Foreclosure or shortsale? update-My shady lawyer

JonnyPistachio

I need some advice. I will be seeing a lawyer next week, but I want to talk to people who know more about this, or have been through it.

So I've been battling the idea for a few years. I bought my house in south Florida in 2006, at the very peak of the market. I had intentions of living there for 5 years and upgrading to a better neighborhood. The house is currently worth 1/3 of what I paid. My neighborhood was not good to begin with, and all the nearby foreclosures and shortsales are making it a neighborhood that will take longer to revitalize. Also, the neighborhood has gotten worse with crime and squatters.

I am one of those people who always fulfills my obligations. I have a contract and I owe a shitload of money for something i'll not see improvement back to its original value (not likely in 10-15 years rather).

But the icing on the cake was a few days ago I heard gunshots in the middle of the night. And I have recently been married and my wife has moved in with me. We dont feel safe, and I am considering foreclosing or trying to shortsale it. Anybody been through either of these? If I foreclose, i'm concerned that the banks will come after me in 10-15 years even, to get their money. :?

81

make sure you save up for potential tax liability. you could potentially owe taxes on the difference between what you get and what you owe.

foreclosure will fuck your credit for a while...not sure about the shortsale....

JonnyPistachio

81 wrote:

make sure you save up for potential tax liability. you could potentially owe taxes on the difference between what you get and what you owe.

foreclosure will fuck your credit for a while...not sure about the shortsale....

Yeah, I hear all sorts of different stuff. I think with FL laws, if I shortsale before 2013, the difference is forgiven...after 2013, I have to pay tax like its a gift.

And yeah, my credit will be in the trough for 4-7 years I hear. But then again, I've had excellent credit all my life, and its gotten me practically nowhere.

maj4e

It it's worth 1/3 I doubt they will do a short. I'd just stop paying and save every dime until they throw you out. Then just walk away. You'll take a hit but I'm pretty certain that due to the economy and the enormous amount of foreclosures that it won't be interpreted as bad as past eras.

he.who.forgets

I'm in the exact same boat. Bought at the same time and my place is worth about 1/3 to 1/2 of what I paid; and we had the same plan...even did an ARM knowing that we'd be out in 4-5 years :oops: . I know 3 people that live closeby that have all done short sales. They basically just quit paying their mortgage for like a year and finally signed up for a short sale. The process usually takes about 5-8 months to sell and close. From what I understand it cripples your credit but only for a year or two. The money saved by not paying a mortgage for so long is pretty tempting...My wife wants to short sale our place but I'm reluctant.

GS4566

I'm a broker here in South Florida.

You'll want to short sale. It hurts your credit for only two years. A foreclosure will hurt your credit worse and will take 8 years to recover.

Find an agent. Many know how to handle short sales and have short sale attorneys they work with. The attorney makes their money (i.e. fees) on the HUD at closing. Essentially, no cost to you. There will be some paperwork the attorney will have you do once you get an offer. A hardship letter and such.

In many cases they forgive the debt. If not, then think about walking away. But try a short sale first.

Professional advice.

EDITED TO ADD: I just heard from another agent that had a client that had a short sale last year and was approved for a new loan. The banks WANT to loan you money and they may turn a blind eye to a short sale on your credit. No guarantees, but I figured that might start happening.

GS4566

maj4e wrote:

It it's worth 1/3 I doubt they will do a short. I'd just stop paying and save every dime until they throw you out. Then just walk away. You'll take a hit but I'm pretty certain that due to the economy and the enormous amount of foreclosures that it won't be interpreted as bad as past eras.

Not necessarily. I just sold a home, the value was about 1/3 of what they owed. The negotiation took 3 weeks. It closed about 7 weeks from the date the offer came in. They forgave the debt to the owner. Also, it was NOT his primary residence, but an investment property.

adam42381

Short sales and foreclosures are everywhere down here. We bought a short sale last summer for a little less than 1/2 what it sold for when it was new in 2006. If you can avoid foreclosure, do it.

