Foreclosure options

**time4change** · 01-02-2009, 06:54 AM

I am in Michigan and my house went from $220,000 in value down to roughly $140,000. I owe $205,000 and will be in foreclosure soon. Comparable homes in my area are now selling for $90,000 to $150,000.

I am wondering which way is best to handle this situation for the future.

It would seem that walking away from my home and purchasing one of the comparable homes in my area for half of what I owe on my current home would be the best option, but I am not sure that is possible. When thinking about it, I would rather be in a position of equity 5 years from now than still be in the negative on my current home.

Any ideas would be greatly appreciated.

**Greg** · 01-06-2009, 08:56 AM

If you walk away from your mortgage you will not be able to get another one.

If you try to buy another house and then walk away from your current mortgage you will find the lenders are going to be watching for this.

**florida real estate** · 01-07-2009, 04:41 AM

I think you need to consult some one who expert and can give honest opinion in such kind of situation...

**Codythebest** · 01-07-2009, 06:11 AM

Or you might leave it and sell it "subject to" to someone who doesn't qualify for loan but have money to pay the mortgage.
There is a niche there for non-immigrants in legal situation in the country but who have been widthdrawn all and every rights here with the W. administration, as a loan for instance. These people have the money, businesses, etc... since they get some decent income but have no rights whatsoever and might be interested to get in a home instead of renting, even if it's more expensive than the next door...
You might go fast though since I assume that the newer presidential administration will most probably see these businessmen as an asset for the country's economy instead of potential terrorists as of today...Therefore, their status might change and they might regain their rights, including loans...

**Thomas Rogers** · 01-13-2009, 04:57 PM

A rent to own scenerio might be able to solve both of your situations. You could possibly put someone into your home on a long term rent to own with a purchase price of the balance of the mortgage and then get into another house of your own also under a rent to own.

**RE_Investor** · 01-15-2009, 08:15 PM

If you get to a point that you cannot keep making your payment, you may want to consider a short sale. Although again, you will not qualify to immediately go out and purchase another home.

**sellnow** · 01-18-2009, 06:37 AM

Go with the short sale!!!
Before you do anything else.
If you short sale your home and the bank accepts the offer.
they will send you a 1099 for the balance. At this point you mortgage will have to be reported as paid as agreed or paid in full. The banks can not have it both ways. They can not have the lien show up as a foreclosure if they accepted the short sale and gave you a 1099 for the balance. The only thing they can report is late mortgage payments. A foreclosure will kill you credit for a while. A short sale depending on how many lates you have will not hit it as bad. Because you paid your mortgage in full. A foreclosure is always the last resort. Always!

**adrianpete** · 01-23-2009, 09:24 AM

Originally Posted by Greg

If you walk away from your mortgage you will not be able to get another one.

If you try to buy another house and then walk away from your current mortgage you will find the lenders are going to be watching for this.

I agree... lenders are much more careful about giving money away when someone has defaulted on a loan. It just makes sense; why would you loan to someone that didn't pay back their mortgage in the past.

Try to short sell it. Foreclosure will hurt you for years to come.

**Greg** · 01-24-2009, 04:54 AM

Originally Posted by sellnow

Go with the short sale!!!
Before you do anything else.
If you short sale your home and the bank accepts the offer.
they will send you a 1099 for the balance. At this point you mortgage will have to be reported as paid as agreed or paid in full. The banks can not have it both ways. They can not have the lien show up as a foreclosure if they accepted the short sale and gave you a 1099 for the balance. The only thing they can report is late mortgage payments. A foreclosure will kill you credit for a while. A short sale depending on how many lates you have will not hit it as bad. Because you paid your mortgage in full. A foreclosure is always the last resort. Always!

And with the 1099 the IRS sees the shortage the bank took as profit to you and you will owe income tax on the loss the bank took.