foreclosure Incoming

[cnun3z]

This is really really frustrating.  I worked very hard to get all my debt paid off and now this.

I co-signed for my parents house a few years ago. everything was good until recently.  The mortgage is now in default. Foreclosure is peaking its ugly head, and my lender is giving me the run around on a loan modification.  trying to sell it is an option, but its under almost $200,000. its really really bad in California.

I'm thinking of just walking away.  7 years with a forclosure on my credit report sounds better then trying to pay $200.000.

the clocks ticking so have to try everything.

[IOBA]

Can you afford to make the mortgage payments?

What are your parents doing?  How did they become delinquent?

I bailed my folks out several times.  No more.  I was never put on the title.  They did that with their son (they needed his income to qualify for the loan, but he never put a cent into the house).  When they went to refinance, they have problems getting his name off of title.  They eventually got him off of title.  A few years later, after refinancing, they went into foreclosure, I borrowed money from my cc's and loaned it to them.  Never got it back.  Repeat.  When they got into trouble again, different house, I told them I would help, BUT the mortgage and the house were going to be in my name.  I said they could live there, rent free.  If they felt like paying something they could, like taxes and insurance.  My mom refused.  She said she'd rather have a reverse mortgage than have me bail them out with those terms.  When they got into trouble again, they didn't tell me until like three or four months later.  They were still fighting with the bank over the missed payment and fees.

It's not quite the same as your situation.  It was good of you to help them.  Now the question is what can you do to get out of the mess?  And what is going to happen to your parents to prevent them from a similar situation?  For me, it was telling my folks my name was going on title.  (They owe me the value of the house they are living in now from the previous bailouts.  I'll never see the money.  Just one of those things I have accepted.)  The only noticeable difference with my folks is that they do not discuss needing money for anything with me now.  They try to manage better because I am no longer seen as an option to bail them out.

Without more information on your situation, I can not share with you what I would do. 

[IOBA]

PS - Just me, but I would try to keep working with the mortgage company.  Maybe use the site or the web to find backdoor numbers and start bugging the shingings out of top people to save the house, to modify the loan, etc.  Whatever it takes.

[Anonymous]

I woudn't walk away.  If you are upside down in value, try to do a short sale.  It looks better on your credit than a mortage.  Plus with a short sale, the mortgage company forgives a certain amount that you do not have to pay back.  With a foreclosure, the bank can come after you for the difference.  I would make payments on the house until you can sell it or work out something with the mortgage company.

[Lel]

Would you qualify for the Making Home Affordable plan?

Short sale, deed-in-lieu of foreclosure, and foreclosure will all have tremendously negative effects on your credit score.  In terms of obtaining a new mortgage in the future, however, a short sale would entail the shortest waiting period.

If the home does go to foreclosure, you shouldn't need to worry about the lender coming after you for the difference, because California is a non-recourse state.  However, if the house was refinanced after purchase, or if second mortgages were taken out after purchase, then these could be treated as recourse debt and you and your parents could be held responsible for any shortfall from the foreclosure auction.

If there are any second mortgages on the property, then a short sale will be very difficult to negotiate, because the subordinate lienholders would probably get nothing from the sale.

I recommend that you speak with a real estate attorney regarding your situation, options, and risk.

I'm sorry to hear about your and your parents' difficulties. 

[ShanetheMortgageMan]

Who is the mortgage lender/servicer?