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mad13k · Joined: 16 Jun 2009 Posts: 1 1.34 Dollars($)

The short version is that I made a bad decision to help a friend/ make an investment in a house and now I want out. The deed is in both of our names, but the mortgage is solely in my name. Her credit is not very good and her income is not technically high enough to cover the mortgage on her own. If we try to sell the house right now, we'll likely be upside down on the mortgage. What are my options?

gmakerley · Posted: Tue Jun 16, 2009 4:47 pm Post subject:

you have a few options. you can retain the home and continue to pay the mortgage. you can sell the home and seek a short sale. you can both move out and attempt to rent the home and thereby reap enough to pay the mortgage. you can abandon the home (a ridiculous choice). you can try and persuade her to refinance in her own name (at the same time you transfer ownership to her solely), and if she cannot do that by herself, you can attempt to find someone else to make an equally bad decision to help her make the deal work.
i suppose the other alternative is to try to assist her in straightening out her "not very good credit" and finding her some more income somehow so that she will be able to refinance at some point in the not too distant future.

robertsmith2005 · Joined: 22 May 2009 Posts: 338 -0.48 Dollars($)

in principal, you are answerable to pay back loan.

other options for you are:

Pre-foreclosure sale. This will allow you to sell your property and pay off your mortgage loan to avoid foreclosure and damage to your credit rating. You may qualify if:

1) the "as is" appraised value is at least 70% of the amount you owe and the sales price is 95% of the appraised value,
2) the loan is at least 2 months delinquent prior to the pre- foreclosure sale closing date;
3) you are able to sell your house within 3 to 5 months (depending on what your lender agrees to). An additional benefit to this option is the assistance you will receive with the Seller-paid closing costs.

Deed-in-lieu of foreclosure. As a last resort, you may be able to voluntarily "give back" your property to the lender. This won't save your house, but it will help your chances of getting another mortgage loan in the future. You can qualify if:

1) you are in default and don't qualify for any of the other options;
2) your attempts at selling the house before foreclosure were unsuccessful;
3) you don't have another FHA mortgage in default.

brian3 · Joined: 09 Jun 2009 Posts: 80 21.31 Dollars($)

robert all these options you mention will obliterate the credit score, for all of them you have to be behind on your mortgage.

unfortunately you are not in a great situation mad13k, and i think you know that. I agree with George that your best option is to find someone else to assume your position and co-sign for the refinance for your friend. Good luck!

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