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Chliu3 · Joined: 22 May 2009 Posts: 4 2.67 Dollars($)

I have an interest-only 5/1 loan (still owe 405,000) with Chase. My house worths about 250-300K according to the recent sale. Because I have to move to another city for a new job, the house is rented now. I will have to lose about $10,000 per year to keep it. I don't have a major hardship to pay the interest right now and I might be able to pay when 5/1 term ends. I don't want to keep losing money for a house I can't even live in. I wonder whether the bank will consider to lower the principle to help me to keep the house. Or maybe I will have to just walk away. Any comments is appreciated.

sonjakracine · Joined: 24 Oct 2007 Posts: 77 15.05 Dollars($)

"Walking away" should be your last resort, it comes with a whole lot of nasty things that will follow your financial future for a good 5 years, if not more.

If at all possible try to sell the property. If there is a shortage and you can prove the market had dropped the bank may negotiate a short sale. Caution to this option too as you may get a judgment filed against you for the shortage or get a 1099, however, some banks do forgive the entire amount.

You may also try for a deed in lieu of foreclosure, anything but walking away, as that is guaranteed to hurt your credit tremendously, keep you form buying, or if you have one already, refinancing a home. Lower scores will set off other creditors to look at your credit picture and they can at that time increase their rates. It's just a mess, like a big snowball just rolling downhill. Best of luck but try not to walk away.

smithsussane · Posted: Wed Nov 18, 2009 10:51 pm Post subject:

Hi Chliu!

Welcome to forums!

If you do not want to keep the property, then it would be better if you can apply for a deed in lieu of foreclosure rather than walking away as Sonja has suggested in his post. Though lenders generally accept a deed in lieu when you've defaulted your mortgage payments, you can apply for it because you're moving to another city. The lender may consider your request. However, you should remember that a deed in lieu of foreclosure would reduce your credit score by 250 points.

Feel free to ask if you've further queries.

Sussane

Guest

Thank you two for the advise. I will talk to the bank about all the possible things they want to do with me for sure. I also wonder whether I should still rent my house if I apply for deed in lieu of foreclosure. Any comments are appreciated.

I heard a story from one of my previous colleague about bank could compromise with you sometimes. He owed the bank about 400k initial loan and then take out another 200k from the home equity line. He didn't want to pay back when the market was down. So the bank let him go with 100k cash pay back only. I wonder if I could also offer 80-100K as down pay, would they allow me to refinance the home to the current market value and it will be good foe both of us. Do you think that is possible? Thanks in advance.

jameshogg · Posted: Fri Nov 20, 2009 12:20 am Post subject:

Hi chliu,

You will have to transfer the property to your lender if he agrees to your request for a deed in lieu of foreclosure. Thus, I don't think you'll be able to rent out the property any further once you apply for a deed in lieu.

As far as refinancing the property to the current market value is concerned, I doubt whether your lender would agree to it. Nevertheless, it is the lender's discretion. You can speak to your lender and negotiate for such a deal. May be he would agree to it.

Thanks

Guest

Thank you for your info. I have already called the bank, but I don't think they understand what I want to do with them. The refinancing department thought I am under water, so they can't refinance it. They sent me to loan modification department, and then I was told that I am qualified for loan modification because I am not living in there. I asked them whether I could do a deed in lieu of foreclosure. They said they usually don't do it. I was then sent to short sale department, and they wanted me to hire an agent start short sale myself. I was totally confused that what if they want me to sell the hosue and still persue me for te rest of the money I owed. Shouldn't I get some kind of document say that I will be free of those debt before I really sell it. Any comments on the short sale is appreciated.

Guest

About short sale, I wonder whether the bank would be able to find info of all my asset and debt. Say if I have property or saving outside the US, will they be able find out? My concern is whether my saving account in the US bank would be freezed or not.

smithsussane · Posted: Sat Nov 21, 2009 12:20 am Post subject:

Hi chliu!

Welcome to forums!

If you go for a short sale, the lender will have the rights to recover the deficient amount from you. Moreover, your credit score would be lowered by around 80-100 points. If you are unable to pay off the deficient amount, the lender would send the account to collections or place a lien on your other properties which may include your savings account. However, I don't think the lender would be able to place a lien on your non-US properties.

Feel free to ask if you've further queries.

Sussane

Guest

Thank you, Sussane. That means I will have to transfer all the cash money outside the US in order to get the lender agree on not paying the deficient amount. Any other suggestion on that?

adonis · Posted: Sun Nov 22, 2009 10:04 pm Post subject:

Hi cliu,

In my opinion, if you transfer all your cash money outside US, that my be considered as a fraudulent activity by the lender. Thus, he can penalize you for it. Before transferring the cash outside US, it would be a better idea to consult an attorney.

snvservices · Joined: 20 Nov 2009 Posts: 17 3.29 Dollars($)

Hi,

This is what I was actually thinking of as, it is always better to consult with the attorney for this activity before taking such steps as, once you have done this it will be little hard for you to overcome as, tansfering your asset can be little tidious job as, it needs to require proper detailing and concern.

Thanks!

Guest

Thanks on that comments. I wonder how the lender will be able to find out that I take out money from some other bank in the past. I mean, they will request all other banks to show them the account activity, right? I guess I will have to just talk to the bank for a deal before I send my money to them for nothing.

adonis · Posted: Thu Nov 26, 2009 12:03 am Post subject:

Hi cliu,

Your lender may request the banks to show them your account activity. Again, it will depend upon your banks' rules and regulations whether or not they would disclose your accounts' activity to the lender.

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