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irumasghar1300 · Joined: 10 Dec 2008 Posts: 4 2.96 Dollars($)

I,m going through hard time we,ve lost a lot of income how do we manage our lenders.We are upside down in our mortgage i.e owe more then the value of the house.Our lenders will skip 3 months payments and add it the principal and take it later but will not change the value of the house which it is right now!!what do I do now??cannot afford thier payments..specially if the house is not worth that much>

jameshogg · Posted: Fri Dec 12, 2008 8:43 pm Post subject:

Hi irumasghar,

If you can afford to lose the property, then you can apply for a short sale or a deed in lieu foreclosure. But it will be totally the lender's discretion whether he will accept the payments or not. Both short sale and deed in lieu are similar processes. Here you will have to give away the property to lender who will give you a mortgage release certificate. The lender will then try to sell off the property in the market to recover his debts.

There are chances that the property will be sold at a deficient amount as compared to the debts you owe to the lender. In case of a deed in lieu foreclosure, these deficient amount is forgiven whereas in case of a short sale you will have to pay these debts.

You should also note that a deed in lieu foreclosure will lower your credit by 250 points whereas in case of short sale it will be lowered by 75-100 points. Moreover in case of deed in lieu, you will have to pay taxes on the forgiven amount as it will be considered as your income.

Thanks

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upside down in value of the house need help