We have friends that sold via short sale a couple years ago and that is definitely the way to go. They bought a condo in 2006 for $275k and when they finally decided to go the short sale route the same units were selling for $100k. It was a no-brainer for them. Sure, it screws up your credit for a couple years, but nothing like a foreclosure would. They rented for a year and a half then last summer they were able to get financing and bought another home that was much nicer than the condo for around the same price they'd paid originally.

JonnyPistachio

GS4566 wrote:

I'm a broker here in South Florida.

You'll want to short sale. It hurts your credit for only two years. A foreclosure will hurt your credit worse and will take 8 years to recover.

Find an agent. Many know how to handle short sales and have short sale attorneys they work with. The attorney makes their money (i.e. fees) on the HUD at closing. Essentially, no cost to you. There will be some paperwork the attorney will have you do once you get an offer. A hardship letter and such.

In many cases they forgive the debt. If not, then think about walking away. But try a short sale first.

Professional advice.

EDITED TO ADD: I just heard from another agent that had a client that had a short sale last year and was approved for a new loan. The banks WANT to loan you money and they may turn a blind eye to a short sale on your credit. No guarantees, but I figured that might start happening.

Thanks for all that advice...now what do I owe you?
I really appreciate it.
I was told (on the phone) by a lawyer yesterday that I wouldnt be a likely candidate for short-sale because I can pay for the house. I have no other debts and my credit is good. Can safety be an issue in a hardship letter? I absolutely feel like choking to death when I think about raising kids in my neighborhood.

Also, if I decide to foreclose, is there a chance that they come after me for the remainder in 10-20 years when they're all caught up on their foreclosure paperwork? (its approx 185K)

I've got to assume that lenders will bend the rules down the line for folks like me. I've been a good customer for 10 years. now its just a safety and business decision.

GS4566

JonnyPistachio wrote:

GS4566 wrote:

I'm a broker here in South Florida.

You'll want to short sale. It hurts your credit for only two years. A foreclosure will hurt your credit worse and will take 8 years to recover.

Find an agent. Many know how to handle short sales and have short sale attorneys they work with. The attorney makes their money (i.e. fees) on the HUD at closing. Essentially, no cost to you. There will be some paperwork the attorney will have you do once you get an offer. A hardship letter and such.

In many cases they forgive the debt. If not, then think about walking away. But try a short sale first.

Professional advice.

EDITED TO ADD: I just heard from another agent that had a client that had a short sale last year and was approved for a new loan. The banks WANT to loan you money and they may turn a blind eye to a short sale on your credit. No guarantees, but I figured that might start happening.

Thanks for all that advice...now what do I owe you?
I really appreciate it.
I was told (on the phone) by a lawyer yesterday that I wouldnt be a likely candidate for short-sale because I can pay for the house. I have no other debts and my credit is good. Can safety be an issue in a hardship letter? I absolutely feel like choking to death when I think about raising kids in my neighborhood.

Also, if I decide to foreclose, is there a chance that they come after me for the remainder in 10-20 years when they're all caught up on their foreclosure paperwork? (its approx 185K)

I've got to assume that lenders will bend the rules down the line for folks like me. I've been a good customer for 10 years. now its just a safety and business decision.

Still try a short sale. The agent will help with the hardship letter. You NEED to move and can't sell it for market value and you DON'T have the funds to cover the deficiency. Stuff like that. 100% try a short sale first. You'll have to stop making payments and they will call you every hour. Just stop answering the home phone.

I have had plenty of people that can pay and needed to sell (move out of town etc).

Hey, another PJ fan in Ft. Myers. Awesome. I thought I was the only one.

