cant afford

octman66 · Joined: 23 Sep 2008 Posts: 2 1.68 Dollars($)

I cant afford my second home which has dropped 50% in value in the past year. From 300k to 150k. What would the result be if I return the keys to the home to the bank. Will I be sued? Back credit?

smithsussane · Posted: Sun Sep 28, 2008 8:08 pm Post subject:

Hi Octman!

Welcome to Forums!

You cannot just return the keys of the house to the bank. The bank will never accept this. You can either go for a deed in lieu or a short sale. In case of deed in lieu, you will have to give away the property to the lender who will give you a document stating that your debts are paid. The lender will then try to sell the property in the market. As the price of real estates have dropped, he won't be able to recover the debt. However there are chances that he will forgive the deficient amount. However, you will have to pay taxes on this forgiven amount. In case of short sale, you will have to pay the deficient amount i.e. it won't be forgiven.

Yes, your credit scores will be affected due to this. But deed-in-lieu or short sale is far better than opting for a foreclosure.

Feel free to ask if you have further queries.

Sussane

0.10 Dollars($)

Hi Octman!

You will either have to go for a short sale or a deed in lieu. If these options are not available in your case, its better you go for Chapter 13 of bankruptcy. this will help you in reorganizing your debts. They will negotiate with you and will come up with a plan which will help you in clearing off your debts within 3-5 years.

Thanks,

Jerry

lisascherzer · Joined: 04 Jan 2008 Posts: 755 1.03 Dollars($)

Call your lender and find out what your options are. As stated above, those options should be available to you but don't proceed with anything until you talk to the mortgage lender first. It won't hurt to talk to an attorney as well.

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