Could someone help us with some short sale advice?

Question

My husband and I want to do a short sale for a number of reasons:

1. I received a job offer in Miami and need to start in 30 days and we want to get out of the NY area

2. Our home has depreciated in value close to $30K in a year

3. If we rent it out, our mortgage is so high that we would still have to add an additional $700-$1000 a month ourselves

4. We can't afford to make the payments

5. There are no refinance options available to us (we've tried three different banks/companies

We were advised by our realtor (and a few things we've read) to go ahead and stop paying the mortgage since we are not currently behind, but are behind on ALL of our other bills. She's done a number of short sales and says the bank is more accepting of a short sale if the owner is late on payments. Is this true? We would like to stop paying since we will need the money to start elsewhere and we want to rent a place before our credit gets hit by the short sale.

Also, is it okay to move out of our place in 30 days if we decide to go the short sale route?

Answer 1

It appears that a short sale could be a viable option for you.  It's true that lenders will usually wait until you've missed a couple payments before they agree to a short sale but over the last year or so the climate has changed a little and some lenders will consider a short sale before you've missed a payment.  Obviously the lender wants to be sure that you actually CAN'T make the payments before they let you off the hook for some of the loan balance.

You definitely need to talk directly to your lender.  All lenders are different and handle short sales and foreclosures differently.  Try to talk to someone in their Loss Mitigation Department.  The short sale may be the best route for them as well if the only alternative is a foreclosure.  

If you have to miss a couple payments then realize that your credit will be affected immediately and that may have an affect on renting or buying in Florida.  Also, while the short sale is not quite as damaging to your credit as a foreclosure it is still serious and can remain on your credit report for a few years.

If your lender OKs a short sale then lower the price quickly until you get a viable offer.  Short sales can take a lot longer than a regular sale due to the paperwork etc. that needs to be done.

Good Luck!

Answer 2

You may want to consult a legal advisor before you start down that route:

But a few things:

1) short sale is not a sure thing, the bank is not in the business to loose monies, so if you have other assets etc the bank may not approve the sale, also remember the bank carries insurance on the loan, it may in the end be finically better for the lender to go into foreclosure and collect the insurance monies then approve the short sale

2) on moving in 30 days, you can do what ever you feel is in your best interest, but trying to sell a house in NY living in Florida will be a challenge, do you have family friends in ny to watch the house, ensure the place is not vandalized,  

Answer 3

Is it OK to move out of our place in 30 days?  You can move out at any time, whether you do the short sale or not.  There are the usual considerations of a vacant property being attractive to vandals and squatters, so leave some lights on timers, leave some curtains in windows, and for selling a table and chairs or something to sit and talk about property.

Don't stop paying your mortgage, but stop making full payments.  Pay your bills as they do affect your credit.  Pay half of mortgage, on time.  TALK to your lender and see what you can work out.  Tell them it's taking its toll, you've got a new job offer out of state, can't rent it out, can't sell it for more than the mortgage, etc. Talk to several people at lender, making sure you're aware of all your options with them.  Another is a Deed in Lieu of Foreclosure.