JonnyPistachio

Cool, thanks. Yes, I will do everything I can to shoot for short sale first. Thanks man!
What are your feelings on the overall market? Our realtor friend told us that he sees a tiny upturn...that prices arent getting much better, but houses seem to be selling a bit faster than normal he says (at least in palm beach county)

Dukes10

JonnyPistachio - Not sure where you are coming from. You signed a contract and promissed to pay your debt. Now that you don't like that the value has decreased and you want to walk away. You also want to know what the least amount of pain this will cause you.
This is exactly why we are in the situation we are in this country.
Peaple who do not want to honor there debts and think they can just walk away. How does this help the community? See what has happened when the others around you did this.
Why don't you try and honor your responsibility. Maybe get out there and try to improve your community instead of packing up and making it worse.
Can't believe you are on this site asking this kind of question.
The site you are on is based upon a band, and their fans, that preach responsibility and making this a better world for us all. In no way is walking away from your responsibilities and making it someone else's problem and creating more problems for this community a choice you should be considering.
Man up and honor your responsiblities. Don't fold.
Use this as a stepping off point to get to know your neighbors and better your community.

81

Dukes10 wrote:

JonnyPistachio - Not sure where you are coming from. You signed a contract and promissed to pay your debt. Now that you don't like that the value has decreased and you want to walk away. You also want to know what the least amount of pain this will cause you.
This is exactly why we are in the situation we are in this country.
Peaple who do not want to honor there debts and think they can just walk away. How does this help the community? See what has happened when the others around you did this.
Why don't you try and honor your responsibility. Maybe get out there and try to improve your community instead of packing up and making it worse.
Can't believe you are on this site asking this kind of question.
The site you are on is based upon a band, and their fans, that preach responsibility and making this a better world for us all. In no way is walking away from your responsibilities and making it someone else's problem and creating more problems for this community a choice you should be considering.
Man up and honor your responsiblities. Don't fold.
Use this as a stepping off point to get to know your neighbors and better your community.

i sort of agree, but at the same time, i disagree.

home buyers credit, cash for clunkers credit..but a new refridgerator credit....all this shit given away to the priveledged few. plus add in the bank bailout..i really have lost the desire to make banks full again.

JonnyPistachio

Dukes10 wrote:

JonnyPistachio - Not sure where you are coming from. You signed a contract and promissed to pay your debt. Now that you don't like that the value has decreased and you want to walk away. You also want to know what the least amount of pain this will cause you.
This is exactly why we are in the situation we are in this country.
Peaple who do not want to honor there debts and think they can just walk away. How does this help the community? See what has happened when the others around you did this.
Why don't you try and honor your responsibility. Maybe get out there and try to improve your community instead of packing up and making it worse.
Can't believe you are on this site asking this kind of question.
The site you are on is based upon a band, and their fans, that preach responsibility and making this a better world for us all. In no way is walking away from your responsibilities and making it someone else's problem and creating more problems for this community a choice you should be considering.
Man up and honor your responsiblities. Don't fold.
Use this as a stepping off point to get to know your neighbors and better your community.

If you had a wife and a baby, would you consider an option where it was less likely they'd got shot or mugged? Gangs and violence, theft, stabbings, druggies, and prostitutes are that easy to clean up? Why dont you explain to me how you'd clean that up and feel confident your wife and child were safe at home while you were working? You have no clue about my neighborhood.

And honestly, I am having a tough time with the decision...I have always been one to always honor my debts. A short sale is a contract and its legal, so maybe before you judge so heavily, you should consider both sides of this.

you say, "This is exactly why we are in the situation we are in this country." I disagree. Its part of the problem, but the banks gave out way too many shitty loans to the wrong people. these shitty ARM mortgages collapsed on too many people.

Can't believe i'm on this site asking this kind of question? get off your high horse dude.

themessenger

Jonny - I work in an area that manages loan modifications for a bank, you definitely want to Short Sale. Have you talked to your lender/servicer about your options? I would avoid foreclosure completely if you can. There is nothing wrong with short selling a home, most banks/servicers monitor negative equity in homes and yours probably is on a list of homes that are candidates for short selling since you said you're so far upside down in value.

