Real estate trouble, please help

Question

In 2004 I purchased a condo very expensive. Since then the price has gone down $100k . Last year when the selling price was equal to my loan amount I agreed to transfer the title under my "friend's" name (through escrow). By contract she was to pay full mortgage payments until her credit was better and she could take over the loan (2 years max). She stopped making payments in March, though has a tenant living in there and making payments to her. It is useless for me to try to get the property back because now it is worth $40k less then my loan, and I cannot afford the payments. What would be a wise course of action at this point, with a just outcome?

Answer 1

Your options are few and they are all bad.  When someone (your friend) has bad credit it is because she doesn't pay her bills.  That is the reason she was willing to buy your condo.  If she qualified for a loan, she would have bought a unit for $50,000 less and saved a fortune. It is a valuable lesson for you in the future but that doesn't help you today.

I would call the lender and say "I messed up.  I don't deserve help but i sure need help".   It is legal for them to say that they forgive all missing payments if you will make the August 1 payment and keep making them.  Would you do that.  /

Answer 2

At this point, you either have to continue making the payments somehow, sell the place or let it foreclose.  You can try speaking to your bank's loss mitigation department to see if they'll accept a short sale or deed-in-lieu of foreclosure but that's their option - not yours.  My guess is that they may have already begun foreclosure proceedings since you haven't made a payment since March - which is five months.  Most states allow for foreclosure to begin at three months.

If you are allowed to go for a short sale or deed-in-lieu, that may save your credit somewhat.  If you allow the place to foreclose, that will be a red mark on your credit for at least seven years and will negatively affect your credit greatly.  Also, if you do allow the bank to foreclose and the bank sells the place for less than what they are owed by you, they can either sue for the remainder (this is an unlikely scenario) or forgive the amount for which the IRS will tax you on since they consider it income (this is the more likely scenario).

I wish you luck in all of this and hope for a good outcome.

Answer 3

You no longer have many rights, you can't sell it, you can't move in.    You gave away your claim, but kept the mortgage.

You can either pay it or let it foreclose, foreclosure is obviously the better option since you do not own the property anymore.

There will be no "just outcome", you made some serious mistakes and now you need to pay the piper for them.