other options instead of foreclosure?

Deal Score0

I moved with my husband to Charlotte NC about 3 years ago from FL. We purchased a house from the bank (3 years ago) that we thought was a great deal, we only paid $ 115, 000. Since there was not urgency to move we decided to refinance the house for a lower interest rate about a year ago which brought our loan to $ 123,500. I have since lost my job, and my hubby is able to transfer back to FL so we want to sell and move ASAP as we are using our savings to cover some bills. The problem is that so many houses in my neighborhood went into foreclosure and sold for an average of $ 80,000 as early as March 2009. We would have to sell our house for $ 133,000 to even break even with all the Realtor fee’s. As you know that seems almost impossible.

We considered renting, but our mortgage with escrow is $ 1000 per month and we would only be able to rent for $ 800. That leaves us paying $ 200 out of pocket, and paying the property manager 10% on top of that. Plus we would be responsible for maintenance and repairs. We can not afford that.

What other options do we have aside from foreclosure and a short sale that will not effect our credit as bad, and will allow us to purchase another home in FL within a year? I have heard of Deed in lieu of, is that a realistic option? Are there any government programs that would assist since I am not working? I do not want to do a loan modification since there is also a fee for that by the bank and it will end up hurting us more then helping us.

  1. Reply
    May 2, 2011 at 11:38 pm

    I’d talk to my lender about the Obama modification programs; if not, at least it opens the door for a deed in lieu discussion.

  2. Reply
    May 3, 2011 at 12:05 am

    It’s not an attractive option, but usually you can make the sale and assume the debt for the mismatch in owed vs sale price. That is, you sell the house for $ 80k and keep $ 53k of debt. This would not affect your credit score. It seems terrible, but on the bright side, if you buy another house right now, you would probably be getting a great deal (due to the swing of the market) at a great rate, and so the value can work out. Of course, this may be similar to just renting out the house and taking the $ 280/week + repairs hit. You would have to crunch the numbers.

    To answer your direct question, there really isn’t any way that you can ask the bank to lose money without it affecting your credit score in a very bad way. This is, in fact, the purpose of the credit score, to determine if you are doing things like not paying back full debts and causing issues for the financial sector by being irresponsible*.

    *I use the term irresponsible as a very broad sweeping term, not to mean that you, as a person, are necessarily irresponsible, as much as the fact that you are now in a situation where you owe more than you can handle. In the banks’ eyes, that is irresponsibility. Also, it is common advice, if possible, to set out to buy a house that is within the means of ONE spouse, so that if the other loses their job, you can still get by. That is something you may want to look into in future purchases. It still doesn’t protect you from both losing your jobs, but it is a nice safety net to have.

  3. Reply
    May 3, 2011 at 12:33 am

    You should call 888-995 HOPE for advise. You have pretty much mentioned all the options I am aware of. And I’m sure not of which will work for your situation. Unfortunately, in 5 years,95% of Americans will have some credit issues due to these situations. Me included. Countrywide and Bank of America should be fined severely for what they have done to our equity and our credit. If I am ever to purchase another home, they will not get my financing.

    Do call that number and see what alternatives you have.

  4. Reply
    Rush is a band
    May 3, 2011 at 1:13 am

    None of the options will leave your credit untouched. None of the options will allow you to buy a home in FL within a year.

    The one that does the least damage to your credit, the short sale, does enough damage to prevent you from buying a house for a few years. Plus you usually have to be in default before they’ll talk to you about a loan modification.

    A deed-in-lieu is almost as bad as a full foreclosure.

    This is going to be a huge problem for you.

    good luck!

  5. Reply
    May 3, 2011 at 1:29 am

    Your only option that wont hurt your credit is to rent it and cover the cost in the hopes that the housing price will rebound and will cover your out of pocket expenses now.

    A short sale is your next best option to walk away from this house with minimal financial damage. However, your credit will be hurt and buying a house in Florida this year would be difficult.

  6. Reply
    May 3, 2011 at 2:27 am

    don’t know if this is the solution to your problem but what i suggest doing for Americans who have credit problems is to check their credit score&report regularly. see if http://creditguidedf.notlong.com interests you.

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