Short Sale Escape

Hi, My salary is been reduced and own more then my house is worth.

I have contacted my lender and the loss mitigation rep said that I need to reduce even more my personal expenses and then try again for a short sale, because rigth now I do not qualify.

My mortgage is $ 3,700/month and my salary now is $ 4,500/month. I can not pay the mortgage and my bills.  

Please, what should I do now, walk away??? try deed in lieu??? foreclosure??? file B 13???

I’m not behind with payment yet. Thank you for your attention and help.  

Dulf 

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Hello Dulf,

Is the income reduction permanent?  If the income reduction is temporary, then a forbearance plan may be appropriate.  I’ll assume for the remainder of this answer that the income reduction is permanent.

At present, a Chapter 13 bankruptcy will not normally reduce the homeowner’s mortgage payment.  It’s simply a means of forcing a federal workout of payment plus arrearage when the lender is uncooperative.  So, on the surface, this isn’t the solution of choice.

Deed in lieu of foreclosure is one step above foreclosure and the lender doesn’t want to own your home.  Walk away?  That’s irresponsible.

What is desirable is a short sale full release.  In a full release, the credit bureau’s tradeline will list as settled with a zero balance.  If this is completed quickly, the credit report can avoid being tarnished with multiple late payments.  To accomplish this, a buyer must be found who is willing to purchase the property for less than the mortgage balance.  

This is occurring each and every day through our Seller Helps Buyer program.  You should also talk with a professional real estate listing agent about adding the property in the multiple listing service (MLS) with a price that is ‘subject to lender approval’.

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.