Profile picture for auburnmama

I presently have an upside down mortgage and am trying to decide on Short Sale or loan Remod

I owe 236,000 on my home and it is now worth between 153,000 and 180,000.  We are struggling to pay our mortgage payment every month due to the fact I had to start working PT to take care of my daughter who has had some health issues.  I've contacted a real estate lawyer and we are now trying to decide if we should try for a loan modification or a short sale.  Does anyone have any advice?  We  have no more savings and I don't want my family out on the street.  Thanks in advance.








  • March 10 2011 - Auburn
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Answers (9)

Best Answer

Sounds like you are getting all the right advise.  The only thing that I would add is not to pay for any services up front!  There are many predators out there that will make promises and charge an up front fee.  DON'T DO IT.  Your lender has the incevtive to work with you, and a short sale attorney will incorporate their fee into the shortsale, which will be paid by the bank.  Good Luck!
  • March 11 2011
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I have closed on 34 short sales. Very simple. If you really love the house and doesn't want to move, try a modification and if the mortgage + taxes will cost the same as you would pay for a rental do the modification. And keep in mind that one day you will have to face the problem. Economy/real estate is not expected to get better any sooner.  Otherwise I don't see any reason you would stay in the house. May be just to pretend you have a house since you really don't but a debt that is bigger than the value of the house.

Of course, if the problem is income, banks will not do a loan modification but I read that Obama is trying to work with major banks to make better the Loan Modification process. I would not do a loan modification. This mortgage is a cancer that needs to be removed so that you can have a life.

Then you are left with 2 options. Live in the house for free until the bank foreclosures on the house or do a Short Sale.

If you decide to do a short sale, please be very carefull when choosing your realtor. Ask a copy (they lie) of the short sales they have closed. Check if possible. Most realtors don't know how to do a short sales. But a short sale should be done by a realtor NOT by an attorney. And the only reason why is because attorneys dont price the house, will not talk to the bank appraiser and pricing is the most crucial part of a short sale. Anyone can put documents together. You can do, the bank will tell what they need. Attorneys don't have time to follow up...

Everything is going to be fine. Your credit score does not say anything about the good person you are.  Better to have a bad credit score and take care of the financial security of your family in the long run. I am sure the banks are not worried about personal situations. So, you better take care of yourself.  Best Lucky! 

  • March 12 2011
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Dear auburnmama,

The fact that you have already contacted a real estate attorney and are reaching out for advice on Zillow demonstrates that you are responsible and trying to do the right thing for all.

I am actually assisting a family in neighboring Millbury who are faced with a similar situation.  The fact is, you are not alone, but that doesn't make it any easier for you, I know!

I agree with so many of the posters here.  I would just like to add that another option would be to rent out your home, if you can do so for enough money to cover your principal, interest and taxes.

If your credit is still good, you just might be able to buy something else....AT A LOW PRICE (sell low, buy low).

I encourage you to be persistent no matter which way you go, but I would definitely start with your lender(s) first.  Let them know what's going on.  Lenders really do not want to foreclose.

If you decide to market your home as a short sale, make sure you have an agent who has demonstrated (not just stated) EXPERIENCE with short sales or else you may just lose your home.

Best of luck to you!!!

  • March 11 2011
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Profile picture for auburnmama
Thanks to everyone who has answered thus far.  Your advice is greatly appreciated.  It's a lot to think about...
  • March 11 2011
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Profile picture for B Mike West
In order to qualify for a loan mod you have to have sufficient income and you have to prove it.  Remember that loan mods are usually only good for three years.  Almost everyone wants to keep their home and that us usually the best option.  Short sales are not guaranteed but damages your credit less than foreclosure.  Of course, you have to have an acceptable hardship to qualify for a short sale.  Good Luck
  • March 11 2011
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Below are a couple of links that I send to clients with really detailed information about loan modification options, foreclosure and short sale processes. I hope you find them to be as helpful as my clients...
http://www.makinghomeaffordable.gov/pages/default.aspx
http://homebuying.about.com/od/4closureshortsales/a/shortsalebasics.htm
  • March 11 2011
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You should go with the loan modification, but I will tell you they are really difficult to get.  The bank seems to run people around for several months and you get no where.  So it can be a long and very frustrating process and if you get the loan modification, it is like winning the lottery.  But it is the best option, IF you can get it.

The next option is a short sale, which is a MUCH better option than a foreclosure, because now, if you have a foreclosure banks are wanting you to wait five years before you can get another mortgage.  Five years is a very long time.  So, if you do a short sale, that is a much better option and you will be able to buy another house faster.

Also you have picked the right time of  year to move forward with a short sale, so if you are going to do that..... do that now and get the home on the market versus waiting until late fall or even worse, winter.
  • March 10 2011
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Profile picture for Jodee1453
As a Short Sale expert in Real Estate and based on my experience I would suggest you look at what is attached to your title 
Is there more than a 1st mortgage?
Such as a Second Mortgage, taxes, criminal charges, child support so on.
If you only have a 1st Morgage you maybe able to do a short sale. With the more things on the title the less likely you will be able to do a short sale.
With a Short Sale there is a lot or paper work, just a FYI.
One of the major things I see is you have to have had a hardship; illness, job loss, personal status "What caused you to get in this situation?"
Just over extending yourself is not a hardship.
See a lawyer is best and listing with a certified short sale agent is a must. You will need someone that can hold your hand and you will want it to be someone you can trust. It is a long process but what doesn't kill you only makes you stronger and if it of any comfort you are not alone and it doesn't make you a bad person.  Interview agents and ask the hard question such as  their experience and referrals from past Short Sales. The biggest thing I have seen is not all listing agents can get the job done.
can handle a Short Sale
  • March 10 2011
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First advice that I would give you would be to contact your lender/bank. They are the ones that basically control that decision. If you are able to show some income and if you have not been late on any payments, then they "may" assist with a loan modification and tack the difference of the payments on to the end of the loan. You can also try selling your home to do a short sale, but the bank also has to approve that. You will need your bank statements, pay stubs, tax reporting for the last two years and your hardship letter. But a short sale doesn't really start until an offer is made on your home. The bank will then do an appraisal on the home and look at what their net will be and negotiate from there. Hope this helps!
  • March 10 2011
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