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Guest

I am in a bit if a spot.

I and my business partner went in on a house almost 2 years ago in CA. We have since lost our shirts and owe more than the house is worth even though we put 10% down. We don't want both of our credits to be destroyed if we have to foreclose. I want to take him off the loan with a simple assumption and then off title with a quit claim deed. I know that if the house does go into foreclosure then he still would be responsible for it, but I was hoping that this could by us some time so we can sell.

I think we can sell it in a couple months but at the moment don't have the money to cover the mortgage. Basically what we want to do is save his credit from late payments or a foreclosure (worst case scenario).

Suggestions?

jenkin7 · Posted: Sun Jul 01, 2007 11:12 pm Post subject:

Hello Kirkwood,

I do understand your problem. If you remove the name of your business partner from the loan, then, your credit would be affected. Not his. There are various options to avoid foreclosure. You could opt for:

A special forbearance - If the lender feels that there is a possibility of you selling your house within a few months or you continuing your payments once your home is on lease, you may be eligible for a short-term delay of your payments
A pre-foreclosure sale - For a lesser amount than the one you owe, you may sell the house. But, your lender will enforce certain limits on the terms of the sale.
A deed-in-lieu of foreclosure - If you are in default and don't qualify for any other options, you may be able to voluntarily give back your house to the loan company. The advantage is that you can avoid the foreclosure fees and the legal expenses. Moreover, you also avoid the negative effect of foreclosure on your credit.

For further queries, do feel free to ask.

larry · Joined: 27 Jun 2007 Posts: 3322 474.67 Dollars($)

Hi Kirkwood,

If your name is not there on the loan, your credit may not be affected.But when you remove the name of your business partner from it, your credit score is affected as said by Jenkin.You may go for deed in lieu of foreclosure as it does not damage the credit rating as much as foreclosure and the borrower is also relieved from the liability of the loan payment.Thus, you can avoid the foreclosure which has a greater negative impact on your score when compared to deed in lieu.

Caron

Hi Kirkwood,

Welcome to the forums.

If you are unable to sell the property, you can try out the lease-to-purchase option. That is, find out a buyer who is willing to take your property on rent for a certain period of time and then he will be buying it from you. While he takes the rented property and buys it, he will be assuming the loan.

Good luck

Guest

Thanks for the info guys. To clear up some stuff let me explain further. I am on the loan currently. I dont care about my score that much since I have a ton of student loan debt that has caused my scores to be mid 500's, since the debt is so large and I had a problem with a forbearence agreement on them, my credit will not recover for a minimum of at least 7 years, so I really dont care what happens to my credit now.

What I want is for my partners credit to not be affected at all since we use his for all our business transactions. Basically I want to know if there is an option that will not have an negative affect on his credit, not even a late payment.

I also cant do a regular assumption (verified) since Im self employed and would have to go stated and my scores do not qualify me to go 100%stated.

Suggestions?

Guest

oh and since I owe more than the property is worth I dont think a lease to buy is an option, our mortgage payment PITI plus home owner dues are 3k, I cant even rent it out for 1895.

helping_user

Kirkwood,

In your situation, I shall say that you can talk to the lender and find out if he can help you to take an interest-free loan from the HUD. This will be helpful in bringing your mortgage current. Or else, try out with a deed-in-lieu. In this case, you will have to agree to a transfer of the property to the mortgage company and in return it would cancel your debt.

Thanks.

miller_st · Joined: 17 Jan 2007 Posts: 918 168.95 Dollars($)

Guest

Well guys thanks for all your help. Looks like they will not let us do a simple assumption on the loan, and we will have to do a short sale. Funny how you can try to be responsible, (put 10% down, fixed rate loan with full PITI, never once late) not get your self into bad situations and things that are out of your control ruin your life. Well I guess it has to happen to someone.

Thanks for the help,

Screwed

blue · Posted: Tue Jul 10, 2007 3:10 pm Post subject:

Kirkwood, simple assumption would be possible only if the loan has an assumption clause in it.

You talked about forbearance option with the lender? In forbearance loan payments are stopped for some months for you to recover financially and then continue the payments. It can buy you some time to find a buyer for the house.

Short sale is also going to bring down your as well as your partner's credit score. But as it stands you do not have many options left.

It is really unfortunate that you are in such position. But what actually happened? You had a big loss in your business or some family crisis led to this situation.

I hope you are able to recover from this position.

Thanks
Blue

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