Mortgage trouble...foreclosure, short sale, other ways out?

Nelski

I am in a pretty crappy mortgage situation and I am looking for any info, suggestions, advice...I live in Philly but still own a condo in Chicago with an ex that we currently rent out. Unfortunately the rent I get is way less than mortgage and it's hard to find someone to pay more so something is better than nothing for now. Anyway, the ex is just leaving the situation leaving me with all of the burden because he is an a-hole with crappy credit so he doesn't care if a foreclosure makes it worse. I would love to sell and be done with this mess. The market sucks and what I owe is way more than it's worth. I don't think I can come up with the balance to get it sold without his help. He really wasn't helping out much anyway, but this makes it worse.
I'm trying to figure out where I can come up with the money to get it sold but not sure I can. I know foreclosure is bad but it has crossed my mind. I am aware this would screw my credit for at least 7 years. Maybe I could try a short sale?
Anyone with any info on this or suggestions?
Thanks

iceangel055

I'm not too familiar with a short sale, however, I do know that the banks are doing modifications on loans without any costs or penalities. You an contact your mortgage company and explain that you have a hardship to pay for this mortgage. If the mortgage payment is more than 31% of your income, by the new law that was put in place this year, they have to modify your loan. The bank doesnt want your condo. You will probably have to write a hardship letter along with giving them some financial info, but I know when I helped my mom do this to stay out of foreclosure, it took about $200 off her mortgage each month.

lloydrt

if youre renting it out for less than the actual mortgage, the only thing this will help is on April 15th with your income taxes, the fact that you are losing money

also, dont forget to depreciate it for a loss, as well as any improvements while investment property will help in the sale, that is if you have a little extrea to put into it............

this economy sucks for everyone.........no Christmas bonus for me.......bah humbug

SP0472

I work for a bank - I would suggest as iceangel suggested - contact the lender and see if you can re-negotiate. If not, see if the lender will agree to a short sale. It's better for them - it'll save on costs involved with forclosure.

There's no harm ever in having a good sit down talk with your financial company/bank.

Nelski

Thanks for the responses, I will contact my lender and go from there.

YourFriendBecky

A friend of mine went through this kind of a mess last year in southern California. He knew that his paycheck was going to be cut, and also knew that his house was now worth $150,000 less than he paid for it, so he contacted the bank in October 2008 about a loan modification. He worked on trying to get an answer from them for over a YEAR, and it was an exercise in frustration. Never got to talk to the same person twice, and the people he did get to talk to were flunkies. Each time he had to explain the situation over and over and over. A couple of the bank employees actually told him that the bank would pay no attention to him till he started missing payments, which was extremely frustrating to him since he had perfect credit and wanted to stay in the house.

In April 2009 he decided to stop making his house payments. He put the money in the bank every month so that he could get caught up if a modification was offered. It never was. The thing is... oftentimes the bank has sold the note on your place to an investor, so the bank itself is not losing any money and has no real motivation to work with you. They're just "servicing" the loan.

Finally, still never having offered to work with him, the bank started foreclosure. He talked to a real estate agent friend who told him that his credit would still be dinged with a short sale, but not nearly as much as with a foreclosure. My friend had lost his job by then and could prove hardship, so the bank approved the short sale. He continued to live in the house (without making payments) from April 2009 till February of this year, when the house was finally sold. It frustrated him so much that they sold the house to a stranger for far less than he himself wanted the loan modified in the first place.

During this process, he encountered MANY people in the same boat... no response from the bank on loan modification. And I know how hard he worked on trying to communicate with them, but it was like a brick wall. If I were you, if you're at risk for foreclosure, I'd do the short sale. Much less damage to your credit. You'll need to prove hardship to the bank, but that shouldn't be hard if you're carrying two mortgages.

I wish you luck.

weaklink109

Until earlier this year, I worked in the real estate collection department of a major bank. Sadly, the story told of the person who couldn't get anyone to listen to him, getting jacked around, and being told they would be ignored until they started missing payments was all too common.

The one piece of advice I can give you is don't get suckered in with any third party that promises to "negotiate" on your behalf--especially if they collect an upfront fee. An attorney might be able to give you info more specific to your situation, but the companies sprouting out of the woodwork promising modifications are, in many cases, shysters.

In too many instances, the third party will promise you the moon, take your money and do nothing. When I was still working in this field, if a third party actually did call in, unless we had written authorization from the mortgage-holder to share info with that party, we couldn't give a third party the time of day, much less discuss the mortgage account.

I would like to think that mortgage-holders are more willing to work with customers in distress since the regulations on mortgages have changed, but from what I have heard from those still in the collection arena, it is still an uphill battle for consumers, despite the federal programs like HARP and HAMP. If you do work with your lender, keep detailed records of who you talk to, date, time, etc., and ALWAYS keep copies of any materials you have sent to your lender.

Your options with a mortgage on a non-owner occupied property are going to be different than someone who is trying to deal with a mortgage on their primary residence.

Good luck!!