About to lose house...

aw1737 · Joined: 12 Jul 2007 Posts: 1 1.44 Dollars($)

We are 4 months behind on 1 st and 3 months behind on 2nd. My hubby lost his job in 2005, took a job with a company paying less money and we've struggled every since. Pulled ourselves out of near foreclousre this time last year, and here we are again Our home has been on the market for 7 months with nothing happening. We dropped price to just pay realtor and loan balances. 3 year old home with lots of competition for existing and new homes. We are now lookign for a place to rent and ready just to walk away. I've read that they won't accept a DIL on a property with a 2nd mortgage. Should we file bankruptcy or just walk away into a rental before a foreclosre shows up on our credit report.

Thanks

larry · Joined: 27 Jun 2007 Posts: 3328 473.40 Dollars($)

Hi Aw,

Bankruptcy and a foreclosure - both have a negative impact on your credit report. Even if you walk away into a rented house, it will lower your credit score. You should better talk to your lender and ask for some alternative options suiting your condition.

Guest 0.10 Dollars($)

Hi Aw,

It is true that most lenders do not offer a DIL option for a borrower if there is a second mortgage or junior liens on the property. Bankruptcy in addition to a foreclosure will have serious financial implications on your credit report as it will be shown for the next 7 years! Many creditors will not deal with you because of your poor credit rating. And after a bankruptcy and foreclosure, getting a landlord to accept you as a tenant is a really impossible task.
You should ask your lender for some loss mitigation plans.

Guest 0.10 Dollars($)

Thank you for your responses. I don't know. I'm going to talk to the lender for my hubby then I can go into detail about the things that I learned on this board. Thanks so much.

miller_st · Joined: 17 Jan 2007 Posts: 917 168.82 Dollars($)

Caron

Well Aw,

I know you must be having a tough time since your spouse lost the job. But why not try out something other than foreclosure or bankruptcy. Discuss with your lender and find out if he is willing to modify your loan terms and conditions, so that you can continue paying for the loan. And, in case your spouse can get a job asap, then you can go for a cash-out refinance. With this, you can take out a new loan combining your balances on the two mortgages at a comparatively lower rate so that you can repay the loan with lower monthly installments. And, considering your financial condition, going for a fixed rate loan would be a better option.

However, if you feel you can no longer take the responsibility of managing a mortgage, then you can offer your property for a lease to purchase option wherein the someone will rent your property for the first few years and then buy it. And, if your mortgage has an assumption clause, then you can also ask the buyer to take over your loan - I mean the cash-out refinance loan.

Best wishes Smile

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