Update: Trying to avoid foreclosure by working with the bank on a quick sale #132 - Page 5

[jennica]

Originally Posted by Meg Murry.

Jennica, I notice that you are multiply distancing yourself from this and your language clearly indicates that you made no serious moves toward getting a job -- you were (notice the past tense) starting (which means you did not actually get into it) the process (a vague term) of looking.


So work during the week.

This is a nonargument if you work during the week.

I'm sorry to sound harsh, but this may be a luxury you cannot afford. Many times, your words and general tone suggest that you appear to believe that you're above all that has happened to you -- that you can reject landlords who aren't "worthy" enough to rent to you with your (hypothetical) foreclosure, or that you shouldn't have to live in your "crappy" house and "crappy" area, or that in a time of serious financial crisis when what you're facing is a foreclosure (or at the very, very worst, homelessness), you are entitled to "fun or weekend activities" when your family's security might depend on your decision to hang tough and take responsibility and do what you can.

Again, I'm very sorry for what has happened to you. With all the gentleness I can muster, can I offer you a definition here? An irresponsible person does what she wants. A responsible person does what she must.

I didn't know I'd be judged on the wording I used. I was just trying to explain my position. If you don't agree with it or understand it, fine. But I'm not all the things you are calling me here.

[jennica]

Originally Posted by candiland

Putting it up for auction is a really quick way to do away with the whole headache. Your Realtor can give the listing to the auction house if you're already in a contract with him/her. You probably won't get as much as you want for it, but with a really good auction company who advertises really well, it should at least attract several bidders. (I'm a Realtor and just helped out with one of these recently).

Is this the same thing as a short sale?

[SleeplessMommy]

Originally Posted by Meg Murry.

Hey, Sleepless -- I have a new job for you.

Mortgage Doula.

(Seriously, we need mortgage doulas in this world!!!)

finally a job I can handle!

BTW, at auction the house will bring 50 - 80% of market value, maybe less. The auctioneer will charge 10% commission. And the contract with the real estate agent will have to be canceled first.

IF the house is sold via short sale, there in nothing to prevent the poster from making future payments to the mortgage company, IF she wants to. For example, if the bank looses $30,000 on the house, she could offer to make payments of $143 per month for 30 years, to pay this off. This ASSumes 4% interest. This is less than the gas cost of continuing to own the house.

In general, mortgage companies do not bother asking for/ pursing this kind of settlement. They just write off the losses and move on.

Her winter heating costs will be well over $1000. Have you done the exercise of making a budget for the two living options? Escaping from this house before the winter heating season might be a good idea.

Keep house: Apartment in city:
mortgage and taxes $ xxxxx rent: $xxxx
heat
electricity
trash, sewer, water, etc
gas and car repair
food
etc.

Does moving back to the city FIX the cash flow problem? How big are the savings? There has been inflation in heating costs, gas, food in the past few years, you need to make sure that the problem is your house, not current income.

[normajean]

Originally Posted by jennica

Thank you! This is what I was trying to say. It isn't a $200.00 a month increase, it is much more than that.

But didn't you also did say that if you refinance to a fixed rate loan, it is $200 more than your original payment, which is less than you are paying now on the ARM? Maybe I'm confusing 2 different threads.

[Heather423]

Originally Posted by jennica

She said that as long as it is on the market, they can not offer me anything in order to stay in my home.

How about taking it off the market? Can they readjust? Then you can always put it back on afterwards??

[Knittin' in the Shade]

Originally Posted by jennica

Oh God, it was never new and shiny.

I meant that figuratively, not literally that it was new and shiny. (sort of like how my kids are completely enamoured with a "new" toy from the consignment shop for the first week, adn then it gets tossed aside. They toy was "new and shiny" to them at first.)

Yeah, we were idiots. We made a huge mistake. We figured that out right away and we've living here for three years trying to make it work ever since. But thanks you two for rubbing it in.

I'm sorry if what I've said feels like I"m "rubbing it in." That is not what I am trying to do at all.

No way. Now that is uncalled for. We have never, ever, in our lives payed a rental or mortgage payment late, nor have we payed a credit card late, nor a utility bill unless it was a total accident, which happens to us mortals. I have a long credit history that I can point to. Anyone who wouldn't look at the whole picture is not worth renting from anyway.

