Foreclosure/Short Sale advice...?
I bought a condo 2.5 years ago in Michigan. The economy is so bad here right now and property is not worth what it was. I owe more then it is worth. I did an interest only, 0 down mortgage. I want out. I am about to be done with college and I think I may want to move out of state. I am very behind in my condo assoc. dues and they sent me a notice of lien. My place has been on the market for two months and I have only had one showing and they said that it was over priced, ha. I am trying to do a short sale. If that doesnt work that I want to try a deed in lieu (the place has to be on the market for 90 days from them to consider it). What I want is advice. I really don't want to screw myself with having a foreclosure but If the short sale doesnt work and the bank does not accept the deed in lieu, I may have to do foreclosure. Is this Lien going to hurt my plan? Any advice?
- Anonymous1 decade agoFavorite Answer
The condo association lien will just make the buyout a little more expensive, whether that occurs when you sell or when someone buys it at a foreclosure auction. In this housing market your chances of a deed in lieu are probably not very good. Banks already own so many houses and really don't want more, though if you are a high foreclosure risk they might consider it. My advice is to accept ANY offer you receive that you feel the bank might accept. From their point of view a short sale is probably better than a foreclosure auction. And ANY option is better for you than foreclosure.
- chatsplasLv 71 decade ago
The lien may complicate matters. If you can swing it, pay up.
An interest only mortgage is a BAD idea for exactly the situation you find yourself in. You build up NO equity in the property and if housing prices decline, you end up owing more than the property is worth.
A Deed in LIeu is better than a foreclosure, marginally, particularly for bank and they may negotiate with you. A foreclosure wipes out all junior liens, such as the condo association fees. You want to avoid having the bank issue you a 1099C if at al possible, keep that in mind in your negotiations.
Speak with your lender at length and fully explore your options. They are more willing to negotiate and work things out now than last year. Also speak with attorney, accountant to guage the impact of the various solutions offered on your credit and tax liability. A 1099C treats the forgiven amount as income to you--big problem at tax time.
- 1 decade ago
I would stick with the short-sale. Make sure your Realtor is a short-sale specialist, and make sure he or she has active contact with your bank.
One thing with a foreclosure is it will REALLY hurt your credit - a short-sale will too, but at least with a short-sale it looks like you tried to resolve your credit issue.
If the short-sale doesn't work, what about renting out your place until the market turns. Maybe you can work out something with the HOA assoc to pay little by little to bring it current.
If you do move, landlords and employers will be looking at your credit, so I would say the last thing you would want is a foreclosure.
You may also be able to get your bank to do a loan modification to get your payments to a level where you can afford them.
- freudenburgLv 44 years ago
Are you utilising a actual materials agent? they'd desire to understand short revenues considering that that's what yours is. call national and ask to chat to the Loss Mitigation branch. The turnaround on short sale approvals isn't rapid so wait and see.