Short Selling my home

jmabeus,

I'm sorry to hear about your circumstances.  Was your first mortgage by any chance a VA loan?  If so, please contact the VA (this link gives you regional contact info).  They will assist you with contacting your lender and working on the short sale. 

It's not too late in the ball game to get another realtor.  Your listing agreement is with the company, not with the specific agent.  Talk with your agent and ask him/her to get another agent from the office with lots of short sale experience involved.  They can split the commission or be paid a referral fee for assisting.  If your agent will not do this, then ask the broker to reassign your listing to another agent in the office who has the experience necessary to help you.  Although as an agent I feel a little guilty about telling you to switch agents, your agent's learning curve should not come at your expense. 

Thanks for the info! I will consider this.

This does not sound like a situation where a magic realtor can help much to me. The first loan has no reason to negotiate, as they will be paid in full, and the second is likely a recourse loan. You are in the military so they can find you and your income if you choose not to pay them. Good luck with it, and I feel sorry for your position.

Actually azrob, sometimes a realtor can work "magic". :)  I worked with one agent who got very good at working with all types of foreclosures.  He could get banks to do things other agents couldn't or didn't know how to do.  He told me that there are certain procedures you had to follow and certain rights the homeowners had by law that often the average person at the mortgage company didn't even know about.  Unfortunately these magicians are fairly rare from what I've seen.

I wish I had a realtor with a majic wand! My realtor is a real nice lady who lives in my neighborhood but she has no experience working a short sale. After listing it for several months to break even (no showings whatsoever), we lowered the price to get showings and it worked. Now I just have to get the 2nd mortgage company to approve without having to pay back 35k with a promisary note. If I have to give something, I'll do it. I've worked for 20 years building my credit and to have it destroyed over a bad housing market, it just plain sucks. This is why I think the short sale solution is best for me. I even considered a refi and renting out my house. I would still lose approx. $600.00 per month. Most of the renters in my community are trash. I can't tell you how many homes have been trashed by renters in here. I just don't think renting is a good solution for me. I'm never coming back to South Florida so it wouldn't make any sense in a market that's only getting worst.

Normally I would say to walk away from the house (the realtors here absolutely hate it when I say that), but if your in the military this might not be a great option since they do credit checks before they deploy you. 

Walking away is not a good idea if you have a VA loan.  Per the VA website "If your loan closed on or after January 1, 1990, you will owe the Government in the event of a default if there was fraud, misrepresentation, or bad faith on your part." 

Have a security clearance?  Ever get the indebtedness lecture?  Don't walk away from your obligations.  It will jeopardize your career.

You really need to have a lawyer helping you.  There are federal laws that have to be followed when someone is active military.  No agent can give legal advice.

Hey Guys, first off I'm not looking to foreclose and ruin my credit. I'm not looking to ruin my Military career and especially destroy what I've sacrified for the past 20+ years. I'm just looking to see what options I have.

To put it plain and simply, I'm at the mercy of my mortgage company! I've done everything I can to persue a short sale, in fact I've worked my tail off to get this going. All the while I've had a very sick child in the hospital. And yes I've recieved credit counseling from my Service and I have very good credit. Dan, I'll E-mail you separately....

But a lawyer can help you with the mortgage company.  They know how to get someone's attention.

jmabeus, I wasn't trying to say you were, I'm sorry if anything I said came across that way.  My comment was to the post above mine.  I was suggesting you work with the VA since I assumed you had a VA loan.  I have worked with other military sellers in a financial crunch and the VA has been very good with helping them out on all aspects.  They can also help you with finding an attorney to handle things.  The people at JAG were pretty unhelpful in these situations.

And I'm so sorry to hear about your child. 

once the sale is complete your second will become an unsecured loan. At that point you could stop paying. The lender will then try to collect the debt and will probably turn it over to a collection agency. At some point they will probably write off the debt called a charge off. This will hurt you credit but not as badly as a foreclosure would

So I should sign the promisary note and not pay? My Secondary Mortgage company (NFCU) is jerking me around. Let me reiterate a few things again. I owe approx. 312k, with a contract at 259,000. My primary mortgage co would be paid in full. My seconday mortgage would be shorted approx. 71K. On Friday NFCU tells me that if I pay them 35K for 60 months (no interest) via a promisary note they'll accept this offer. The only kicker is that the appraisal has to come back under 300k, well it did today at 290k. Now, the lady tells me the appraisal is too high after she told me it needed to be under 300k. NFCU wants at least 280k to send it to the board. Now I was starting to stew and I was just about to tell her to pack sand and just take the property. I don't freaking care at this point. She right out lied to me. She said that she was just giving examples. Well, she lied. Now I call my realtor back and tell her forget it, the bank can have my house. Keep in mind I have a terminally Ill Son in the hospital (this is where I talked to both parties from) . Just too much to burden right now. The realtor calls me back an hour later and said the buyer wants the house and will pay the additional 20K if we get a note from my mortgage company that they'll approve at 280K. I left the lady a voice mail at NFCU and told her this. If she gives me the run around again, I'm going to ask for the name of her direct Supervisor and I'm going to file a complaint. The point here, I have been vigilant in trying to get this issue resolved. The mortgage company knows I'm in a real bind and knows they have me where they want me. This is my last effort to save this thing or I'm walking away. I've never been late on a single payment in my 20+ years in the Military. I have orders to transfer in 30 days and a very sick child. I have 4 other kids to think about. Any comments? I cannot afford to hire an attorney.

