I would like to know what the best option for me is.

immobilien4me · Joined: 04 Jun 2008 Posts: 2 2.87 Dollars($)

I have a first and second mortgage with National City Mortgage on a house located in Washington State. The outstanding balances on both mortgages total $543K and my house would probably sell right now for between $500K and $520K. Considering that I have never missed, or been late on a payment, have excellent credit, and an income that easily covers my mortgage payments, what is the best (and cheapest) way to get out from under my house and avoid a deficiency judgment at the same time? When you respond, please take into consideration that I don't care about the ramifications concerning my credit score.

larry · Joined: 27 Jun 2007 Posts: 3328 474.44 Dollars($)

Hi immobilien.

Welcome to the forum.

I think you don't want the house any more. So you can request the lender to accept the deed in lieu of foreclosure. If he accepts the deed in lieu of foreclosure then he will not come after you for the deficiency judgment. BTW it may affect your credit and you may not get approved for another mortgage in coming 3 or 4 years.

Feel free to ask if you have any further questions.

Best of luck,
Larry

immobilien4me · Joined: 04 Jun 2008 Posts: 2 2.87 Dollars($)

But will a lender agree to accept a deed in lieu of foreclosure if the I have the resources available to cover any deficiency that may result (such as a 401k and job income) or if I am allowing the property to go into foreclosure as a matter of convenience rather than necessity (which I am)?

Also, isn't it true that a deed in lieu of foreclosure generally cannot be used when there are junior liens on the property (such as a second mortgage) because such mortgages would remain as liens on the property after the transfer?

erb1953 · Joined: 24 May 2008 Posts: 79 0.19 Dollars($)

I think if you let it go into foreclosure for any reason, it is not going to matter to the mortgage company, they are going to want their money.

I am thinking that you will have to let the payments fall behind first, I don't think that they will just take the deed in leiu just because it is convenient to you.

If you are not worried about taking the loss, why don't you sell it outright or through a realator, that way you can just try to pay off the additional money owed on it and work out some kind of a loan that would allow you to do that so the deed could be transferred.

I guess I am at a loss as to why someone would just chose to do this? Is there more going on then you are revealing, just curious, you don't have to say. But if you have good credit, why would you not care if you ruin it. People work very hard to recover from such a situation. It may come back to bite you.

I really think that you should really reconsider and seek out your options other than letting the house go into foreclosure. I would try selling it first.

cliff · Posted: Sun Jun 08, 2008 8:58 pm Post subject:

Hi immobilien

The mortgage company more than likely will NOT accept a DIL. Mortgage companies are not interested in taking back properties that they know are worth less than what they can sell them for.

A good option is a short sale especially since you have two mortgages. I deal with a lot of clients with cases such as yours. Typically at first the mortgage company will tell you they will not take a short sale but, when facing foreclosing on the property it is cheaper for them to allow you to do a short sale rather than foreclose.

Hope this help. Laughing

kenl314 · Posted: Wed Jun 11, 2008 12:38 pm Post subject: potential short sale-

I agree with Cliff above. You're close enough (maybe) to the value where the bank would likely make something work. You have to get with a realtor in the area who has done short sales before; it can be tricky. More importantly than that- you need a RE attorney who specializes in short sales and has actual experience dealing with the bank's loss mitigation department. That is the key.

FYI- Most attorneys who do this will charge an upfront fee ($500- $1000) that is then credited back at the eventuall short sale closing. Their overall fee would be around 1.0% of the eventual sale price. You won't care about that, but the bank has to consider and agree to that as a cost to sell- along with normally a 4% or 5% RE commission.
Thanks, and Good Luck,
Ken

cliff · Posted: Wed Jun 11, 2008 3:20 pm Post subject:

Good Point Ken.

charlesarmbruster · Posted: Tue Jun 17, 2008 4:12 pm Post subject:

Cliff -- you are THE MAN. It is obvious that you have good recent experience with problem-situations. It is experience like this that teaches the rest of us on how to deal with the present -- Thanks!

cliff · Posted: Wed Jun 18, 2008 3:37 pm Post subject:

Thanks Chuck, I'm really trying to do whatever I can to help this community. Its a joy working around such professionals as yourself.

Where doing some new things that we expect to have a positive impact on Mortgagefit.com.

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