I can't decide! - Loan Modification Forum

ORNV3 · 04-13-2009, 07:59 PM

I keep going back and forth on this one issue. I think about it all the time and can't seem to make a decision. I'm not sure what is the best move.

A bit of background: House is way underwater and I had to move out of state. I was able to rent the house but the rent only covers 1/2 the mortgage. I've decided that I will eventually go into foreclosure and will need to file BK due to the SOL on the unsecured debt.

My problem is that I still have the renters in the house, they've paid rent and I've got it sitting in an account. I just got a letter from the first mortgage stating that I need to pay about $3000 to bring the loan current. I actually have enough money from the renters to bring the 1st current.

The question is should I bring the first current and keep paying it with the rent money (every other month) until the renters move out?

The way I see it I have a few options.

1. Bring the 1st current and pay it every other month. This will delay the entire process, which might be a good thing because I don't want to file BK until next year.

2. Let the renters live there for free and give them their deposit back.

3. Tell the renters they have to move out and tell the bank it's vacant.

BK is going to be the end of all this.... I'm just trying to figure out what to do about the renters/rent.

Would it be better to have a bunch of money to turn over to the trustee when I file BK or would it be better to try to keep current as long as possible???

The Professor · 04-13-2009, 09:43 PM

If a BK filing is going to be the concluding act, best thing to do with the money is convert it into an exempt asset. There is a science to bankruptcy planning. Find yourself a scientist (lawyer familiar with asset protection).

Daniel

AZnOUT · 04-13-2009, 11:38 PM

This post raises an interesting question re: a timeline for foreclosure...while I'm sure this varies by lender and state (lender has made it very clear to me that no discussions will occur until and if I missed a few payments and/or received a NOD), I'm curious whether a payment on your mortgage every two to four months could prolong the foreclosure process to provide more than 7-8 mos. from missed payment to departure of free rent if you are fairly convinced that you will ultimately walk away. Seems like maximizing your rent free mos to better prepare for life without credit is the objective if you can. Example: timing of 4 payments over 15 mos before the lender gives up and forecloses (may even make the payments on the 1st only given the 2nd is so far under that they are unlikely to foreclose). Any view from those whom have done this? Would it prolong the process (understanding not everyone wants to prolong the inevitable)? It seems to be valuable delay tactic of completely eliminating your other debts and building a cash reserve. I realize the damage on your credit report (seems to be no worse than the actual foreclosure), but seems like it can provide time to review market recovery and/or provide additional opportunities to push the lenders to eventually considering principal reductions. Thoughts?

ORNV3 · 04-14-2009, 01:21 PM

Professor,
I do agree with you that the best thing to do is use the money on exempt items. I'm just wondering if it's okay to take the rental money and not use it on the house payment. I guess it just feels wrong to me. However, it's not like I'm going to wait for the very last minute to let the renters know what's going on. I'll let them know so that they will have plenty of time to decide if they want to stay as long as possible or find another place. I do plan on refunding their entire deposit. Who knows, maybe they can even get cash for keys.

I don't need the money from the rental to survive, but there are plenty of exempt things/items that I could use that money for over the next 6 months or so.

I'm just worried that by not using the money for the house payment that I'll get in some kind of trouble or something when I go to file BK. Maybe I'm just paranoid!

ORNV3 · 04-14-2009, 01:26 PM

AZnOut -
I think I get what you're saying. For example is someone has a first and a second and they can't afford to make the full payment but they can afford to pay the first about every other month or so it might make sense to try to prolong the whole thing as long as possible. You would know that foreclosure is inevitable and that your credit will be terrible but.... you maybe you can stay where you're at for a rock bottom price as long as possible.

If the first mortgage is say $1000 and you have nice house and like the neighborhood and everything and a comparable rental would be equal to or more than that.... why not just see how long you can drag it out.

