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Member
Momoffour
Posts: 8
Registered: ‎10-26-2007
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Should we short sell or fix up and sell in the Spring

We are currently in foreclosure after my husband had an unexpected break in employment over the Summer.  Now, however, he is in an excellent IT position and will earn 92,000 a year with a generous bonus (hopefully!) coming in February of 2008.  Our dilemma is in whether or not to short sell our home that needs around $7,000 in renovations - two bathrooms and new carpeting along with a new stove.  We are in a stagnant although not failing real estate market and our realtor advises us to enter a mortgage repayment plan in order to fix up the house and sell in February.  We are with Cendant mortgage and have a $3,000 monthly payment due to an A.R.M which is due to increase again in 90 days.  This is a house and not our home - we have horrible neighbors and hate the neighborhood we bought in which makes a short sell very appealing.  If we do the repayment we will need to give Cendant 3,000 a month until we sell - whereas if we rent locally we could save 2,000 a month into a 401K.  We do not intend to live in this house or for that matter this state beyond next year and we are conflicted as to whether paying 3,000 for a house in disrepair (and in a neighborhood we loathe) is worth the money out of pocket.  Does anyone know how badly a short sale dings a F.I.C.O score?  Ultimately, we need to invest $7,000 in repairs and a $3,000 monthly payment to be in a very stressful living scenario - this our realtor claims will all be worth it as six months of repayment will help negate our months of being behind with Cendant.  My husband's credit is in the toilet already and I want to do the smart thing - any opinions?  I am very concerned at the thought of throwing away the $7,000  - money that we could put into savings versus tossing into a home that may or may not return a profit.  
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fused
Posts: 16,374
Registered: ‎03-12-2007
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Re: Should we short sell or fix up and sell in the Spring

Is this foreclosure reporting on you and your husband's reports?

Credit Profile -
FICO 08 Scores (09-16-2014): EQ 824, EX 817, TU 822
All three scores were 850. Lost points for not having an open installment TL. So, BE WARNED!!!!!
Credit History: 26+ years ~ AAoA: 12 years ~ Util: 1% ~ Inqs: EX 1 (Amex 07-15-2014)

Valued Contributor
Lady_Scarlet
Posts: 2,385
Registered: ‎09-10-2007
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Re: Should we short sell or fix up and sell in the Spring

[ Edited ]
What's the amount of money you would have to bring to the table to close?  Is Cendant ammenable to a short sale (they have to agree and may not accept the contract in the end - hence foreclosure)
 
You would not be saving $2K a month - you are forgetting the deduction for interest and taxes - would be much less than the $2K.
 
How would you be moving (job transfer perhaps?)  If a job transfer, many relo packages can include a buyout of your home - would mean staying in it until the move but financially might make a lot of sense.  Not going under financially can be a big incentive to tolerate for a short time the 'now'.
 
Agent is right about getting 6 months of current under your belt - and is telling you the best time (spring) to get best price and terms possible in this market.  If you can hang in there and wait until he transfers (with that Relo package) - you may be able to come out without owing on the house no matter what time of year you sell.
 
A short sale will show as a chargeoff on your mortgage - at least they can't add it to your income now (and have you pay taxes on it).  This is NOT good for getting another mortgage or even renting a place.
 
Best professional advice - and I know you do not like the neighborhood, but I am thinking of long-term overall best interest - stay there (pay the $3K) fix it up (start watching the DIY network) and get a relo package from his job with a buyout.
 
If I have thotoughly confused you - please ask questions.


Message Edited by Lady_Scarlet on 10-28-2007 07:33 PM
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Member
Momoffour
Posts: 8
Registered: ‎10-26-2007
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Re: Should we short sell or fix up and sell in the Spring

Thank you for such a prompt response.  I am new to these message boards and greatly appreciate the thoughtfulness!  First off, the mortgage is only in my husbands name.  My credit is almost non existant -  a couple little medical bills and truly nothing else.  We started living on a cash basis only about four years ago - my husband has an auto loan and a mortgage as well as some medical bills.  I just spoke with him about our time line and he said the auction sale could hit anywhere from mid December through Mid February - we will know in mid November.  We have tried repeatedly to contact the loss mitigation specialist to no avail - apparantly she is quite busy with the record number of foreclosures at the moment. The last time we spoke with her three weeks ago she had asked us to call back a few days later as she would have word from the investor involved with our case.  Since then, we have phoned her at least four times a day - her coworkers all claim that only this particular woman can help us at this point.  This is so very frustrating!  Also, we owe $190,000 plus foreclosure fees and our realtor reckons we could ask $238,000 once we invest the $7,000 for renovations. 
Moderator Emeritus
fused
Posts: 16,374
Registered: ‎03-12-2007
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Re: Should we short sell or fix up and sell in the Spring

[ Edited ]
I cannot offer up much advice on what you should do, I will defer to the mortgage folks. I can however explain what might happen to your scores since you asked. In terms of FICO scoring, a short sale would be treated almost the same as a foreclosure or a deed in lieu of foreclosure. If any balance and/or past due amounts are also being reported, this will lower scores even more. In fact it can get even worse if the amount owed is high, the higher the balances the bigger the hit will be to your scores. How much is hard to say but this type of serious derog would do as much damage as a collection, CO, judgment or any other public record.
 