Dukes10 - Get off your high horse, don't act like the housing market wasn't artificially inflated at the expense of most US citizens by most govermental policies instituted by both parties. I believe in personal responsibility as much as the next person but there's isn't anything wrong with short selling a home b/c it gets a person into that home at a more true market value than what it was 5 years ago. Walking away from the property on the other hand is irresponsible and I would advise against it from a personal, moral, and professional standpoint.

JonnyPistachio

themessenger wrote:

Jonny - I work in an area that manages loan modifications for a bank, you definitely want to Short Sale. Have you talked to your lender/servicer about your options? I would avoid foreclosure completely if you can. There is nothing wrong with short selling a home, most banks/servicers monitor negative equity in homes and yours probably is on a list of homes that are candidates for short selling since you said you're so far upside down in value.

Dukes10 - Get off your high horse, don't act like the housing market wasn't artificially inflated at the expense of most US citizens by most govermental policies instituted by both parties. I believe in personal responsibility as much as the next person but there's isn't anything wrong with short selling a home b/c it gets a person into that home at a more true market value than what it was 5 years ago. Walking away from the property on the other hand is irresponsible and I would advise against it from a personal, moral, and professional standpoint.

Thanks for that...I am going to talk to a lawyer soon. And my friend who is a local realtor knows quite a bit about short sales, so I will meet with him to ask some questions too. I thought about contacting my lender, but I want to do that after I get a better understanding of my possibilities. My lender was very difficult to deal with a year ago when I was trying to get them to erase the PMI to make my monthly payment more affordable. I coudnt get any answers out of them and they were very bad about calling me back, disconnecting my calls, and losing documents. PMI...that's another ridiculous addition to my monthly costs...but this is what its there for I suppose!

maj4e

I don't consider it a moral issue. You should, of course, make best effort. However if it comes down to quality of life, that trumps a promissory note any day.

Walk away and live your life.

GS4566

Dukes10 wrote:

JonnyPistachio - Not sure where you are coming from. You signed a contract and promissed to pay your debt. Now that you don't like that the value has decreased and you want to walk away. You also want to know what the least amount of pain this will cause you.
This is exactly why we are in the situation we are in this country.
Peaple who do not want to honor there debts and think they can just walk away. How does this help the community? See what has happened when the others around you did this.
Why don't you try and honor your responsibility. Maybe get out there and try to improve your community instead of packing up and making it worse.
Can't believe you are on this site asking this kind of question.
The site you are on is based upon a band, and their fans, that preach responsibility and making this a better world for us all. In no way is walking away from your responsibilities and making it someone else's problem and creating more problems for this community a choice you should be considering.
Man up and honor your responsiblities. Don't fold.
Use this as a stepping off point to get to know your neighbors and better your community.

Dude. Not only am I Broker, I'm a contractor. I saw a floor tile installer, who made about 10 bucks an hour, buy a home for 550k an get a home equity line of another 100k on a home in 2005. The bank loaned this guy 650k! He foreclosed in 2007 and the home resold for 255k. Tell me now, who's fault is it?

Have you ever looked at your mortgage payment and see how much goes to INTEREST. They make their money. Also, the bank DOES NOT want the home (or any homes) anymore. A short sale is a win for the bank also.

GS4566

JonnyPistachio wrote:

Cool, thanks. Yes, I will do everything I can to shoot for short sale first. Thanks man!
What are your feelings on the overall market? Our realtor friend told us that he sees a tiny upturn...that prices arent getting much better, but houses seem to be selling a bit faster than normal he says (at least in palm beach county)

Prices went up 13% in Lee County in 2011. I have clients that bought homes last year (last February actually) that could not buy the homes this year at their price. Not just stats in the news, but I'm seeing this boots on the ground.

http://www.gulfreturns.com/2012/01/are- ... -rise.html

Good Luck. I'm sure the short sale will work out fine.