I guess it would depend on the individual situation. hhhmmm

maxx233 · 04-14-2009, 03:21 PM

ORNV,
Some things to consider off the top of my head:
1) will your lender even let you make payments every other month? Mine doesn't, they demand payment in full once it's reached 3 months past due. So you may be able to pull off "every other month" once, but I'd imagine it's not a very long lived solution?
2) I'm in a similar situation. I've had roommates pretty much forever in order to afford the mortgage. I told the mortgage company my hardship is loss of rental income. Really, my roommates are fine, my hardship is just a realization that I'd rather foreclose on my own prerogative than wait for a roommate to lose a job and force me to foreclose - but "roommates are gone" sounds better to the bank. Anywho - Once I decided I was walking though, I immediately let the roommates know what was going on. They wanted to know if they'd get free rent, and my answer was no. They're not the ones suffering the credit hit or probably taking a tax hit, etc - it's life as usual for them except that now there's a termination date for their stay there. What I did do for them though is offer to take one of them to the apartment I end up getting, and until then I gave him about 25% off rent. The others (a couple) I offered super cheap rent, pretty much just enough to cover my expenses having them there, and we agreed they'd move out after 4 months. That way they can get their own place, which they could never afford to save up for before, and they're gone (they bug me) before the minimum date I have to leave by - leaving me able to really enjoy my house for a month. In exchange for the lowered rent amounts everybody has to pay in cash now - which goes straight to my safety deposit box, and nobody's allowed to answer the door should anyone come knocking, such as the lender checking on who lives there. This works out good for everyone involved and I think is a fair deal.

You may consider finding out with your lender if paying every other month is even going to do anything for you/if they'll even accept the payments to allow you to keep the house. If not, you might just let your tenants know what's going on, cut them a sweet cash deal to soften the blow, and stash the cash knowing you did your due diligence to at least try giving the lender that money. You might also want to consult with an attorney

But as far as I know, you're the responsible owner of the property til they foreclose you, and it's within your rights to rent it out and there's no right to that money by the lender (it's not what the debt is secured by.)

AZnOUT · 04-14-2009, 03:45 PM

ORNV3 -

That is what I'm driving at where the financial analysis (and unknown direction of housing recovery) and timing for foreclosure are more important to your financial future than market stabilization (deeply underwater with nominal downpayment). I live in a nice neighborhood with many foreclosures/short sales. I estimate that I'm underwater $400k or so with dim prospects for recovery in the near term (5 yrs.). The thought of banking $6-7K (1st is $5k) per month in exchange for a good credit history becomes more appealing every month (especially with local rentals in the $2k range)...anti-deficiency protection, no debt forgiveness income, etc. Prolonging the process and forcing the lenders hand seems to be the most beneficial approach.

ORNV3 · 04-14-2009, 05:18 PM

Maxx233,
Thanks for responding. Unfortunately I live in another state and use a property management company to deal with the renters (at the time it seemed easier and smarter). I wish I knew the people and could make some kind of cash deal with them.

Anyway... I don't really want to give any more money to the bank. I've paid them basically all of my money over the last few years. I'm just worried about how it will look when I go to file BK. That's really my only concern. I will do right by the renters for sure... they'll probably get a few free months in the end at least.

dogatemy · 04-15-2009, 10:05 AM

I firmly believe you should include the tenants in the decision process. The fact that you are debating the idea indicates you have a moral compass and I would stick with it.

If my landlord said, "hey.. I can evict you in 30 days and give you your deposit back.. or I can keep your deposit and you can stay in the house rent-free as long as possible (which could be many months)".. I would let him keep the deposit and hang out rent-free.

maxx233 · 04-15-2009, 12:22 PM

Yeah, fire the management co and just fill the tenants in. I would definitely consult with a BK attorney regarding the legal, not moral, implifications. But here's how I see it: The house is deeded to you, it's still your property to do with what you will until it's taken back and sold. If you have tenants in there, and the plumbing breaks - you're responsible to fix it. If the tree in the driveway is dead and falls over on someone - you're responsible for it. Those are liabilities you assume still. Therefore, I would think, you should also be perfectly able to continue collecting rent as that's a right you still assume until the property is taken and sold. They shouldn't have any legal right to the money you collect on rent before they take posession of the property any more than they have legal liability if something were to happen before they take posession. Just my $.02 - ask a BK lawyer! (and let us know)

ORNV3 · 04-15-2009, 01:21 PM

I have a contract with the property management company thru the end of August when the lease is up. Can I just tell them that I'm letting the house go and that we need to end the contract? I'm not sure if I should contact the management company first or the renters themselves. I should add that the renters are college boys....