I'm sorry, I think you mistook what I was saying. Iw asn't saying that you wouldn't pay the rent, only saying that a potential landlord could look at your credit (which, regardless of how good it has been in the past, will be seriously destroyed with a foreclosure) and think "They didn't pay their mortgage, why would they pay their rent?" And with the way the economy is going, virtually every landlord I know (both here in Philly and back where I grew up in NY) are pulling credit checks and won't rent to those with poor credit scores or "dings" like repossesion, foreclosure or bankruptcy. It's just the way the world works, and I think that if you try to limit to renting from those who on;y look at the "whole picture" you will most likely wind up renting from slum lords who don't care.



Yikes, I didn't know this either.



Thanks for the advice. We obviously could not afford the loan initially (but we didn't know that at the time) and had trouble paying it right away. It has steadily gotten worse.[/QUOTE]

[Izzy's Mom]

Originally Posted by jennica

So, what do you all think? Should we do a quick sale or no? I guess our options are to do the quick sale, or for me to get some type of job and make it work here for at least another year. Not sure what I want to do yet. I'm going to talk to DH tonight about all this.

Don't be mean now, this is stressfull.

I think this sounds like a good option (the quick sale) - make sure if you don't make your mortgage payment for a month you put as much as possible of your usual payment somewhere safe so you can use it for a damage deposit or rent or whatever. Good luck to you and I hope you find a good place to rent back in your old area so that you are happier.

Oh and I will say personally I wouldn't do the quick sale and I certainly wouldn't foreclose, as I would prefer to work and use daycare than ruin my credit, although I certainly can understand to some extent why that isn't your preferred choice. Long term credit problems can be so damaging to your future happiness and I don't think it's easy to see now for you, but the time will come when it makes more sense. A lot in your situation may depend on your DH anyway - if he is laid off I think you'll need to just get rid of the house and move back to the city where there are more job options for you both. Again, good luck.

[Heather423]

Originally Posted by Mothra

I disagree. My commitment to my children is stronger than my commitment to any bank. I would not go to work full-time in a minimum wage job to avoid forclosure.

Wouldn't your so called strong commitment to your children include providing a home for them to live in and food on the table???? Your statement is completey off base, and I take it personally. I would love to stay home with my child, I feel guilty every day, luckily she is with my mom, I am more fortunate than most mothers. Are you saying that WOHM's have no commitment to thier children? I HAVE to work full-time to provide a decent home in a nice neighborhood so my child can grow up in a nice area and not worry about having to get mugged or shot, and have a large grassy yard to play in.... I live in one of the cheapest cities in my area, just so we can have the space we need, which means the school district is the worst, but we have to also send my DD to private school when that time comes, which means having to make the $$$ to be able to do that. Like another poster said, being a good dedicated mom also includes financial responsibility too. Nowadays you cannot put all the pressure on your DH's. God forbid what if something happened to him? We all have to make sacrifices for our families, some are more willing to do it than others.

[Petersmamma]

I just want to add my experience. We purchased a small house about 5 years ago in a new neighborhood that is FAR away from my current job. Our thinking was that we would be able to sell it in 5 years when I finished school and that it would be better to buy a new house in a new neighborhood than the same amount of house in a not so great neighborhood. We, luckily, have a fixed rate that is low and we are in the smallest house in the neighborhood, which eases pressure.

We tried to sell our house about a year ago with the idea that we would rent till we decided where we want to move. We priced our house so that we would literally walk away with NO money. In one full year, we had ONE showing and ONE offer (separate) that was 30k less than what we were asking.

So, the market is dismal. Dismal, dismal. And I don't like our neighborhood (the risk you take when you move to a developing area), my commute SUCKS, gas prices are rising, because it's a small house it would be hard to have a second kid here, and I just generally don't want to live in Houston and I feel stuck because of this house.

I've honestly had the same thoughts as you (just kind of fantasizing about being closer to work and such) so some of the posts on this thread have been an eye opener.

I don't really have any advice for you. I think that no matter what you do, it's going to be hard. So, I think you need to make the decision that feels the best, even if it doesn't feel perfect (because I don't think there is one).

[WNB]

No, you don't want your house to go into foreclosure. I think the long-term costs of letting that happen would be worse than the short-term costs of making ends meet while you get out of the house and into cheaper living arrangements.

I don't see this as an ethical issue: she and her DP are obligated to pay the loan, if they don't they lose the home and face the consequences for reneging on a major financial obligation.

What is and was unethical was banks offering far more loan money than the borrowers could afford, allowing zero-down payments, allowing people to finance 100% of a home purchase. These practices drove up the price of homes, forcing people like the OP and her partner to pay more for their home (and more in interest to the banks) than they would have in a more rational housing climate. It was basic inflation at work: increase the money supply, and prices increase as buyers compete.

