Foreclosure stress--long--

[ruth]

It's called bond for deed in Louisiana where most of my property is. It's called contract for deed in all other states. There are sites online that you can download all the forms you need. Basically its a short term loan for someone who can't qualify just yet. Has monthly payments with balloon payment after x years. Gives them time to get their credit in order and secure regular mortgage later. You retain title till it is paid off.

However if current renters weren't interested in a lease purchase I'm guessing they wouldn't be interested in this which is basically same thing (just legalese differences). Sounds like they know they have a good thing going. I would advertise it and get someone else - that should motivate them to anti up or get out. Send them a registered letter reminding them they need to be out March 31st. Of course you need the rent and time to get new renters/buyers so you can offer them a month-to-month lease from this point forward.

 

[lfoose]

d.k, I can understand your leariness to share. I know for me, I feel like a total fool about it all. But my Dh keeps telling me we are a victim of circumstance. We owe $73k on the house and were going to sell it to the renters for $70k. After paying off the 1st mortgage, any fees and the realtor commissions, the remaining balance would have gone to the 2nd mortgage and that 2nd mortgage would have been shortsaled.

I just can not beleive the market is like it is. Amazing-and to think, our 2nd mortgage company appraised that house at $101k...2 yrs ago.

 

[2dream]

My only advice here is - Since you have a home you apparently love - and a home you no longer want. Stay current on the home you love. If there is a foreclosure with a balance owed only then go to Chapter 13. First of all the Chapter 13 is structured to save your HOME - not excessive assets. So you would end up loosing the rental anyway.
Talk to the morgage company that holds the rental. Can they refinance for you to reduce the payments to what the renters can afford? If this renter leaves can you find another? Have you tried to find someone who wants to do a lease purchase agreement on the rental house?
Is there a Consumer Credit Counseling Agency in your area. There are thousands of Non Profit Counseling agencies but make sure the one in your area is legit. CCCS is a reputable agency. Maybe they can run interferance with you and your mortgage company. Normally they are free - and it might be worth a shot.
Good luck.

 

[seedcorn]

Feel for you, truly do. 2 things you should learn from this.

Loan agent's job is to make loans. Realtors jobs are to sell homes. They will do whatever they can to accomplish that job since their job is at stake. While they may be right in a perfect world, we live in an inperfect world where bad things happen.

We have to make our own decisions as to what we can afford or not afford. Plus how much risk we can afford to take. Never listen to lenders/realtors as the final word.

Housing market sucks as of now, Mom's house should be $140,000 having a slow time getting people to buy at $85,000.

 

[Chickadee28]

5 yrs ago we found the house we are living in now. We decided to do a bridge loan-basically you get a loan on the equity on the house you are trying to sell and you use that for the down payment on the new home. Once the old home sells you repay the loan. It sounded great at the time, but ended up being a huge mistake. Our home took forever to sell and we had 9 months of double mortgage payments, plus the added stress of having two homes to maintain.

It turned out ok for us, but had DH lost his job or if we had any other financial issues come up we would have been in trouble.

Is there a non profit debt counseling company in your area? Maybe they would be able to guide you on how to do this with the least amount of damage to your credit. Or maybe contact an atty to help. The mortgage holder may be willing to work with you as well.

I think so many people are finding themselves in trouble with the market the way it is. We would like to move to a place with more property, but that is not likely to happen with the housing market the way it is.

Good Luck, I hope it all works out for you.

 

[SpottedCrow]

Jeeze, lfoose...
I certainly agree on keeping up with the "new" house...

Loan agent's job is to make loans. Realtors jobs are to sell homes. They will do whatever they can to accomplish that job since their job is at stake. While they may be right in a perfect world, we live in an inperfect world where bad things happen.

We have to make our own decisions as to what we can afford or not afford. Plus how much risk we can afford to take. Never listen to lenders/realtors as the final word.

This is SOOO TRUE!

The current tenants KNOW that they're out of the place at the end of the month, right?​

 

[ruth]

One final thing that you did not mention and I did not ask was whether or not the house you are trying to sell has an assumable mortgage? If it does it can be a lifesaver because you can sell it to someone at "take over notes" - they don't have to go through an approval process. There are many people out there who can pay payments but can't get approval for mortgages. I sold my first home that way - it was in an overbuilt subdivision and no one could sell their homes because the builder had dozens of the exact same model, still brand new that they would customize so why buy a used house. People were walking away from their homes - buying a new one before the foreclosure could get on their credit and then just walking away and letting HUD foreclose. Of course then HUD is dumping the houses which further added to people being unable to sell. Ruined what started out as a great neighborhood.

Anyway, I was one of the lucky ones. I had an assumable mortgage and I sold my house to the first person that called about it. I told her $10,000 down and take over payments and it was done in a week. She later lost the house and I had the legal right to pay what she owed the mortgage company and take the house back and resell but I stayed out of it. The beauty of assumable mortgage is that it doesn't go on your credit if they default because you sold the house to them.

If you don't have an assumable mortgage and can't do a lease purchase or contract to deed and you do have to sell the home for less than the mortgage that's o.k. because it's better than having a foreclosure on your record for the next several years.

As others said, do whatever it takes to keep your new home current - let the old one get foreclosed if necessary but keep the new one current.

Having worked as a bank loan officer I can tell you that they do evaluate credit reports and if everything else was current but it showed a foreclosure and there was a note on the credit record (which you can have added) that said the home was listed for sale for a year and did not sell, and could not be rented to cover payment, foreclosure was the only method - they would take that into account. Try to keep everything else current so that your credit report will show that it was only that home that was the problem.

 

[TheMartianChick]

Excellent advice given, ruth!

I had a friend that was able to buy a house less than a year after foreclosure in the way that you described.

I volunteer with several nonprofit housing agencies. One of them is affiliated with Neighborworks (www.nw.org) It is possible that you have a local Neighborworks affiliated agency that offers foreclosure assistance. Our local group can help financially and can also stall a foreclosure without a bankruptcy. I am not sure if your local entity offers this same program or not. Good luck to you...

 

[DrakeMaiden]

I haven't read what everyone else has said, so forgive me.

I'm sorry about your situation. I was given similar advice by my real estate agent, but opted to be cautious and make buying our new place contingent on selling the old one. It was a pain, but it worked out for us, (luckily). There are risks either way.

I can't verify this, but I read recently that because mortgages are now sold, bundled as derivatives, on the stock market, that legally the BANK cannot foreclose on you, because they sold your mortgage to a bigger financial institution (who can't necessarily verify that they own your mortgage):

"So far courts have held that the only entity that can foreclose is the entity that actually lent the money. The average guy does not know that with an attorney to protect him he has a free house!"

Again, I don't know if that is actually true, this is just something I read that might be worth looking in to. Know any lawyers?​

 

[lfoose]

I looked up the www.nw.org and will pass that onto my realtor. SOunds similar to what she told me about this afternoon. I don't remember exactly but the type of loan was called a Community Giveback something or the other. She said it was a gov't based program that gave $ to banks if in turn the banks legitamitely helped people get loans. So we'll see.

She also told me that the renters were looking at another rental property tomorrow...for a year rental agreement.