Posted by Joe Kaiser on May 20, 2007 at 18:15:03:
A foreclosure won’t matter much, all things considered. There will be
lots of people with lots of foreclosures soon enough.
Put yourself first. Let the bank worry about the bank.
If there’s nothing you can get out of this, then contact the bank to let
them know they can either accept what it’s now worth (through a short
sale with your agent) or they can accept a deed in lieu.
And at this stage, that is the responsible thing to do.
Foreclose? - Posted by Shari
Posted by Shari on May 19, 2007 at 21:29:19:
I bought a property and rehabbed last year that put me into financial ruin. I could not sell the house and now my personal residence is in foreclosure due to trying to carry both properties for a year. Sale date is 9/28/2007. It is a beautiful property in a great neighborhood. I just listed it in the MLS and it will sell for 285-290k. The problem is that with the foreclosure fees and back payments, I would need to sell it for $302,000 to break even, at which it will not sell and if it did, will not appraise. I don’t have the money to bring to closing if I sell it at market.
I was thinking short sale but apparently the bank needs income docs of which I have none. My fiance that was supporting us ended his own life in February, it has been horrible for me. I can move into my unsold rehabbed house and can afford the payments but I don’t know what to do with this house. Let it foreclose? My credit is already ruined by 4 months of non paid mortgage payments.
Is there an alternative?
I would like to get this settled without further harm to my credit and I am also a person who lives up to her responsibilities.
Thank you all so much for your help - Posted by Shari
Posted by Shari on May 21, 2007 at 07:37:50:
My credit is ruined anyway and this is the worst time of my life. I am trying to think of it as a new start. I just talked to someone at the bank and after explaining my predicament, she advised me to let it just forclose in so many words.
So that’s that, I am going to move into my other property which has no equity in our local market, and live there, take a deep breath, and continue on. I don’t have any of my own income at this time, my boyfriend and I were doing rehabbing and building, all but the property I am moving into are in his name. I am going to contact some builders we know and perhaps so administrative work etc. to get started again.
Thank you again so much for your help, it is very much appreciated!
Re: Foreclose? - Posted by JT-IN
Posted by JT-IN on May 20, 2007 at 12:40:13:
Just provide the lender with what you can regarding financial records… What they are seeking is the knowledge of whether you have the ability to repay the debt, either from income or other assets. They aren’t in the business of forgiving debt to someone who can pay.
Even if you have No records, at least provide them with a factual accounting of what has occurred to your Fiance’, including hard documents, death cert., police report, even newspaper clipping, etc. This will demonstrate to them that you are not attempting to pull the wool over their eyes. You are not asking for a huge discount, based on what your estimated sale price would be, and in light of current market conditions I couldn’t really imagine them saying NO to the request.
Worst case they may request or require you to sign a personal note for the balance and the release of the secured property. Then possibly you could pay that at a later time; all negotiable of course. Just some ideas, anyway. Wish you the best landing from this rocky ride.
Re: Foreclose? - Posted by IB (NJ)
Posted by IB (NJ) on May 20, 2007 at 10:10:00:
Hi Shari. I am very sorry for your unfortunate circumstances.
What about the rehabbed property? Is there any equity left? Can you sell it for profit and use that to make up the balance of the sale of your personal residence?
Lessons to Share ? - Posted by Jimmy
Posted by Jimmy on May 20, 2007 at 08:29:20:
any lessons you could share with us? I realize that part of this was beyond your control. But maybe their were decisions/behaviors that positioned you for failure. not being critical. its all about learning.
getting knocked on my butt were always the most educational experiences.
some things I learned from my mistakes:
keep personal spending to a MINIMUM.
always maintain a nice cash reserve, and don’t dip into it to do new deals
make rehab contractors bid their work. never give a blank check.
carry plenty of insurance.
never touch cash-flow nagative deals. they cannot withstand a down market.
keep leverage at 70% LTV or less. this is a lot safer, and allows you to tolerate some bad news. compare to the people at 90-100%. they go underwater easily. its happening NOW.
understand that debt and leverage are your best friends in an up market, and your worst enemies in a down market.
you make just as much money managing your bottom line as you do managing your topline. Building revenue (rents, capital gains, interest income, etc.) is great. But lowering expenses can be just as important. Laminate flooring instead of carpet. Metal roofs instead of comp shingles. investing in a plumber or electrician to split off utes in a duplex is often an excellent investment.