I am so sorry about your son.  I can't imagine the stress you are under right now, but please, OMG, no, you should not sign the promissory note and not pay.  You need to get someone who knows what they are doing to help you.  You say you can't afford an attorney, but with advice like that, you can't afford not to.  An attorney can write it up so that it is payment in full with no pursuit of deficiency judgment.  Good luck to you.

Marci's advice is spot on. Also, when you get a chance, I believe the military generally offers some people to talk to about problems in life, and these burdens you have are too much for any one person to bear without help. God bless you, and you will be in my prayers.

I fully intend to pay, my first response was just to see what Michael Russell was referring to. This is of course if my lender will get this thing taken care of instead of messing with me.

Oh more more thing, from what I understand, the mortgage relief act of 2007 doesn't cover 2nd mortgages, correct? If so then I get stuck paying taxes in over 50K of ghost income since the lender sends me the 1099. What's the work around? If I negotiate with my lender for a promisary note to pay back 25k, does that mean I only get hit on 25K? Or should I just go ahead and attempt to get a promisary note for the who thing and try to get it over 10 years?The point here, I don't want to get stuck paying a hefty tax bill next year. Can anyone give me an approx. number what the tax would be on 25K and 50k? Yes, I know I should speak to an attorney but I'm just trying to see where I would stand. Thanks all. I had one guy tell me to consider letting it foreclose and take the credit hit for the next 7 years. (Not that I'm doing that)

j, I believe that if the second was to acquire the house, it is also included.  Of course, I am not a CPA and you would have to talk to someone with that knowledge.  Remember that it only covers federal taxes, not state taxes, which is why it is imperative that the contract is written to relieve you of ALL liability.

I don't care about state taxes, but thanks for the info....

Call me crazy, but I didn't think it could be a short sale unless you were behind on your mortgage payments?  Am I missing something?

Yeah well when you have to go you have to go! Renting it out is definetely not an option. Live in South Florida and you will see that there's a flood of foreclosures and now short sales.

j, does The Soldiers and Sailors Civil Relief Act apply to all active military or just to the ones overseas?

I am just wondering if the reason you are not getting much response from your primary mortgage is because you are in good standing.  They probably don't want to waste time on you because they have lots of other people who are behind.

I'm not saying you should do this, but would it help if you stopped paying the mortgage?

I really think you need to seek the advice of a real estate lawyer or another appropriate source.

Winifred, that is usually the case.  Unfortuneately (or fortuneately), being active military, getting behind in payments is not a good idea.  There has to be some kind of legal aid or something there that can help. 

Marci,

I completely agree with you about jmabeus needing to find a resource near him who can answer the questions.

While we were in the Navy our child developed a chronic illness.  We were encouraged to apply for a program, can't remember the name but because we were in the program they gave my husband some exemptions- such as from moving.  Since her care was all situated in our area it was deemed in her best interest for us not to change duty stations-

Are you eligible?  From what we were told they accept a wide range of health issues, mental health, asthma, allergies, and many other disabilities. 

I am sure you already know about it... but just in case you didn't.. Our Navy nurse actually told us about it during a wellcheck on our child. 

We have friends that have spent 14 years at one duty station because of their childs severe allergies...it hasn't effected his status in any negative way...

wishing you better news and lots of hope that this will work itself out in a positive manner.

I specialize in working with sellers in short sale situations. Each bank is different on how they will handle it.  Also most primary mortgage holders will not negotiate a short sale if there is a 2nd on the property. The banks will often want those negotiated down first.  Any specific questions, I would be more then happy to answer them for you.  Just make sure you keep up your payments and you may not see much of a hit on your credit.

Mindy Allen, ABR, Realtor

Keller Williams Madison

Marci,  the military does have their legal branches (think JAG like the TV show) but they are not as experienced as needed for the most part in dealing with foreclosure type situations.  jmabeus' best option at this time is to contact the VA since he did get a VA loan and it is their job to help the veterans when they run into problems with a VA loan.  Also, he does have to get VA approval to do a short sale.  I don't know if he or his agent have already contacted the VA but I have had success in working with the VA in the past to help resolve issues.

Diny,