Message Edited by fused on 10-28-2007 03:30 PM
Credit Profile -
FICO 08 Scores (09-16-2014): EQ 824, EX 817, TU 822
All three scores were 850. Lost points for not having an open installment TL. So, BE WARNED!!!!!
Credit History: 26+ years ~ AAoA: 12 years ~ Util: 1% ~ Inqs: EX 1 (Amex 07-15-2014)

Valued Contributor
Lady_Scarlet
Posts: 2,385
Registered: ‎09-10-2007
0

Re: Should we short sell or fix up and sell in the Spring

Okay, you don't have the time to wait until Spring unless you bring this current.  Can you?  If the answer to this is yes, then I would call the main number and ask where you wire the money to.  If you need to work things out and the specialist isn't returning calls - send a letter overnight and cc it to her boss via overnight.
 
Foreclosure requirements vary by state.  I am sure you have already researched these,  but if not google: "your state" foreclosure preocedure - some are judical, some aren't.
 
Has the realtor even talked to Cendant?  Don't even know if they will go for a short sale.  Has she done a net for you - how negative are you?  If this realtor has never done a short sale find one who has - and I mean this! Pulling this off in 6 weeks or less for a contract (not even settlement) - maybe 14 at the outside - is going to be almost impossible and this doesn't include getting Cendant's approval of any contract (and that can take weeks).  They do not have to accept the contract and can just say "OUT NOW".  You may be able to put a hold on the proceedings if you make a payment or two and work out a short sale (and continue to make at least a partial payment).  Truthfully, they do not want your house - the investor wants his money and I can almost guarantee that he will lose money if this goes to foreclosure.
 
I know you don't like the house or neighborhood (and would love to just get the heck out)- but if you can bring this current (and keep it current) and wait until your DH tranfers, you will probably be in a much better position financially for your family.
 
Without seeing a net and talking with Cendant - let alone knowing your area - I am giving you my best guess scenarios
 
 
 
 
 
 
Now a member of the UNOFFICIAL 700 Club - Plus scores of 734-734-747
Moderator Emeritus
fused
Posts: 16,374
Registered: ‎03-12-2007
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Re: Should we short sell or fix up and sell in the Spring

Lady_Scarlet thanks for sharing, I was hoping you would stick around and help. Thanks a bunch!
 
Fused
Credit Profile -
FICO 08 Scores (09-16-2014): EQ 824, EX 817, TU 822
All three scores were 850. Lost points for not having an open installment TL. So, BE WARNED!!!!!
Credit History: 26+ years ~ AAoA: 12 years ~ Util: 1% ~ Inqs: EX 1 (Amex 07-15-2014)

Member
Momoffour
Posts: 8
Registered: ‎10-26-2007
0

Re: Should we short sell or fix up and sell in the Spring

I will begin to build some credit as it is simply non existent at the moment.  A mortgage broker tried to pitch us the idea that we could use my credit only and my husbands income - does this sound possible?  The idea is that in six months I will have established credit and we could use my husband's solid work history and decent income.  I have not worked beyond a part-time basis over the past five years.  This particular mortgage broker seemed serious but I question whether it is either legal and/or ethical as he wants to base the loan on my "income" which would only be part-time freelance writing income - he says that the income did not need to be proved as a writer can make a lot of money at any given point.  This sounds shaky at best - can any of the mortgage specialists comment on this approach?  Thanks in advance for your time.   
Valued Contributor
Lady_Scarlet
Posts: 2,385
Registered: ‎09-10-2007
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Re: Should we short sell or fix up and sell in the Spring

Fused, you and the OP are both welcome. 
 
Now a member of the UNOFFICIAL 700 Club - Plus scores of 734-734-747
Valued Contributor
Lady_Scarlet
Posts: 2,385
Registered: ‎09-10-2007
0

Re: Should we short sell or fix up and sell in the Spring



Momoffour wrote:
I will begin to build some credit as it is simply non existent at the moment.  A mortgage broker tried to pitch us the idea that we could use my credit only and my husbands income - does this sound possible?  The idea is that in six months I will have established credit and we could use my husband's solid work history and decent income.  I have not worked beyond a part-time basis over the past five years.  This particular mortgage broker seemed serious but I question whether it is either legal and/or ethical as he wants to base the loan on my "income" which would only be part-time freelance writing income - he says that the income did not need to be proved as a writer can make a lot of money at any given point.  This sounds shaky at best - can any of the mortgage specialists comment on this approach?  Thanks in advance for your time.   


Shane needs in on this...
 
Fused, can you move this over to loans and flag it for Shane.
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