Profile picture for casperjo

Feel trapped, need HELP!

I bought my house in March of 2008 for $179K.  Of course, when the bubble burst, the value of my house plummeted along with everyone else's.  Currently, comparable townhouses in my complex have been selling for $155K.  I still owe $166K on my loan.

Now is where this gets complicated.  I currently have gotten engaged.  He lives 1.5 hours away from me currently, and we are looking to find an area halfway in between. 

I thought that I would simply rent out my place until I could have the possibility to break even (considering the 6% realtor fees I would have to pay as well).  However, my HOA will not grant me permission to rent.

What do I do?  I don't want this house to keep me from moving forward in my life.

PLEASE HELP.
Thank you!
  • March 27 2014 - Richmond
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Answers (10)

I'm of the opinion it is VERY difficult to negotiate a "short sale" with the mortgage holder without stopping payments to them first (I have yet to see a lender be accepting of this without YOU being in arrears)... which means your credit is effected.

I would read your read your HOA rules & regs with a fine tooth comb and ask yourself and an attorney what are the consequences of renting it out? what are the reasons for denial exactly? In most cases their is % of units that CAN be rented in the complex (have you been notified formally of the exact units rented, time they were rented, period of lease?) Your attorney may ask "what gives the HOA the right to continue a month to month or lease of one unit indefinitely over your unit" OR if one owner (maybe the developer) has multiple units rented "why does his interest outweigh yours"? typically for a complex to qualify for FHA or Gov. backed loans they cannot deny the right to allow at least a % of rentals in a complex. The bottom line is this... for a HOA to do anything about you renting it (if they should discover your renting it vs. letting your cousin Vinny live their for free), they can send you letters, they can fine you and threaten fines but at the end of the day I think it would require a court order to settle the matter and your attorney might give them a rude awakening when they attempt that.

next option... deed in lieu! simple, easy, leave the keys on the table and shake hands with the lender.

 
  • March 30 2014
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Putting aside your desire to begin a new life, the simple fact is that you can't sell the property without writing a check and you can't rent it out, so your choices are to sell it and write a check or to short sell it.

With that in mind, it's certainly worth petitioning the Board of Directors for permission to rent, but Boards have obligations to the HOA to follow the rules. Assuming that they deny your petition, then we go back to your either writing a check and engaging in a short sale.

All the best,
  • March 30 2014
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Hello,

allot of agents have given great advice, the only thing I would add is to read your HOA docs to make sure the rental policy is clearly defined and that you indeed are not allowed to rent, in my experience policy is past from board member to board member and assumed to be true.  Most likely the rental policy is correct however that is where I would start. 

If a Short Sale is still the best route for you then knowing the rental policy may open the door to an investor if you can rent.
  • March 29 2014
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Casperjo

Life altering events, are a reason to consider and be accepted for a short sale. 
Life altering events may include but are not limited to: Death, Health issures, loss of income, relocation, marriage, etc. 

Once the short sale is approved and closes it appears on your credit report as "paid in Full" or "Paid as negotiated".  

I would simply call the bank, explain the situation and request assistance.  

If you can move forward with your life without actually closing, then find your new home, and place your current home on the market.  

Wishing you the Best!
  • March 29 2014
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Profile picture for GMerino
I would suggest to go to the HOA and let them know exactly what others have said about letting the home go into foreclosure or give you the okay to rent.  Often times they are not only afraid of the renter rate in their community but the late payments on the HOA fees.
  • March 29 2014
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Profile picture for Mike Hogan RVA
I live/work in the Richmond area and have gone through this with clients many times. In many situations the HOA won't allow a rental because the already have to be careful of FHA guidelines on how many rentals are allowed in a given community and still be allowed to purchase using FHA backed loans.

A good REALTOR will be able to give you an up to date value analysis, talk to the HOA on your behalf and help you figure out a way of moving forward. There is ALWAYS a way to move forward. 
  • March 29 2014
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New beginnings!  They are so invigorating and refreshing.
Having your town home presenting an obstacle to starting the next chapter of your life is true frustration.

Here is what you need to do.
Call, yes, pick up the phone and call a Richmond REALTOR with the intent of review the REAL market data for your community. Market value of your town home my be different than your expectation.

Your REALTOR will also have data to suggest the value trajectory you can anticipate. 

With this data you can determine what to do if you need to act now, or the strategy to put in place if action is to be taken in the future.

You have available to you today 2 options for getting your home sold within 30 days.
One option will allow you to bread even and the buyer to get a deeply discounted purchase.

Others have mentioned a short sale. For a $10,000 deficit this seems a painful way to go.

Finally, you may need to seek legal council to review the community rental policy. Your REALTOR can direct you to the right attorney. Home the rules and regs available.

I wish the the very best outcome.
Do what you need to do for your new beginning.

Annette Lawrence, Broker/Associate
Remax Realtec Group
Palm Harbor, Fl

 Pick up the phone and make the call.
  • March 27 2014
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I'm sure everything is negotiable.  I understand the Homeowner's Association's issue with allowing owners to rent out their homes.  I get it.  But, you might want to ask them how they'd feel if you simply let it go to foreclosure further reducing the value of the remaining owners investments.  Now, the new entry price into that complex is dramatically lower....reducing their equity.  They might be more agreeable if they were posed with that scenario.  Just a thought....
  • March 27 2014
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You will need to discuss with the HOA to see what can be done and ask if allowing it to short sale or go to foreclosure would not be more of a disadvantage to the HOA and the owners there in the condo. Good luck with that, this is why many buyers refuse to look at places with HOA's.

BTW, Commission is 100% negotiable and you surely can get a commission less than 6%. It is not set in stone.
  • March 27 2014
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Profile picture for shane.engel
Hello,

You are definitely not alone in your situation. Being "underwater" (owning more than your property is worth) on your mortgage is like having handcuffs on.

Have you considered the option of doing a Short Sale? (That is basically where a settlement is negotiated on your behalf for the mortgage company to accept a payoff that is lower than your loan balance.) It requires someone skilled and knowledgeable about how to navigate that process. (I personally have experience in helping people in Short Sale situations.) And you may or may not qualify. But sometimes it ends up being a person't best option.

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Best regards,
Shane Engel
RE/MAX Way

 
  • March 27 2014
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