How soon can I get a mortgage loan after a short sale, or deed in lieu of foreclosure?

[Anonymous]

I MUST MAKE A DECISION SOON

my house payment has just adjusted  from 1900 to 4888.

I hear different things from the lender and from RE agents wanting the listing.

I'm in an area in California with a high amount of foreclosures and short sales.

i would like to plan so that I have the least damage to my score and to future assets.

I have never filed BK and not sure if I will need to in the future.

I  also have 2 rental properties that i'm thinking of short selling or doing a deed in lieu (not sure which is the greater evil-short sale or deed in lieu of foreclosure)

All properties are upside down. I'm now taking from Peter (rentals) to pay Paul (the home I live in).

I would like to know the quickest way to get these properties out of my name and get on the road to recovery

of my credit and FICO scores.

My FICO's were nr 800. and now  

Any advice from pros or those with previous experience?

thank you so much in advance

 PS: are lenders reducing principle balances yet or is it something that may come into play this year?

[ShanetheMortgageMan]

Sorry to hear about your situation, it's not an uncommon one as you have probably realized.  When it comes to qualifying for a mortgage a deed in lieu of foreclosure is looked at the same way as an actual foreclosure - 3 years need to pass from the event.  Short sales aren't really covered by Fannie Mae, Freddie Mac or HUD yet but most lenders are treating them the same as a foreclosure as well.

There is no limit to what a lender can do on a loan modification - but I don't you'll be able to get a principal reduction on your investment properties, or your own home, in order to sell and get out from under them.  Doing a short sale is possible though.  Realize that there is likely no way out of these properties at this point without doing some damage to your credit, a short sale usually requires you are past due by 60 or more days, a deed in lieu will report that way, a foreclosure requires you miss enough payments for the process to start, and sometimes lenders are even reporting modified mortgages as "settled for less than full amount owed" which may or may not do damage to one's credit score as well.

Have you contacted your mortgage lender about doing a loan modification?  Who is your mortgage lender?

[MattH]

For the payment to have gone up by that much, the loan must have been one that allowed negative amortization, which means the poster is likely very deep underwater, a simple rate reset on an ARM is unlikely to have created such an enormous payment shock.  OP, is this correct?  What do the numbers look like?  The bigger the modification needed to make the loan affordable, the less likely such a modification will take place.

[Anonymous]

Hi Shane thank you so much for replying,

my own home is with Country Wide 1st loan and a heloc. (1 month behind) was worth 560k now 289

1st rental also with Countrywide 1st and heloc/(2 months behind.) was 380k now 200

2nd rental with Chase 1st loan only. (2 months behind). was 380 now 240

all upside down.

I have spoken with Country Wide, they said they can't do anything until they see my financial statement.

which i'll be sending in soon this week.

Countrywide said I didn't have to pay taxes. on a deed in lieu..

so would short sale be bes and fastest?

Are there any new laws or upcoming laws that would help with forgiveness on the rentals in terms of taxes or owing the difference?

Countrywide said there are 2 programs coming in April, but she didn't know what yet.. Does anyone know what these entail?

 THank you!

[Anonymous]

If a workable modification isn't possible, a short sale or deed in lieu at least get the clock ticking on the three years.

Our foreclosure wasn't settled for over two years. We filed BK7 almost 3½ years ago, meet the 2 years post-discharge requirement... but have to wait almost 2 more years for FHA because it took so long for the house to be sold.

[ShanetheMortgageMan]

Welcome. 

First as far as your legal options are concerned I'd really recommend you consult with a real estate attorney.  I have some friends in similar situation and because they have so many properties it's going to be that much more important they talk to a real estate attorney - purchase money mortgages, refinance indebtness, and 2nd mortgages all have different laws pertaining to them in California, what the creditor can and cannot come after you for, and other details.

You are on the right track on the loan mod - go along with Countrywide's steps and if you want further guideance on that I'd recommend you stop by www.LoanSafe.org and visit the forums there, they have an entire section on Countrywide Mortgage Loan Modifications and people's success stories with them.   Since the website operator, Moe, is here in Corona, CA I am sure there will be a lot of info pertaining to California real estate & foreclosure laws.

Short sales take forever, you need to list your home, have someone make an offer... and then it usually takes 2-3 months before your lender will officially accept, so that process is usually a lot longer than a deed in lieu.  I'd think a deed in lieu would be the quickest, but might be more damaging.  I know one option my friend is looking into is filing BK and including all properties in it, he got the advice that would wipe out all debt and would prevent the creditors for coming after him with a deficiency judgment.