Our Real Estate agent suggests 'Short sell'

**sweeps** · 07-06-2007, 09:50 AM

A short sale might be a good move if your lender approves it. Keep in mind that the amount forgiven by your lender is counted as taxable income. (You'll get a 1099 that must be reported on your taxes.)

**scfr** · 07-06-2007, 10:07 AM

I do not know about Short Sales, but have you looked at other options that would not involve selling?

For example:
Rent out a room in the townhouse?
Take on a 2nd job (both you and your husband)?
Sell off your possessions?
Go down to just one car and take public transportation?

As you already stated, you didn't carefully think things through when you bought the house. Don't make the same mistake about selling. Don't sell out of a sense of panic. Sell only if you have really thought everything through carefully.

**anonymous_saver** · 07-06-2007, 10:08 AM

Could you get a part time job to help pay this off? Even working from home and selling stuff on ebay could help. Selling old textbooks could get you some cash too.

**DebbieL** · 07-06-2007, 10:14 AM

Sell immediately. This is only going to get worse. The foreclosures in the coming years as this bubble shakes out will be astonishing. That loan is suicide - get out as soon as you can. I'm sorry, and I wish you luck in this. Many people will lose their shirts in this mess.

**Scanner** · 07-06-2007, 11:09 AM

This is an interesting situationj as it involves 2 components which deserve equal weight - the psychological componenet (can't sleep at night) and the financial component.

Let's take inventory: on the positive side, you've never been late on a payment. So, your credit is decent. On the negative side, you are what they call "house poor" and unable to save for the future.

It's really a toss-up.

If you take the loss, you'll have to pay off a debt with no asset to back it and earning equity. But. . .there have been people in $50,000 credit card debt who were able to climb out. You could unshoulder this tremendous psychological burden, take the loss, and then work for the future.

I wouldn't blame you for doing this.

On the other hand, I think the poster who suggests "hunkering down" and weathering your "summer of discontent" may be the wiser option. Work towards paying down the second mortgage (even if it's an extra $50/month) and then getting to a place of refinancing the other mortgage so you can earn some equity.

Yes, you'll remain house poor, and stress may remain high, but you'll start to at least see a light at the end of the tunnel.

Whatever you do, don't take financial advice from a real estate agent - their job is to sell houses, not improve your financial picture.

**Hypersion** · 07-07-2007, 02:18 PM

If you had a 30 year fixed loan and were building at least some equity I would say wait it out.

Unfortunately you have an interest only ARM, that will adjust, most likely higher, in 2 years. I would stop throwing good money after bad and sell.

**parafly** · 07-09-2007, 01:13 PM

Refinance into a fixed rate 30 year mortgage and get a second job.

**DebbieL** · 07-09-2007, 01:28 PM

Dump the house. You cannot afford it, and the sooner you dump it the less your losses (but there will be losses).

**Hina** · 07-11-2007, 07:32 AM

I want to thank all of you who responded to my post.

We met with the agent and looking at the comps and the market trend, I agree with DebbieL and Hypersion: this loan is poisonous and there is no win situation. I have to dump this house and yes, there will be Losses...the real estate agent was very clear in emphasizing that.
For the posters who suggested second jobs- that was my first thought also. In March I started a part time job in the evenings and weekends but no matter how much extra money I put towards this loan the bottom line is the same: we bought a house we can not afford and like Hypersion said it's throwing good money after bad money. Some of you suggested, refinancing, we tried that and not surprisingly were refused..no equity in the house, the price down sharply,who's going to offer re-finance?
So here are how the things stand: the realtor suggested putting the house on the market for $350,000 and hopefully once we get an offer he is going to talk to our banks( after his commission the total will be $329,000...he told us that he is sure to give up some of his 6% commission because the banks want to get most of their money back and they would ask the realtor to forgo some of his take) We HAVE to convince the first mortgage to share it's 330,000 payoff with the second mortgage company. He said the best scenario ( I call it wishful scenario) for us would be that the second mortgage company would forgive the debt and the worst of course that the banks don't agree to Short sell. The most likely scenario would be that the second mortgage would agree to forgive half of the mortgage in which case we would have to agree to pay close to $45,000 in a period of 7 years ( about $500 a month payment)
I was calculating the numbers so $15,000 for rent and $500 loan payment..we will still be saving close to $1000 a month. I pondered with the thought about not selling for another year ( some local analyst say that the price may increase 4 to 8 percent but even with the 8% increase it will be 25,000 to $30,000 Max and by then we would have paid another $36,000 in monthly mortgage) and I keep reminding myself it's a BIG if the value will indeed increase in a year.
Right now I am keeping my fingers crossed: First that there will be an offer for $350,000 and secondly that Ocwen would agree to forgive half of the $82,000

Once again thanks to all who responded.

**Hina** · 08-03-2007, 06:47 AM

Update: House ha been on the market for almost two weeks, not a single phone call. Meanwhile every other day I see new "For Sale' signd popping out in our area.

Our contract wit the real esate agent will expire in about 5 weeeks. It seems like we are heading for "deed in leiu of forclosure'. If that does not work then bankrupcy seems the only option to get rid of the house.

The amount of stress and anxiety owning this house has given us, I belive I am willing to trade it for the shame and humilation of bankruptcy.

Both I and my husabnd are striving to look ahead. It' going to be renting places for a long long time.. till we can save atleat 20% down paymnet

**simpleyme** · 08-03-2007, 07:33 AM

I hope things work out for you and you get rid of that house one way or another very soon

**LivingAlmostLarge** · 08-03-2007, 09:56 AM

Sorry to hear about your troubles. Okay worse case scenario, what happens if you cannot sell the house? Can you really get a deed in lieu of foreclosure?

Can you borrow money from your family? Are you both working 2 jobs? I only ask because maybe you can get some headway and traction to buy out a short sale and get out alive?

Do you have any savings? What is the situation with regards to being able to rent? I mean will you be able to with a bad credit history?

**DebbieL** · 08-03-2007, 10:03 AM

Best of luck to you. That's why I'm a happy renter for now (and the future - until our stupid housing insanity crashes where I live). The current average price (and believe me this is for a nothing special house) here is $570K, and the average household income is around 60K - something's got to give. It's insane.

**Ima saver** · 08-03-2007, 10:55 AM

I am so sorry to hear of your troubles. I hope things work out somehow.

Our Real Estate agent suggests 'Short sell'