Relocation - Mortgage question

**tmvijai** · 06-24-2009, 06:53 AM

I know your situation is bad and sorry to hear that. It is not always about you when bank considers their options to do short sale or not. It takes months to get it all approved and done. So you can just leave and go. If do that, you are going to affected very badly. For them, its yet another foreclosure. So I don't think you can force them to take up on your attempt to moving to different state. That won't fly well. THats my opinion.

**Radiance** · 06-24-2009, 07:21 AM

Yeah, back to the drawing board.
Need to close down on my financial statement so "I" know where exactly where I am and make a decision from there.
I have an appointment with a HUD agency July 7th. Would like to have my financial statement ready by then.
Will report back.

I'll be ok.

**Radiance** · 06-24-2009, 07:43 AM

ok, remember thinking outside of the box. ... Open your mid...

I am 69 under water.
How about I offer the bank to approve a short sale and approve me an unsecured loan for half of deficiency?.

So the house is worth 200k and I owe 269. Let say I do find a buyer
The bank gets 200k from the buyer
I take an unsecured loan from them for 35k and they forgive the other 35k.
My loan would be at 6 years (like a car) at 6% with monthly payments of $580.
In exchange, they need to forgive the reminder deficiency of 35k and not to report me to the credit. The mortgage should show as "paid"

I would rent and have that extra payment for 6 years.
Better than having a foreclosure for 7 years, and being responsible for 69k plus taxes.

Crazy enough to work?

If I do move to Columbus, OH from Miami, FL my money situation would be even better since cost of living is lower and salaries are a little higher. I dont even need to mention the relocation to the lender.

**wincrasher** · 06-24-2009, 08:46 AM

I think it is crazy. All they can say is no, so I guess you could put it out there.

From their viewpoint you are asking:

1. Take a loss on your mortgage default.
2. Issue a new unsecured loan to someone who just defaulted. At a below market rate for unsecured, at that. Think that breaks Fed banking rules as well.
3. Not report forgiven loan loss to IRS (crime?)
4. Not report default to credit bureaus (fraud?)

This plan is so crazy, it just may work!

**Radiance** · 06-24-2009, 10:21 AM

I think it is not that bad, but maybe I am being delusional

1. Take a loss on your mortgage default.
A: Well, if I go foreclosure they will take a bigger loss and it will take longer for them to recover any moneys. I would stay rent free for a year and then they need to auction after that, under market value.

2. Issue a new unsecured loan to someone who just defaulted. At a below market rate for unsecured, at that. Think that breaks Fed banking rules as well.
A: I have not defaulted. nor do I plan to. I currently have a credit score close to 700. Consider I was able to get a hadrship approved with them without being late on my payments...
I do not know what are market rates for unsecured. It might need to be higher and/or longer term then.

3. Not report forgiven loan loss to IRS (crime?)
A: Yes. they might need to report this to IRS no matter what. So I would need to pay taxes over the 35k. Not sure it is crime since financial advisors tell me that having to pay taxes is a posibility, not a certain fate. But let's say they do report to the IRS. It would be part of the deal. I would need to make a payment agreement with the IRS.

4. Not report default to credit bureaus (fraud?)
A: This I understand has been done before, I am almost certain is not fraud, it would be part of the agreement, call it loan modification where they reduce the principal or transform the principal loan amount.

I am basically proposing a short sale where I am taking responsibility of p[art of teh deficiency just to make it more attractive to them. In short sales you are usually NOT responsible for the deficiency, only for the taxes. That is the main reason people even try short sale over foreclosure when possible.

I am including this on my plan as I would like for the HUD agent to review and advise on my July 7th appointment.

And then, the worse that can happen is that the lender representative laugh out loud and or I make him/her spill coffee out his/her nose...

**zetta** · 06-24-2009, 02:15 PM

I would see what they say about extending hardship or allowing a short sale before making the offer to pay back half of the short -- they might offer you a better deal. Don't tip your negotiating hand too soon.

**wincrasher** · 06-24-2009, 05:34 PM

I think you are operating under the assumption that a short sale doesn't damage your credit - I believe it will. It will be classified as a default or a write-down or charge off. You need to find out for sure.

If it does, and you go that way, the amount really doesn't matter - the damage is the same. So if they take a 30k loss or a 100k loss - your credit score would be the same.

Someone can chime in with more info on this point.

The only thing you get out of a short sale is that it is a final agreement - done right, they can't go after you for the loss.

Relocation - Mortgage question