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Profile picture for sahuero

How can I protect my excellent credit score and get rid of or get out of an upside down mortgage?

My house was bought for $370K brand new, a bigger house around the corner sold for $150K. My financial partner in the house just got laid off and I want to protect my credit (but I don't care if I keep the house or not and I can't afford it alone). Our Lender said we can't get modification loan because our mortgage is current and the loan is a good loan. What's my best option at saving my credit (866)?
  • January 07 2009 - Hesperia
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Answers (7)

The best ways to protect your credit are to continue to pay the note or to sell it and pay the difference between the sales price and the note to the lender. Anything else will hit your credit pretty darned hard and for a lot of years. Have you thought of roommates?
  • January 10 2009
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Profile picture for Ada Sanchez
Since your financial partner just got laid off, and your house is upside down, you do qualify for a Loan Modification with your lender. 
My Q? is - was both of your income taking into consideration when you got your loan?   Your are going thur a HARDSHIP and lost of income is part of it.

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  • January 10 2009
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One way to get out form under it is to rent your home out if you are able to...I know it sounds like you have lost a lot of income in your household, but that is probably your best shot out of all the scenarios.

Check out your options at [hotlink removed by Zillow moderator] 

  • January 08 2009
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Profile picture for Bentley Advisors
sahuero, rules re: workouts and modifications are changing every day and new programs continue to be put in place.  You won't likely be liable for any taxes based on The Mortgage Forgiveness Debt Relief Act (http://www.irs.gov/individuals/article/0,,id=179414,00.html).  Also, Citi announced a program to reach out to homeowners current on pymts but at-risk of defaulting.  I suspect most others have already or will start similar proactive programs vs awaiting defaults.  As a matter of fact, Fannie Mae now allows loan workouts on their loans for those who prove financial difficulty even if they haven't made any late pymts (http://www.latimes.com/business/la-fi-harney21-2008dec21,0,5965944.story).  Hang in there.
  • January 08 2009
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Profile picture for FLKeysRealtor
sahuero-
unfortunately there is no way to avoid a hit to your credit score when in this situation. A short sale has less impact to your credit than a deed in lu or a foreclosure. As you mentioned the banks don't seem to work on a file until payment has stopped being made, each missed payment will lower your credit a bit.  if a renter can cover your expenses than it would be your best option to try to carry the house until the market turns.
  • January 07 2009
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Profile picture for sahuero
So if I can sell it (not too many buyers for that area), is there something I can do in the meantime while it's on the market to be sold?

Sorry, but what do you mean by "pay the difference"... to who? I know if I do a short sale, I'm responsible for taxes on the difference, which would be a hardship as well.

I appreciate any additional information you can provide - thank you.
  • January 07 2009
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Sell the home and pay the difference between what you owe and what you sell it for.  I wish there was a better answer, but that's it.

  • January 07 2009
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