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I have a condo in SF, California and my loan is going to adjust in December of this year. I have been consistent with my mortgage payments and have not once been late. I owe $375,000 and it's probably valued at $390,000 or less. I have written and called my lending company many times to request assistance in modifying my rate/payment plan, but had no luck. They said I don't qualify for a modification due to the terms on my adjustable rate note and per my income status they said I could still afford my payments. Well YES, at the moment I can still afford my payments, but in December there is no way I can. This is ridiculous, because there is no way that I could afford an additional $500 increase in my mortgage payment and then every six months the payment will increase again.

I' am a single parent with two kids, living paycheck by paycheck, have no additional money reserved, and in credit cards debt. I'm considering defaulting but which option would benefit me, DIL or Foreclosure? Also, my property tax is due December 10th, am I still obligated to pay for it if I go into default? If I don't, will this affect me when I file my taxes in 2009?

smithsussane · Posted: Tue Oct 28, 2008 7:28 pm Post subject:

Hi SF Nikki!

Welcome to forums!

In my opinion, a DIL is a better option than foreclosure. Foreclosure will badly effect your credit report than a DIL. A foreclosure will remain in your credit report for 5 years whereas a DIL will remain for 4 years. Moreover there are chances that in a DIL, the lender may forgive your deficient amount resulting from the sale of the property. As far as I know, you will have to pay the property taxes.

Feel free to ask if you have further queries.

Sussane

Samantha · Posted: Wed Oct 29, 2008 5:08 am Post subject:

Hi Nikki,

I'll suggest that you negotiate with the lender for a deed-in-lieu if at all you don't want to keep the home and the lender doesn't provide you with a loan modification or alternative repayment plan.

Since you're a single parent with 2 kids and living paycheck by paycheck, therefore deed in lieu will be the right option. This is because even if there's any deficiency resulting from the sale of the home, the lender won't charge it from you.

However, I do feel that you should keep paying your property taxes as otherwise the IRS could place a tax lien on your home. And if this happens, things can get pretty complicated.

Hope this helps...

God bless you.

Samantha

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Deed in Lieu or Foreclosure?