Mortgage Paid by Credit Cards

Hi Paul,

My husband and I hought this home with a THIRD party last year. At first all three were on loan and title. After a while he decided to move, and we agreed to take on the entire payment. He signed over the title to us. NOW, we can no longer afford the payments, my son is disabled and we are never going to be able to afford this home . My husband and I both have 780 FICO. The current loan is 6% 30 year fixed. There is no modification that can solve this. As the market declines we are unable to sell the home. It has been on the market for 6 months, and has shown quite often, but not anywhere near an offer. My realtor is a short sale specialist and thinks he can reduce the price and find a buyer. We are current on payments, but putting 500 a month on credit cards to make it.

If we short sale it… I am told I must be behind on payments before Countrywide will even think about allowing it. And they will go after John, our third party first.

If we foreclose…. we had an 80/10/10 laon. So there is a first and a second. So, Counrtywide. or whoever owns the loan will go after us for the second. And we will wind up BK.

So maybe we should just foreclose and go Bankrupt. The Attourney thinks we will meet the means test for chapter 7. It’s just we don’t have any other debt problems, just this house.

DO you think the lender will allow my short sale? WIth John and current payments?

If not, what else are my options?

Julia

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Hi Julia,

A few late payments followed by a completed short sale with full release of liability would be far better than a bankruptcy and foreclosure. 

A bankruptcy with no late payments followed by a foreclosure would be better than a bankruptcy with late payments followed by a foreclosure.

I would suggest that you first attempt a short sale with full release on both mortgages.  If you are a candidate for a chapter seven then you are definitely a candidate for a full release of liability.  Don’t put any more mortgage payments on your credit cards.

Read: Short Sale Never Delinquent, Bankruptcy, Short Sale, & Credit Report, Rachel’s Short Sale

Thanks for the questions and hope this helps.

Paul

This author is not an attorney and this information should not be considered legal advice.  Please consult an attorney for legal advice.