I agree buyers had (and have) an obligation to make rational decisions about what they can and can't afford, and to factor in likely increases in the cost of living and changes in their likely income in those decisions. But the banks were wholly complicit in misleading people about "what they could afford" by relaxing the standards and creating new loan products to attract more borrowers.

OP, I'm sorry you are in this horrible situation. I hope you can look into some of the suggestions for bringing in more income to make ends meet while you find a way to get out of the house without going into foreclosure. The suggestion about, essentially, refinancing via student loans -- which can be put into forbearance if absolutely necessary -- seems interesting, but I would consider them a last resort.

You might also consider re-financing WHILE YOUR CREDIT REMAINS HEALTHY (i.e., before you slip into late or missing payments) into a longer term loan. You would pay more interest, but your monthly payment would be lower and protect your ability to meet the obligation. That would give you a cushion of sorts while you sold the house and your DH found work back where you want to live.

[AngelBee]

Praying

[Heather423]

http://www.mothering.com/discussions...d.php?t=771849

Another thread with someone going thru a similar situation....

[CathMac]

Originally Posted by SleeplessMommy

...
BTW, at auction the house will bring 50 - 80% of market value, maybe less. The auctioneer will charge 10% commission. And the contract with the real estate agent will have to be canceled first. ...

Interesting, I'd heard that sometimes you actually do better at an auction if the opening bid is attractive since you draw a lot of people and if you get lucky a competitive atmosphere developes and the price gets bid up.

Perhaps that's an unrealistic scenario if they owes significantly more than the house is worth.
~Cath

[Yooper]

We were faced with a similar situation 2 years ago. We, luckily, have a fixed rate mortgage and we bought a home that is far far far below what we were approved for (can you tell I am financially conservative?). But, just as we bought a new car, gas and heating was skyrocketing, and our property taxes went up, dh lost his main job. We were committed to having someone home with dd most of the time. But I was also not going to foreclose no matter what. So, dh started working his second job nearly full time during the day and I started bartending 2-4 nights a week. This worked out great for a temporary solution. My shifts did not start until dh was done with work. Most of my hours were after dd was asleep so I was not "missing" much. There were still times on the weekends and evenings that we were all together. And dd did not have to go into daycare. Bartending is pretty lucrative. I would bring home between $70-$200 a night in tips alone plus I was paid minimum wage on top of that. It required no "skills" although I do have a nearly useless (for part time work anyway) master's degree in engineering. I was able to make enough to cover our entire mortgage, car, and health insurance payments until dh was able to find another job. Dh was out of official work (his other job is his not-very-lucrative photography business) for over 12 months and we came out of it with no cc debt and no missed payments anywhere. Waitressing could also work the same way.

[Om Girl]

Jennica-

You're in Minnesota, I'm in Minnesota, so let's talk:

I completely understand from your OP that you just want OUT OF THE HOUSE and to move back to the city...Selling outright is better than a quick-sale or foreclosure so...

Here's my advice for temporary measures until you can sell/foreclose, etc:
Your mortgage payments are increasing by $200.00...so here are some actions you can take to aleviate the increase (without finding a job, putting DC in daycare, etc)

• Call the Energy company and ask about general assistance or year round payments (this will ease some of the energy bills for now)
• Contact your local government agency about public assistance, specifically energy assistance.
• Cut your food/grocery/un-necessary spending to the minimum you can live with without depriving yourself.
• Go to the county office and talk about homesteading and your property taxes, making sure that they're accurate for the time period now, NOT when you bought your house!
• Find the BEST REALTOR in your area...
• Actively market your house to sell...offer incentives, post "attractive" pictures of your home. Many people are shopping online for homes and if your pictures aren't attractive or flattering, they won't even schedule a showing.
• Remove ALL CLUTTER from your house, this is called staging, and it can really help your home sell compared to others in the area. A well staged house can increase its attractiveness to buyers by 80%.
• Is your home accurately priced for the area, you've said you don't have the nicest home in the nicest neighborhood, but Chaska is pretty nice.
• Keep having open houses for your property...there are buyers out there right now, and if they like the area, but can't afford a "bigger home" yours might be perfect!

That being said:

• There is currently an affordable rental shortage due to all the mortgage foreclosures.
• Landlords are REQUIRING credit and background checks on all applicants
• First and last months rent are being required, along with a substantial security deposit for rentals
  • Will you be able to come up with $2100.00 for this? ($800/mo rent x 2 + $500.00 sec. deposit)
• What is your motivation to move to the city, what will be different and how will your life be "better" than it is now?