ORNV3 · 04-15-2009, 01:32 PM

Maybe I'll just contact the property manager and tell him what's up. I honestly don't care if the renters move out or if they live there for free.

I really don't even want the money because it feels morally wrong to take it. When I talk to other people about it they think I should get as much money as I can and run with it. Doesn't feel right to me. If I were still living in the house I would be totally fine with living there for free as long as possible, but taking other people's money and not holding up my end of the deal seems off.

Maybe they can just pay the HOA and enough to cover insurance and taxes and see how long they can make it before they get kicked out. I just want to move on. I can't wait for next year so I can be done with this whole mess.

kent302 · 04-16-2009, 08:34 AM

If I feel the way you do, I'd take the money and give a "bailout" to the renters or donate the rest to charity.
I say that is because the financial wizards that set up this game of bankers win when home prices go up, taxpayers lose when home prices fall.

atfavs70 · 04-16-2009, 10:15 AM

ORNV3

Sine you are contemplating BK, be careful with what's called "fraudulent conveyance". Best seek an ATTY for a clear understanding of that.

Good Luck

ORNV3 · 04-16-2009, 06:44 PM

Thanks for the input everyone

I think I'll just hold on to the money that the renters have given me so far. I'm not ready to file BK yet so I'll just keep it in an account like one attorney that I talked to suggested. Maybe when it gets closer to filing time I'll talk to the attorney again and see what I should do about it. Again... I don't even care about the money, I just want this whole thing to be as clean as possible.

I'm going to write an email to my property manager this weekend and tell him what's up. I'm scared. I don't know why.

Enough Already · 04-17-2009, 11:44 AM

ORNV3,
I think your plan to be as up front as possible is the best way to go. That will be best for everyone involved.

Good luck, and keep us posted.

ORNV3 · 04-22-2009, 01:26 PM

I finally told the property manager today, he immediately forwarded my email to my former real estate agent. The realtor called me and asked if he could give my number to his partner who specializes in short-sales. I just talked to her and she's going to talk to the banks and see if sort-sale is an option. I doubt that it is an option but what the heck, I've got nothing to loose now. I told her that I would only be interested if both lenders would agree to release me from any future liability.

As far as the rent goes, I guess I'll just keep getting it and saving it and see what happens for now. Maybe I can save up enough money to settle the second and not have to file BK.

ORNV3 · 05-08-2009, 08:43 AM

Just thought I would update....

Just faxed in all the paperwork for the short sale, it looks like we're going to list it for $152000 and lower it if we don't get an offer in 2 weeks. I bought the house for $308000 in 2006, how sad

Anyway, the renters now know what's going on and they can decide if they want to stay in the house or end the lease early.

I feel better trying for the short sale and letting everyone know what's up, I'm not hopeful but at least I can say I tried.

ORNV3 · 05-08-2009, 09:11 AM

I just thought of a question... if this actually works.

If I do get a short sale to go through, will there be tax consequences? The house was purchased as my primary residence and I live there for 2 years.

azpoor · 05-08-2009, 05:10 PM

From what I know, doing a short sale could bring a deficiency judgment against you and maybe tax consequences. I'd pay for a real estate attorney to review your short sale docs before you sign anything. I hear the banks are slipping things in to get more out of you.

ORNV3 · 05-08-2009, 06:13 PM

I won't sign anything unless I have an attorney look things over. The whole thing is pointless to me if they can still get a deficiency judgment and/or if I will be taxed on the forgiven debt. I'll just wait and see if I get an offer and if the banks accept it. Then I'll get someone to look over the docs before I sign them.

If I do eventually need an attorney where should I find one. I live in Oregon but the house is in Nevada. Would it be best to have someone who is familiar with Nevada law or better to have someone close by?

atfavs70 · 05-10-2009, 12:28 AM

Foreclosure and short sale resulting to a transaction wherein the outcome is less than the loan amount will trigger a 1099 reporting. The IRS treats that as income and will be taxed as such. However, if the house was occupied for 2 years, even if the time of occupancy was staggered, you are allowed an exemption of $250k single or $500k if married plus any permanent expenditures that you incurred that increased the value of the home such as the cost of a adding a swimming pool.

azpoor · 05-10-2009, 05:35 PM

Regarding tax consequences, check out the IRS' Mortgage Forgiveness Debt Relief Act of 2007. It's on the irs.gov website.

