break even with a sale.

Soap box or not, I am pretty tired of people blaming everyone else for their poor decisions, and no offense but it sounds like you and your spouse have made 1 bad decisions after another bad decision and you are now paying for it.

As someone who pays my mortgage ontime along with all my other bills and does not over extend, I do not feel sorry for anyone who chooses to pile up credit card debt, mortgages that they can not afford and other additional debt to then whine about how to get out of it.

Seek the advice of an attorney and try to dig your way out of the hole that you yourself dug.

Originally Posted by SweetpRN

Hmm. Let me help, since you didn't read the prior posts. We rented for 3 years after moving. Rent in the area was higher than mortgages, we were both working and living frugally for 3 years. Decided to buy to try to conserve money (save $200-400/month). Lower monthly costs, "tax benefits" of owning etc. We put down a down payment (from money we had saved over the last 3 years) and then I lost my job. We have a little over 20% equity in the current property (assuming prices haven't dropped since we bought).

I understand wanting to get on a soapbox and chastise us for decisions we have made, but I didn't start this to ask opinions for what has been done (good or bad). As much as I appreciate the comments - if you are going to chastise, add advice on how to rectify our situation or save the thoughts.

Not to sound ungrateful, but the milk has split one way or the other.. how do I clean it up.

[manderly6]

There is a very interesting thread related to this on the realestate forum. While the thread started in 2009 it is still getting posts.

//www.city-data.com/forum/real-...-mortgage.html

[imoapie]

Ok, NJ is a recourse state but that only matters in foreclosure, if you short sell it doesn't matter. I'm not a pro but I have a good idea about these things.

Secondly, even tho it is a recourse state they don't usually come after you for it.

Lastly, act fast. At the end of this year or next, some law, I forget the name, expires that will hold you liable for taxes on difference between short sale and market value. Again, not if you were to sell today but soon that will be the case.

Act quickly, seeks professional help and sell short. Good luck.

BTW, where is the house?

[SweetpRN]

Originally Posted by JCK7778

By posting in an open forum you are going to get an array of different opinions on both the situation you have put yourself in as well as opinions on how to "fix it". Unfortunately the only person you should be seeking advice from is an attorney or a realtor to try and get you out of the mess that you have caused for yourself...the bank did not cause it for you, the housing market did not cause it for you, you caused it for yourself by over-mortgaging on your first home (80/20 loan with a downpayment????) and then geniously deciding to purchase another home and take on yet another mortgage. I am guessing the savings would have been a whole lot more then $200-300 if you downgraded to a smaller or less cushy rental vs. purchasing a new home.

Or instead of putting your savings towards a downpayment for new home that you could not afford, why was that money not put towards your current home in order to try and pay it down to prepare to sell? Why is the savings that you are currently getting from purchasing vs. renting not being put towards paying down that first mortgage.

Instead of trying to find a way out of having to pay for your first home, why do you not try to think of ways to pay it off or at least pay it down enough where you could break even with a sale.

Soap box or not, I am pretty tired of people blaming everyone else for their poor decisions, and no offense but it sounds like you and your spouse have made 1 bad decisions after another bad decision and you are now paying for it.

As someone who pays my mortgage ontime along with all my other bills and does not over extend, I do not feel sorry for anyone who chooses to pile up credit card debt, mortgages that they can not afford and other additional debt to then whine about how to get out of it.

Seek the advice of an attorney and try to dig your way out of the hole that you yourself dug.

Thanks for the opinion.

Not sure how much you make a year, and so you could probably "pay down" $100k+ in a year "to prepare for selling the home". And then how much would it have dropped next year. And by then we will probably be foreclosing on both homes anyway. How is throwing good money after bad money a good financial decision?

I can't recall blaming anyone for our situation (well other than you.. I do think most of our problems were and are being caused by you.. but that is a topic for a different day).

I do think talking to an attorney is a good idea.. thanx for that one.

I did post on a public forum in a bid to get suggestions from people in different works of life. I guess I can't control who gives their opinion and just ride with whatever comes.

And lastly, I can't recall missing or being late on any of my mortgage payments. If anything I recall mentioning that we were overpaying in a bid to pay it off early. But then again, I guess since we are just "people" we fall into whatever stereotype will help you promote the message from you soap box. "Soap box or not, I am pretty tired of people blaming everyone else for their poor decisions,"

[joeymarine]

Originally Posted by imoapie

Ok, NJ is a recourse state but that only matters in foreclosure, if you short sell it doesn't matter. I'm not a pro but I have a good idea about these things.

Secondly, even tho it is a recourse state they don't usually come after you for it.

Lastly, act fast. At the end of this year or next, some law, I forget the name, expires that will hold you liable for taxes on difference between short sale and market value. Again, not if you were to sell today but soon that will be the case.

Act quickly, seeks professional help and sell short. Good luck.

BTW, where is the house?

100% correct that it only applies to foreclosures. In a short sale they forgive the balance usually and send you a 1099 for the balance.

The law you are talking about is the Mortgage Debt Forgiveness Act. As this is no longer the primary residence I don't know if this applies - you would have to talk to an accountant if you would be able to not claim the 1099 on your taxes.

~Joey

[SweetpRN]

Originally Posted by joeymarine

100% correct that it only applies to foreclosures. In a short sale they forgive the balance usually and send you a 1099 for the balance.

The law you are talking about is the Mortgage Debt Forgiveness Act. As this is no longer the primary residence I don't know if this applies - you would have to talk to an accountant if you would be able to not claim the 1099 on your taxes.

~Joey

Question about that: Is the 1099 sent by the bank as income for that year? ie. We made whatever the difference between the short sale price and original mortgage that year?

[tahiti]

Originally Posted by SweetpRN

Original home price isn't $240k. Current values aren't even $240k (not sure where that number came from).

Even though the loan was "80/20" on our original home, we put down 10%. Along with 5 years of mortgage payments.. but all that "equity" is gone with market depreciation.

I want to stay emotional about this.. but unfortunately it is becoming a business decision more than anything else at this point. We were "overpaying" our mortgage for 4+ years to get it paid off early. But that "equity" doesn't exist anymore. Should I cry about that? Or move on and try not to dwell on what is lost?

You said the value dropped $120K.

"We have a house in NJ that has dropped 120k in value".

You then said it's worth less than 1/2 its' value.

"Pay off a home that is worth less than 50% of what it was originally sold for?"

So if it dropped in value $120k and it lost > 50%, you paid no more than $240 to begin with.

[Marc Paolella]

Sweet,

Your spinning your wheels here, wasting time and typing effort. Just call an attorney who specializes in short sales. Your situation is technical, complicated, and individual. There is not one piece of advice you are going to get on a public forum that is worth a damn. Call an attorney who has a specialty in negotiating short sales to go over your highly individual situation.

[timneh5]

You need to have a short sale, although you say you may not qualify. Why do you think that?

[Obrero]

Originally Posted by tahiti

You said the value dropped $120K.

"We have a house in NJ that has dropped 120k in value".

You then said it's worth less than 1/2 its' value.

"Pay off a home that is worth less than 50% of what it was originally sold for?"

So if it dropped in value $120k and it lost > 50%, you paid no more than $240 to begin with.

Yeah and they bought the house with an 80 / 20 loan with the 20 being a HELC and then magically there was 10% down.

Someone is not telling the whole story. Which is: We bought another house because we paid too much for the first one and decided to walk away. How can I make sure we don't get screwed with our new house?