upsidedown2 Posted July 7, 2012 Posted July 7, 2012 (edited) I've finally made the decision to get a divorce. It's been a long, hard decision. I first made the decision in 2006, backed down, made it again in 2008, then backed down after my wife promised NC with her "friend". Lately she's rekindled the relationship, so I think it's time to move on. One of my biggest problems is that we're upside down with the house. We purchased the house in 2006 for $235K. When I was thinking about a divorce in 2006 the value had dropped to $189K and that's one reason I decided to wait. However, the market continues to decline and the value now is about $100K. We put $75K down, and our current mortgage balance is $153K, so we're about $53K upside down. Because of our income the bank would not accept a short sale unless we agree to a deficiency judgement, which we're not willing to do at this time. We only have about $25K in cash total, so paying the balance down and refinancing is not an option. It's a conventional loan, so it's not covered under any of the government programs to help underwater borrowers. I have no interest in staying in the house, however I'm sure my wife would love to. This was a house she wanted, I never liked it or the location. My intent is to buy another house shortly after the divorce, so I don't want to do anything that will affect my credit score. I make substantially more than my wife does. I'm looking for suggestions. Thanks. Edited July 7, 2012 by upsidedown2
carhill Posted July 7, 2012 Posted July 7, 2012 There's a lot of private money out there. My advice is to, if the mortgage is non-recourse, blow it to the bank and walk away, take the credit hit, rent and pursue a new domicile via alternative means. As an example, you could be a great lease-option tenant for one of my properties. No banks need to be involved. It'd be easy to do a five-year balloon or just do an extended lease with rent credits until commercial lending was an option if the landlord didn't want to carry the paper on the deal. I know for a fact there are tons of homes being bought up with private cash and aren't subject to commercial lending at all. Find one. Don't hinge your divorce or moving forward on being upside down on a loan. Definitely do investigate all programs and avenues to save the home/meet your obligation but don't let that path rule you. Good luck. 1
Author upsidedown2 Posted July 7, 2012 Author Posted July 7, 2012 Unfortunately I'm in Florida so the mortgage is not non-recourse. And because I have a good income the bank would come after me for the deficiency judgement.
carhill Posted July 7, 2012 Posted July 7, 2012 Is your D being handled by lawyers? If so, work out a PlanB. Ideally, this should have been done before ever making the lender aware of anything but it still can work out. At that level of shortfall, you're within the realm of foreclosure and deficiency judgment costs so there may be room for a negotiated deal. If the bank is no go, let them take you to the mat. The PlanB will include contingencies for that. Can you tell I went through a D during the real estate crash, though in Cali rather than Florida? My best asset was a great law firm. They saved me, well, a bucketload, generally at about 5 cents on the dollar. Look at all options. Give preference to the legal ones. Anything is possible. TBH, you might have better luck getting non-legal advice on some of the REI forums I participate in. Creative strategies in this housing market are being discussed and enacted every day. One could fit your circumstances perfectly. Oh, forgot...welcome to LS
Author upsidedown2 Posted July 7, 2012 Author Posted July 7, 2012 Could you recommend a good REI forum?
carhill Posted July 7, 2012 Posted July 7, 2012 Reiclub has some good minds. They helped me out a lot on negotiating a short sale (to buy).
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