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We owe 785k nd property worth 425k FL

Posted by Brian Brown on March 2, 2013 at 4:22am in Short Sale Discussions
Scenerairo...1st mortgage 625k followed by a 2nd HELOC 160k. FL Both mortgages were takenout out with Chase simotaniously 7 years ago at purchase. Property today would appraise around 400k to 425k. No finicial hardships in the picture. Assets $450k all of whick is in IRA's, 529 plans(three kids) and 401k's. Less than $10k in checking/savings. Lots of expenses with three kids but the current IO housing ratio is at 15%. We've benifit with the low interest rates because our current mortgage is an IO but in three more years the scenerio really changes. The IO payments will require principle and I anticipate out housing ratio then will be north of 30% and higher if rates move north a little. How did we get into this mess. We purchase the house at 100%+ financing...yes we received $20,000 at closing for window treatments. At the same time we owned a 2nd house with $200k in equity...we we rented it instead of selling and lost nearly all the equity by the time we sold it. Huge mistake looking back. It appears our best option is a short sale but will Chase work with us. The housing ratio is manageable today but when the IO turns to require principle we will not be able to afford it. We are open to moving out of the house if necessary to get the transaction done but not preferred because of the kiddos and their school. I was recently contacted by a realtor who presented the HAFA program where a non-profit could step in and purchase the house. You lease the propert back from them for 7% and you have the chance to buy the house 3 to 4 years down the road. Did a Loire research and it's for real but appears you need to be working with a realtor with short sale experience and a non-profit that is creditable. My ask of anyone reding this is their input on if they have came across a similiar situation and/or any thoughts or advice. Can I do something this year or do I need to wait until payment shock in a few years...of which the Mortgage Debit Forgiveness Act will likely be expired and then I'm going to have a gigantic tax bill on the any portion of a loan being forgiven if I were to be so lucky. Thanks reading and would appreciate any input.

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Replies

  • Brian Brown March 13, 2013 at 3:03am
    Brett, Bryant and Ron,
    Thank you all for your input into our situation. Not sure how this scenario is going to play out but you guys have provided a some additional info to consider.
    Thanks again,
    Brian
    • Bryant Tutas > Brian Brown March 13, 2013 at 3:41am

      I hope it all works out for you. Let me know if I can help in anyway.

  • Bryant Tutas March 3, 2013 at 1:48am

    Hi Brian. Property values are on the rise in Florida but it will be quite a few years before you are in an equity position again. You may have a hard time qualifying for HAFA and unfortunately this is the only program that I know of that allows the non-profit purchase/lease back. Remember you also can't do this of your investor is Fannie or Freddie as neither participate in HAFA.

    I personally did short sales on 2 of my properties in 2010 because I too was far upside down and wanted to unload the debt.

    I have done many short sale with Chase and have found them to be easy to work with.

    I have also done many short sales for folks that had very high assets and income with no hardship. My experience is that most short sales will be approved. If there is no hardship and the seller has a good financial standing then they may be required to make a cash contribution, sign a note or both at closing.

    This certainly something that would need to be negotiated as we go along.

    If you need some help let me know. I'm a Florida licensed real estate broker and have completed many short sales.

    Here's some info that will help.

    My Links

  • Jonathan Katz March 2, 2013 at 7:05am

    Brian,

         We process hundreds of short sales and some of the borrowers are not in a financial hardship. We would take your case on for sure and give it a shot to see if anything is possible. The worst case scenario is that they don't approve the short sale and you can try again later when things change. Non profits can purchase a property for a lease back, but those transactions are often scrutinized more than a traditional short sale.

    Hope this helps.

    310-564-6389

    Brett@ishortsalenow.com

    www.ishortsalenow.com

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