short sale please help!!!!!!!!!

[Anonymous]

hello I am new to this forum and I am going thru a togh time right now.  Long story short, my husband lost his job in 8/2010, been looking for work but to no avail.  We were able to pay our payments on time for about 5 months using savings.  Once we knew it was impossible to afford, we tried modifying our loan with BOA.  Well they lost paperwork, said they called but really didn't, and denied us 4-5 times for bs reasons (each taking 2-3mos without any return calls to the various messages that were left to them, etc.)....So we tried again giving all of our docs to one of their cs centers and I spoke with the case manager today and she stated that since we are 15 mos behind, we were ineligible for FHA HAMP (although I havent found any evidence of this online).

So we are currently behind ~33k and balance is ~315k...so according to them our only options are short sale (really dont want to do), or come up with approx 10k to bring us under 15 mos behind.  Current mortgage payment is ~ $2500 monthly gross is ~ 4k yearly 55K.  I inputed the numbers and she states that they will try to get my payments to 31% which is impossible because that would be about 1,200 (very affordable for us)...but when I did a mortgage calculator, even if they extend the morgage for another 30yrs at 5% (claims its the lowest they can go), the payment with insurance and taxes would be approx $2150 (I only bring home about 3k a month).  No auto loan or other debts just small cc balances.

Now I could possibly sell my soul to the devil and borrow 10k from family (but I rather not do if its not necessary), but I just cant figure out what a short sale is and what my other options are.....I really do not want to file bankruptcy I just want to live in my house...lol...this time has been really stressful living paycheck to paycheck hoping that you don't get a forclosure notice in the mail, along with all of life's other stresses.  ANywho does anyone have any insight into my situation? Thanks I would really appreciate it.

[LondonMassey]

I know you feel attached to your home, but realize that your home is no longer worth any where near what you've been paying for it.

As far as a short sale goes, it allows the seller to come to an agreement with the bank to basically walk way from the home with nothing and the bank takes the loss.  The difference between benefits in a short sale vs a foreclosure: A short sale will lower your credit approximately 50 points where as a foreclosure will knock off at least around 200 points. Also, after a short sale, your ability to purchase a home is a lot faster.  I also read somewhere that according to FHA rules, as long as you have no late payments when doing the short sale for FHA you can purchase immediately after, of course if your credit score permits.

Personally, I would hate to leave my home... but I'd hate even more to struggle paying for something that isn't worth close to what I'm being charged.  I wish you luck.

[Anonymous]

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@LondonMassey wrote:

I know you feel attached to your home, but realize that your home is no longer worth any where near what you've been paying for it.

As far as a short sale goes, it allows the seller to come to an agreement with the bank to basically walk way from the home with nothing and the bank takes the loss.  The difference between benefits in a short sale vs a foreclosure: A short sale will lower your credit approximately 50 points where as a foreclosure will knock off at least around 200 points. Also, after a short sale, your ability to purchase a home is a lot faster.  I also read somewhere that according to FHA rules, as long as you have no late payments when doing the short sale for FHA you can purchase immediately after, of course if your credit score permits.

Personally, I would hate to leave my home... but I'd hate even more to struggle paying for something that isn't worth close to what I'm being charged.  I wish you luck.

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thank you so much, but I think the hubby and I will have to file bankruptcy....just found out that he owes approx $20k in taxes and they are getting ready to put a lein on the house because we cant pay the $500/month they want...so I guess here we come ch7

[ficogirl1]

With respect to federal taxes, please be aware that the taxes are not automatically wiped out with the filing of a Ch. 7.  The bankruptcy rules are very specific on what taxes, if any, can be discharged.  Please make sure you get advice from a bankruptcy attorney who is very familiar with the rules about discharability of federal income taxes.

[Booner72]

Hello - welcome to the forums.

I'm so sorry to hear about your troubles.

Let's say you did "sell your soul" and borrow the 10K from your family and get caught up.  Let's say you did get the refi at 5%.

How much would the payback to family be each month & then the mortgage payment?  If only making 3K, how can you possibly afford that?

I would hate to lose my house to, and it's my biggest fear, but maybe short sale is your option, get out - rent, get to work on rebuilding, wait the 2-3 years you have to wait to get another house, during that time save/save/save - then when you get into your own house again, be sure it's under your budget so this wouldn't happen again.

Seems like it would be a big relief and weight off your back, even though sad.

Good Luck!

[bosox52981]

***** short sale will lower your credit approximately 50 points where as a foreclosure will knock off at least around 200 points.*****

If they are currently behind 15 months on the mortgage, hasn't the credit already taken the same hit as a foreclosure? I thought once you go 120+ days late, the FICO hit is the same as if it is noted as a foreclosure.

[LondonMassey]

That's on top of whatever damage is done from the late payments.  Fact is that a foreclosure on your record destroys someone's chance of being a home owner for a few years... a short sale leaves some wiggle room to get back on track.  In both circumstances, you leave the house with nothing.... Why not just take the little bullet instead of letting yourself be hit by a bomb?

[GoodCredBen]

I would certainly short sale,

See about moving into something more affordable.....

Please, please please dont take this as me attacking you but i would like to explain my situation.

I make roughly 70K a year....

I am looking for a house with the MAX of 150K keeping my payments around 1K a month....

The situation it seems you have put yourself in is living BARELY within your means.

I would suggest taking care of everything and look for some place to live in that is more realistic. 

Once again, i do not mean this to be mean, i really feel for you and i am so sorry..... it its just going to take a learning curve here. 

[Booner72]

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@bosox52981 wrote:

***** short sale will lower your credit approximately 50 points where as a foreclosure will knock off at least around 200 points.*****

If they are currently behind 15 months on the mortgage, hasn't the credit already taken the same hit as a foreclosure? I thought once you go 120+ days late, the FICO hit is the same as if it is noted as a foreclosure.

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NOPE.  I have to disagree.  Where did that quote come from?  This forum's education section says short sale, deed in lieu and foreclosure are all scored the same.  Nonpayment of debt.  There is no way 50 for short sale and 200 for foreclosure.

[Lel]

It is impossible to predict, with any degree of certainty, the effects of different derogatory mortgage information on one's credit report, since there are almost always other factors at play.  For example, some people have short sales after several delinquent payments; others have short sales while current on the loan.  The effect of the short sale will presumably be different for these two borrowers.  Persons with very high credit scores tend to have greater point losses than those with lower scores.  It's probably better to say that for any major derogatory, there is a range of possible point losses, and a 50-200 range is perhaps a reasonable estimate.

YMMV.