Posted: Wed Jan 28, 2009 12:10 am Post subject: Short Sale, Deed in Lieu or Foreclosure in WA?
In 2004, I got remarried and had to refinance my home to add my husband to the mortgage (to make Immigration Services happy). Given the time constraint dealing with the INS, we got ripped and ended up with a Mortgage (Aurora/Lehman) and a HELOC (National City)
The $2,500 monthly wasn't so bad when we were both working; but I have been disabled since 2005 and my fight with SSA is going nowhere fast. My husband is still working and we can just manage to cover expenses; however, his company has been doing some serious lay-offs lately and we're very worried about being able to pay the mortgage since things are already getting tighter the longer I'm not working.
We own land in another state and have been considering leaving WA for some time; but almost 50% of the houses in our development are up for sale and have been for over 6 months so we didn't think trying to sell the house was an option. We know that our neighbors are slashing their prices and many are going to lose money even if they do manage to get a sale. With the economy being what it is, I think things will just keep getting worse.
We aren't in default yet, but we don't have much liquid savings if anything should happen. We were considering calling one of those "ugly house" buyers to see what they would offer us and then see if the bank would accept a Short-Sale if the offer was below the mortgage and/or below HELOC total. I know that having that second lender for the HELOC is going to hamper our chances of Deed In Lieu. It doesn't help that both lenders have recently been bought by others during the bailout.
We already own our other property outright, so it's not like we'll be needing a home loan anytime soon (maybe a car loan though). We have really good credit now, and taking a ding on the mortgage wouldn't put us in the "toxic risk" category. I'd hate to default if we can work something else out, but I don't know if WA is a state that allows lenders to collect deficiencies. We're worried about the lender suing us or attempting to seize other assets (like our meager IRA). If we move, my husband would be making a fraction of the money that he does here.
We just want out of WA and out from underneath this mortgage before hubby loses his job and we're forced to lose the house! Help! _________________ Need help choosing the right loan? Get free consultation from community lenders/consultant
As you are still current on your payments, I don't think the lender will give you any option to negotiate with them right now. Until the borrowers are late at payments, the lenders do not offer the options of short sale, deed in lieu or foreclosure. You may still speak to the lender once and inform him that you and your family will be leaving the state and check if they can accept a deed in lieu in your case.
You should also note that if the first lender accepts a deed in lieu, still you will be liable for paying the second mortgage dues. If you cannot pay the second mortgage, then the second lender will charge off the loan to a collection agency.
Thanks,
Jerry
Stumped Guest
Posted: Wed Jan 28, 2009 10:48 am Post subject:
Thanks Jerry. I don't think that default/partial payment is too far off in our future; but I understand that there is little we can do until the problem actually occurs. We were hoping to preempt the default with a short-sale because we thought that would be better for the lenders (something is better than nothing, right?). I think I could sell it for almost the full 1st mortgage, but the HELOC may only be partial if anything and would likely have to go into collection because we won't be able to pay. Deed In Lieu gets even more tricky. I'll go through my loan docs and see if there are any remediation clauses and then talk to the lenders.
Yes, you're right. Something is definitely better than nothing. I mean if you can't pay and try for a short sale, it does imply you're at least trying to pay off the loan. A deed in lieu would mean that you've given up. However, if you go for deed in lieu, you can avoid paying the deficiency.
jerry
