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Help, I need advice. Bought our home in 2006 for $235,000 and is now worth $153,000 per Zillow.

We bought our home 4 years ago for $235,000 and it is now valued at $153,000.  We're are also struggling to make our monthly payment which makes all of this even harder to take.  We have two young children and after my youngest was born I had to stop working full time due to her health issues.  We feel trapped and don't know what to do.  Seems like we can't sell.  We owe more than the home is worth, have no equity, and are struggling to provide the family with neccessities each month.  My husband and I are both working, but our monthly income is much less than what it was 4 years ago.  We never thought our home value would decrease the way it has.  PLEASE, any advice would be much apprecitated.

Thanks in advance. 
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February 10 2011 - Auburn
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I feel bad for you. You have a few options though. One,you can notify the lending institution to see if you can qualify to rework your mortgage. Maybe they will extend the number of years on your mortgage or cut down your principal amount. Who knows until you ask. Secondly you can sell the house under a short sale. If the lender agrees to a short sale they not only release you from all liability but also pay for the commission if you use a broker. You also might qualify for government funds for moving expenses. Thirdly, you can stay where you are and continue to struggle with the payments until your finances turn around. I hope this helped some and whatever you do I hope it turns out great for you and your family.Look at it as a learning experience and remember it's just a temporary setback. Good luck.   Wayne Newcomb, Yankee Realty

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February 13 2011
I am sorry to hear that things have become a little challenging.  However, you do have options.  You maybe able to do a short sale and get the debt forgiven or have a loan modification with a payment that you are comfortable with.  Please feel free to contact me at [Link removed by moderator] and I maybe able to give you a few suggestiions.
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February 13 2011
Profile picture for jal74
Or you could do something else, far far better for yourself

I would suggest you discuss the following with a competent real estate attorney licensed to practice in MA

1)  Have the attorney do a title and lien search on your mortgage.  If it has been pooled as part of a securitization (go to step 2)

2)  Authorize your attorney to determine if proper chain of title to the mortage has been maintained.  If your attorney determines that there are probable significant defect(s) in the chain of title (go to step 3)

3)  Determine in conjunction with advice from your attorney whether you should default and then pursue action in court to claim your title free and clear of all encumberances upon failure at foreclosure motion to produce clear title to your home by the foreclosing servicer/agent for mortgage security trust.

You could end up with your home free and clear.  It's happended before and it could easily happen again.

Regards
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February 10 2011
You can find a lot of information here> [Link removed by moderator]
The information on short sales is basically the same for all states.The  difference happens after you get an offer.California sales are handled by escrow companies (we "go into escrow") and in other states they're handled by attorneys.

As stated below, first, you should try to do a loan modification with your lender. The link above will direct you to the sources set up to learm more and begin this process.

Sometimes, loan modification is not an option. That's when it's time to find a good agent who is qualified to do a short sale. There are many people in your situation right now. You are definitely not alone.

Interview some agents or get referrals to agents who specialize in short sales in your area and choose one to help you.
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February 10 2011
Profile picture for auburnmama
Thanks for all of your input so far.  We had been thinking about loan modification, but we've also out grown the home since we purchased it.  We've also put a new roof on it last year and had to put in a new heating system this year (another loan).  

I'm just sooo overwhelmed with all of this and what has been going on with my daughter (she's doing much better now) that I can't think straight. 

As for making extra income, it's not really feasible at this time.  I take care of the kids during the day and work in the evening and my husband does the opposite.
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February 10 2011
All great advice!

The first place to start is your mortgage company.  I have a blog on the mortgage modifications with all the links to the programs here:  http://amymullenremax.wordpress.com/2011/01/04/making-home-affordable-the-modification-option/

Although the process is not easy (or quick) it might keep you in your home and in a more comfortable position.

Please do not use Zillow's value as written in stone.  There are frequently issues with the values posted on Zillow and a full market analysis is the best way to determine your home's worth.  I would be happy to help you with that.

The short sale is a complicated process that can be done also.  We have a short sale team ready to move for you if you decide to go that route.

Feel free to ask any questions - I'm happy to help.  It's good to know all of your options and explore each of them.  Your situation is difficult based on what you've said but I'm sure there is something that can be done. 

Amy
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February 10 2011
Hello Auburnmama,
I feel for your situation I suggest contacting your mortgage company about a mortgage modification to reduce your payments they have options to assist you but want do anything without your inquiry.  The other option you have is getting a good real estate agent who is experienced in short sales. The short sale process is much better of an option than foreclosure.
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February 10 2011
You have two options.  First: loan modification / principal reduction; call you lender to discuss this option.  Second: if you are ready to leave the home, then you might consider a short sale.  You need to gather your last two years tax returns, recent bank statements, current income information and write a hardship letter.  There are attorney's in your area that are expert in assisting you in talking to the lender.  Once you know which way you want to proceed, modification or short sale will determine if you need to hire a real estate agent to market your home.  If you need an attorney's name email me via my profile.

Best of Luck,

Eric
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February 10 2011
Profile picture for wetdawgs

What are your goals related to this issue?

The two possiblities that jump to mind as the top two are:

a.  As your income is lower, you may be able to claim hardship and qualify for a short sale.  Then, you can rent at a lower monthly cost (perhaps - depending on local market rates).

b.  You may be able to get a loan modification to have a lower interest rate or longer term of payment, hence lowering monthly payments.  You can check to see if you are qualified on www.makinghomesaffordable.gov .  Of course, being qualified and being approved by your lender are many steps apart.

c.  You can assess your income potential - and add a job to supplement current income.  Or, perhaps you could rent out a room.

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February 10 2011
Find a local agent that you want to work with.  Most agencies will do a free aanalysis of your home and its value.  Then you can decide if you want to try and sell it or not.  You might be able to do a short sale, but that is only as a last resort.  It is better to sell it for less than what you owe than to go through foreclosure.  You would need to talk to your lender before going down that road. 

Dave Ramsey offers some great information on cash flow planning, budgeting and more.  www.daveramsey.com or check your local library for his books like "total money makeover" or Financial Peace University.
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February 10 2011
 
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