Danimal

Dukes10 wrote:

JonnyPistachio - Not sure where you are coming from. You signed a contract and promissed to pay your debt. Now that you don't like that the value has decreased and you want to walk away. You also want to know what the least amount of pain this will cause you.
This is exactly why we are in the situation we are in this country.
Peaple who do not want to honor there debts and think they can just walk away. How does this help the community? See what has happened when the others around you did this.
Why don't you try and honor your responsibility. Maybe get out there and try to improve your community instead of packing up and making it worse.
Can't believe you are on this site asking this kind of question.
The site you are on is based upon a band, and their fans, that preach responsibility and making this a better world for us all. In no way is walking away from your responsibilities and making it someone else's problem and creating more problems for this community a choice you should be considering.
Man up and honor your responsiblities. Don't fold.
Use this as a stepping off point to get to know your neighbors and better your community.

This is by far one of the funniest replies I have ever seen!!!

Johnny P, you SHOULD get to know your neighbors more. Start a meth lab and try to get the community involved.

cowboypjfan

If you don't already have one, I would buy a gun.

JonnyPistachio

GS4566 wrote:

Dukes10 wrote:

JonnyPistachio - Not sure where you are coming from. You signed a contract and promissed to pay your debt. Now that you don't like that the value has decreased and you want to walk away. You also want to know what the least amount of pain this will cause you.
This is exactly why we are in the situation we are in this country.
Peaple who do not want to honor there debts and think they can just walk away. How does this help the community? See what has happened when the others around you did this.
Why don't you try and honor your responsibility. Maybe get out there and try to improve your community instead of packing up and making it worse.
Can't believe you are on this site asking this kind of question.
The site you are on is based upon a band, and their fans, that preach responsibility and making this a better world for us all. In no way is walking away from your responsibilities and making it someone else's problem and creating more problems for this community a choice you should be considering.
Man up and honor your responsiblities. Don't fold.
Use this as a stepping off point to get to know your neighbors and better your community.

Dude. Not only am I Broker, I'm a contractor. I saw a floor tile installer, who made about 10 bucks an hour, buy a home for 550k an get a home equity line of another 100k on a home in 2005. The bank loaned this guy 650k! He foreclosed in 2007 and the home resold for 255k. Tell me now, who's fault is it?

Have you ever looked at your mortgage payment and see how much goes to INTEREST. They make their money. Also, the bank DOES NOT want the home (or any homes) anymore. A short sale is a win for the bank also.

I had bought my first house in 2002, and I was contemplating renting it out and buying another home in the same neighborhood. The bank Ok'd me for my second loan before my previous house was sold and before it was ever rented. There was no way I could've afforded both without renting one, but they didnt care.

Also, i dont know if its accurate or not, but I even read that some banks that bought loans from other lenders, actually made money of some foreclosures.

Honestly, I figured some people would chime in and say what I was considering was wrong...in 2007 I saw a lot of articles discussing what maj4e said...is there a moral dilemma? again, I am having a hard time with this decision. I like my house and actually like some of the surrounding neighborhoods, but safety is seriously an issue. And when I heard those gun shots the other night, I decided it was time to stop convincing myself that my wife will be safe.

rick1zoo2

crazypjfan wrote:

If you don't already have one, I would buy a gun.

wow.

JonnyPistachio

Danimal wrote:

Dukes10 wrote:

JonnyPistachio - Not sure where you are coming from. You signed a contract and promissed to pay your debt. Now that you don't like that the value has decreased and you want to walk away. You also want to know what the least amount of pain this will cause you.
This is exactly why we are in the situation we are in this country.
Peaple who do not want to honor there debts and think they can just walk away. How does this help the community? See what has happened when the others around you did this.
Why don't you try and honor your responsibility. Maybe get out there and try to improve your community instead of packing up and making it worse.
Can't believe you are on this site asking this kind of question.
The site you are on is based upon a band, and their fans, that preach responsibility and making this a better world for us all. In no way is walking away from your responsibilities and making it someone else's problem and creating more problems for this community a choice you should be considering.
Man up and honor your responsiblities. Don't fold.
Use this as a stepping off point to get to know your neighbors and better your community.