I understand this is hard, foreclosure is not a quick and easy fix for your financial troubles, it will affect your credit for 10 years which in turn will affect your cell phone rates, credit card APY, car loans, future home purchases, etc.
Bankruptcy and foreclosure are two very different animals, regarding credit histories and forgiveness.
While I agree that there are many things you can do instead of foreclosure, if you're really not happy with where you are, then ACTIVELY work to get yourself to a place that's better.

[hookahgirl]

PLEASE just call around to some landlords...I am telling you this market is scareing people bad, we are having a rough time over here and I dont want someone to have to go though the same thing!
Whitney

[sonrisaa29]

I would suggest looking at craigslist and see how many landlords are requiring credit checks, and perhaps that will give you a good idea of whether a foreclosure could leave you out in the lurch when trying to find a new house.

[Rhiannon Feimorgan]

I haven't read the whole thread, just the first 2 or 3 pages so maybe this was brought up. But there is another option you didn't mention OP. What about selling the house for whatever you can get for it, taking a loss. Then move to an inexpencive rental where there are better job opertunities and less commute and use the money you're saving to pay down the remaining debt.

You would still have debt, but if you make regular payments on it, it's not going to be a black mark on your credit the way forclosure would be. And you would be out of the house.

I mean really, none of the options are perfect. The all have huge down sides but that is what I would do. I'f you can be living in a place where your expencis are lower and and you're happy, paying down the debt created by that house is doable.

I feel for you, the housing boom/crash has hurt a lot of people.

[Bird Girl]

The original poster has been caught in the housing bubble trap--millions more in this country are going to follow her; she just got snagged earlier than many. There's a well-known blog about the housing bubble--Google can provide you with the direct address. Once you begin to read there, and other related blogs, the full scope of the problem will become clear.

Since the OP hasn't yet fallen behind on her payments, she still has a few options. She has a few choices among the lousy options available to her.

First and foremost: since you know you don't want the house, YOU MUST GET RID OF IT! and the sooner, the better. Since you are already underwater, what you are looking for is called a "short sale," where you sell for less than is owed on the mortgage. Getting the house under contract must be the first priority. Make sure your realtor knows that you are looking for a short sale. Price it as aggressively as possible (paying no attention to what other houses are asking for or what you owe); find three comperable SALES, not listings, from the last month or so and price at least 10% less than they were. Declutter the house as much as possible--try a yard sale, if the weather's still OK, and put in a few new flowers. Get your kid's stuff put away in a closet and make sure the house is ready to show. Don't bother with any remodeling that you have to pay for, but do make sure everything is scrubbed clean within an inch of it's life and ready to go.

Folks here have mentioned how many homeowners are going into foreclosure. The housing bubble has created a huge tidal wave of re-setting ARM loans and of foreclosures behind it. It is getting harder by the day to fund new mortgages, and buyers are scarce. You must find the buyers who are out there, and cut your price until you meet them. Home prices are not coming back this year, next year, or any foreseeable time in the future. The market will not be better in the spring. You've got to dump this sucker now, because the gap between what you owe and what it is worth is widening every day.

As far as that gap goes, short sales and foreclosures result in the creation of a 1099 from the IRS--they assume that the amount of money that the lender forgave, the difference between what the house sold for and what you owe is actual income, and they will charge you taxes on it. This is your incentive to work out a payment plan on the short sale gap with your lender, and not to let the lender forgive your debt. A short sale does damage your credit, but not as badly as a foreclosure does.

Because your credit is about to take a big hit, you must look for a rental apartment now. Don't just click around on the internet--actually travel to the neighborhoods you want to live in, and start collecting rental applications. For one thing, it will be easier to keep your house in saleable shape if you're not living in it. For another, it will allow you to get settled into your new place and look for employment. Your finances are going to take a big new hit, and you need more income. If you don't want to put your son in daycare, then look for something you can do either at home, or in your DH's off hours. It may be stressful for your son to have to undergo these changes, but the stress of having working parents is much less than the stress of having financially strapped parents, who can't make ends meet, and who are constantly frazzled by money. Build up a cushion of cash, and re-evaluate in 12 or 18 months.

[Meg Murry.]

Originally Posted by jennica

I didn't know I'd be judged on the wording I used. I was just trying to explain my position. If you don't agree with it or understand it, fine. But I'm not all the things you are calling me here.

You're not being judged on the wording you used as much as you are being judged on what the words tell me about your situation, your attitude, and your efforts to get a job. It's not a matter of "agreeing with it" and I do understand it. I would like to add that I did not 'call' you anything.