upsidedown help

**dumplins192** · 09-21-2008, 09:42 AM

My wife and I are wanting to move badly.
I did some checking.
I believe our house will sell for 140000 on this nice market we all are in for now. We also have a 15000 second on the house.
The note has 160000 remaining after seven years. Now we are looking at 175000 total. 35000 up-side-down on the house and we havew not included the broker fees! ( god bless Dominon )
Like I said, we are dying to move on to a much better house in a area that is stable.
My wifes name is the only one on the mortgage. I have done some **** house talking around with people and they are saying for me to get approved for a loan, then buy a house.
Electively foreclose on the house we currently own. We ultimately would be saving a huge amount each month and would be out of the 35000 in the up-side-down mortgage. ( Dominion again, )
Her credit would be trashed for a few years, but it beats trying to pay off the note we have now.
Is there any other recourse to a foreclosure other than bad credit?
I wanted to see what the experts would do in this case.

**minnesota-mls** · 09-21-2008, 11:48 AM

Thanks so much for your note.

We often times tell our clients to look at the possiblity of renting out the home. By renting out the home (instead of selling it on the MLS), the homeowner is able to keep the property and sell when the market rebounds. This also allows the seller to move into the other home.

Depending upon what type of loan he or she may be doing, and what amount down, the rental income on the home may be just enough for them to still qualify.

Here in Minneapolis, Minnesota, we have had a number of sellers who have done this. It's a great alternative to selling right now. The seller is able to ride out this market and sell when the market does improve.

With so many homes, condos, and townhomes for sale here in Minnesota, sellers are forced to be a bit creative on how to move forward.

**Mike Taylor** · 09-22-2008, 04:35 AM

I have to echo the renting it out idea. It is this type of mentality that has led our country to crisis. Your is simply a foreclosure for convenience not for crisis. I can understand the temptation, but it just not the right thing to do.

**kholder** · 09-22-2008, 06:13 AM

It is nice to hear someone say that foreclosure is not the right thing to do. Here in the Florida panhandle, one of the biggest problems we have right now is all the real estate agents allowing all of their properties go back to the bank. They all got so greedy when the market was hot and now they act like it is no big deal to ruin their credit and just stop making their payments. They are loading the market down right now with all these foreclosures and it is dragging the market down in some really nice areas.

**jamesww** · 09-22-2008, 07:53 AM

Allowing your home to go into foreclosure is bad news. Fannie Mae just set new guidelines making foreclosure the very worst thing to have on your record. It will now stay on your credit report for 10 years and you will not be able to garner a conventional or FHA loan for 7 years. Previously it had been 2 years. Foreclosure for convienence is a very unethical route to take and now has a major penalty associated with it.

Other than renting the home out the only other choice you have is to take part in a short sale. Short sales still have the 2 year prevention from getting a mortgage and it will only stay on your credit report for 5 years according to a release by BGS3.

I would try the short sale route to get your home sold but would not allow the home to get foreclosed upon. Most lenders will not even consider a short sale unless you are three or more months late on the mortgage so there will still exist substantial damage to your wife's credit. But if you want to then this could be an option for you.

**Greg** · 09-22-2008, 10:01 AM

This is called buy and bail and the banks are already aware of what you are thinking. Because of this, you are going to have a hard time getting a loan on another house in your same area you are already own in.

**bg233** · 09-22-2008, 11:48 AM

I think renting it out would be a great way to manage the asset until such time as you are confident in selling.

**dumplins192** · 09-22-2008, 01:27 PM

Thanks everyone for your knowledge. The renting thing is out of the question, the houses in the area do not rent for anything close to what we need out of it.
Anyway, back to the grind.
THanks jamesww for the warning. That could have been a costly mistake. I was under the asumption it was still 2 years.
This forum is really informative! I have spent hours browsing and getting questions answerred i always wanted to know!

**clemy** · 09-23-2008, 06:44 AM

You have no problem trashing your wife's credit record while keeping yours pristine. Nice situation for you. That way you have your nice credit when you dump the wife for a newer, less expensive wife with good credit.

**agentsranking** · 11-07-2008, 01:51 PM

I've worked a number of short sales and been successful on getting the banks to accept the deal about 75% of the time. I've personally never dealt with a seller who was current on their payments attempting to get the bank to accept a deal however I spoke with two agents this week that with whom I network about this situation and they both indicated they've done a number of deals with banks when the seller was current on their payments. I guess it depends on the bank and the property. This would be much better for you credit than letting it go into foreclosure and better than trying a short sale after getting behind on the payments.