This is by far one of the funniest replies I have ever seen!!!

Johnny P, you SHOULD get to know your neighbors more. Start a meth lab and try to get the community involved.

haha, well, there's too much competition in the meth division here...maybe i'll take crack. its cheaper and easier to move. I found my neighbor dead form a drug overdose. That was coke though.

crazypjfan wrote:

If you don't already have one, I would buy a gun.

Funny you should say that. This is another dilemma. I have always said i'd never get a gun. But when you hear shots, sometimes you think differently. But most of the violence in my neighborhood is gang related. So they are mostly just killing each other. But we have a large Guatemalan population here, and they are victims of stabbings and robberies too often because many are illegals and the thugs know they carry cash on fridays because they cant get bank accounts. The neighborhood was on the rise in the early 2000's..heck its near the beach, but its not going to recover form this when the gangs are running things.

cowboypjfan

rick1zoo2 wrote:

crazypjfan wrote:

If you don't already have one, I would buy a gun.

wow.

why wow?

Almost everyone I know has a gun and they don't even live in a bad neighborhood. Clearly, there is a problem when you hear gunshots in the middle of the night. I know I would rather have something to protect my family if someone broke in.

Dukes10

Wow. It must feel good to blame everyone else. It was not your fault that you didn't know the neighborhood. It's not your fault that the mean banker made you sign a loan that you didn't understand. Those ARM loans are just so confusing that you could not have known the facts. You are right. It's everyone else's fault.
I wonder what else is not your fault.
Hope you find comfort in blaming everyone else. That will help you justify.
By the way, it's not a high horse I'm on. When you stand on your own those who lay down and give up see it as being a high horse.

rick1zoo2

crazypjfan wrote:

rick1zoo2 wrote:

crazypjfan wrote:

If you don't already have one, I would buy a gun.

wow.

why wow?

Almost everyone I know has a gun and they don't even live in a bad neighborhood. Clearly, there is a problem when you hear gunshots in the middle of the night. I know I would rather have something to protect my family if someone broke in.

I am not going to argue with you, I'll just say my opinion is that guns only cause more violence and having them in my house would be a danger to my family.

Jearlpam0925

DIdn't they pass some new law, or program, where the government is compensating the difference if you're underwater on your house?

themessenger

Jearlpam0925 wrote:

DIdn't they pass some new law, or program, where the government is compensating the difference if you're underwater on your house?

HAMP 2.0 is really meant for loan modifications in this type of scenario. It's a modification program so you stay in the house but it involves some sort of reduced interest rate or principal reduction typically. It's rolled out to servicers now and homeowners in May it looks like.

http://www.makinghomeaffordable.gov/pro ... /hamp.aspx
"Making Home Affordable is planning enhancements to the HAMP Program. Detailed information will be available for mortgage servicers in February 2012. The expanded program for homeowners is expected to be available in May 2012. We will update this site as more details become available."

blackredyellow

Dukes10 wrote:

Wow. It must feel good to blame everyone else. It was not your fault that you didn't know the neighborhood. It's not your fault that the mean banker made you sign a loan that you didn't understand. Those ARM loans are just so confusing that you could not have known the facts. You are right. It's everyone else's fault.
I wonder what else is not your fault.
Hope you find comfort in blaming everyone else. That will help you justify.
By the way, it's not a high horse I'm on. When you stand on your own those who lay down and give up see it as being a high horse.

In addition to being able to ride on a taller-than-average-sized horse, you are also good at putting words in peoples' mouths.

bionicamy

Jearlpam0925 wrote:

DIdn't they pass some new law, or program, where the government is compensating the difference if you're underwater on your house?

http://portal.hud.gov/hudportal/HUD?src ... oreclosure