Don’t provide free refrigerators. If a tenants wants one, they pay an extra $20 a month. this rule bumped by revenue by $800 a month. and half of my tenants buy their own. that’s excellent! same goes for washers and dryers.
at lease renewal, bump rents. its free. its additional revenue and it costs nothing.
anytime you do a significant repair or improvement to an occupied unit, try to squeeze a few extra dollars.
the list is endless.
Re: Foreclose? - Posted by Randy (SD)
Posted by Randy (SD) on May 20, 2007 at 07:59:07:
I’m sorry to learn about your personal tragedy, reading your initial post and your reply to Jack (where you post other credit - credit cards, car loan’s etc. is great) you do have a bit of a conundrum. You’re asking the bank to accept a short sale while paying other creditors in full. You also post “apparently the bank needs income docs of which you have none” are you saying you have no income or you cannot document your income? Typically a lender is going to require full disclosure including income verifications before accepting a short sale, but these are not typical times!
Mortgage lenders are facing record foreclosures, I read recently several states are enacting legislation to enforce a 90 - 120 day moratorium on foreclosures to give homeowners time to work out a solution with their lenders. If you’re not getting satisfaction or resolution with the loss mitigation person you’re dealing with, escalate your case to their supervisor. A $10,000-$20,000 short sale is far better for a lender than another $290,000 property on their foreclosure list. Go for the short sale.
Re: Foreclose? - Posted by Colin Bochicchio
Posted by Colin Bochicchio on May 19, 2007 at 23:44:45:
I know the feeling in a diffent way since it sounds like you are in a very bad situation. There are always ways to do things as long as you have options to consider.
If you like email your contact information.
I have some avenues for you to consider.
Do not let it go to foreclosure and as long as the notice of default was not filed you have time to get your strategies in action.
God bless you in this.
My email is firstname.lastname@example.org.
Re: Foreclose? - Posted by Jack
Posted by Jack on May 19, 2007 at 21:42:22:
I was going to say that you should just let it go to foreclosure since you said that your credit was already ruined. But then you say that you don’t want to further harm your credit and that you live up to your responsibilites. So I’m confused. Is your credit ruined or not? Are you in foreclosure, or do you live up to your responsibilities?
Re: Foreclose? - Posted by Joe
Posted by Joe on May 20, 2007 at 12:49:47:
This has to be the first post that did not use the words “Land Trust”…
Re: Foreclose? - Posted by Shari
Posted by Shari on May 19, 2007 at 23:46:47:
Typically, I live up to my responsibilities but recent events have led me to this unfortunate position. I would like to handle this before foreclosure is imminent. I would like to work with the bank via a short sale and get this situation resolved without resulting to foreclosure hence my question…what can I do to help this situation? What is the most responsible thing to do? Is income verification truly the only thing the bank will accept or has anyone had any experience asking the bank to take a short sale with alternative documentation? Is there an alternative? My other credit (credit cards, car loan) is great, I just can’t afford to pay two mortgage payments anymore.It has been 14 months of paying two mortgage payments at a total of $5500 per month and now my significant other has ended his life. Uggg, complete nightmare. I want to do the right thing, short sale, subject 2, whatever. I don’t want to leave the bank high and dry either.
Re: Foreclose? - Posted by colin
Posted by colin on May 20, 2007 at 13:20:12:
I’m curious as to you comments regarding using the words land trust…??? right after my post…??? just wondering what you were trying to say…??
I do work with land trusts and have posted on them but it is not advisable in every situation but combining that with a corporation provides very good asset protection for your property.
There are probably a few ways to get her out of this situation and one in my view is to seek a forebearance and restructure the debt. If Shari works with them most lenders will work with you especially in this market.
I just wish her the best in getting out of this unfortunate situation.
Re: Foreclose? - Posted by Kristine-CA
Posted by Kristine-CA on May 20, 2007 at 18:21:20:
What exactly is your income and what would verify it? What are you
living off of? Was your fiance’s income your family’s only income? In
that case, loss of income is certainly possible to document for the
However, if you are paying your credit cards, car payments AND a mtg.
on another house (or own another property with equity), it’s a hard sell
to the bank that you have financial hardship.
I would try for the short sale, documenting loss of income for the
lender and getting them all the info regarding comps, etc. The trouble,
from my perspective will be that you appear to have assets. How much
equity in the rehab house? Kristine