04-13-2009, 07:59 PM	#1 (permalink)
ORNV3 Senior Member Join Date: Jan 2009 Posts: 168 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	I can't decide! I keep going back and forth on this one issue. I think about it all the time and can't seem to make a decision. I'm not sure what is the best move. A bit of background: House is way underwater and I had to move out of state. I was able to rent the house but the rent only covers 1/2 the mortgage. I've decided that I will eventually go into foreclosure and will need to file BK due to the SOL on the unsecured debt. My problem is that I still have the renters in the house, they've paid rent and I've got it sitting in an account. I just got a letter from the first mortgage stating that I need to pay about $3000 to bring the loan current. I actually have enough money from the renters to bring the 1st current. The question is should I bring the first current and keep paying it with the rent money (every other month) until the renters move out? The way I see it I have a few options. 1. Bring the 1st current and pay it every other month. This will delay the entire process, which might be a good thing because I don't want to file BK until next year. 2. Let the renters live there for free and give them their deposit back. 3. Tell the renters they have to move out and tell the bank it's vacant. BK is going to be the end of all this.... I'm just trying to figure out what to do about the renters/rent. Would it be better to have a bunch of money to turn over to the trustee when I file BK or would it be better to try to keep current as long as possible???

04-13-2009, 09:43 PM	#2 (permalink)
The Professor Senior Member Join Date: Jul 2008 Location: 49er Gold Country Posts: 1,543 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: I can't decide! If a BK filing is going to be the concluding act, best thing to do with the money is convert it into an exempt asset. There is a science to bankruptcy planning. Find yourself a scientist (lawyer familiar with asset protection). Daniel

04-13-2009, 11:38 PM	#3 (permalink)
AZnOUT Member Join Date: Mar 2009 Posts: 5 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: I can't decide! This post raises an interesting question re: a timeline for foreclosure...while I'm sure this varies by lender and state (lender has made it very clear to me that no discussions will occur until and if I missed a few payments and/or received a NOD), I'm curious whether a payment on your mortgage every two to four months could prolong the foreclosure process to provide more than 7-8 mos. from missed payment to departure of free rent if you are fairly convinced that you will ultimately walk away. Seems like maximizing your rent free mos to better prepare for life without credit is the objective if you can. Example: timing of 4 payments over 15 mos before the lender gives up and forecloses (may even make the payments on the 1st only given the 2nd is so far under that they are unlikely to foreclose). Any view from those whom have done this? Would it prolong the process (understanding not everyone wants to prolong the inevitable)? It seems to be valuable delay tactic of completely eliminating your other debts and building a cash reserve. I realize the damage on your credit report (seems to be no worse than the actual foreclosure), but seems like it can provide time to review market recovery and/or provide additional opportunities to push the lenders to eventually considering principal reductions. Thoughts?

04-14-2009, 01:21 PM	#4 (permalink)
ORNV3 Senior Member Join Date: Jan 2009 Posts: 168 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: I can't decide! Professor, I do agree with you that the best thing to do is use the money on exempt items. I'm just wondering if it's okay to take the rental money and not use it on the house payment. I guess it just feels wrong to me. However, it's not like I'm going to wait for the very last minute to let the renters know what's going on. I'll let them know so that they will have plenty of time to decide if they want to stay as long as possible or find another place. I do plan on refunding their entire deposit. Who knows, maybe they can even get cash for keys. I don't need the money from the rental to survive, but there are plenty of exempt things/items that I could use that money for over the next 6 months or so. I'm just worried that by not using the money for the house payment that I'll get in some kind of trouble or something when I go to file BK. Maybe I'm just paranoid!

04-14-2009, 01:26 PM	#5 (permalink)
ORNV3 Senior Member Join Date: Jan 2009 Posts: 168 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: I can't decide! AZnOut - I think I get what you're saying. For example is someone has a first and a second and they can't afford to make the full payment but they can afford to pay the first about every other month or so it might make sense to try to prolong the whole thing as long as possible. You would know that foreclosure is inevitable and that your credit will be terrible but.... you maybe you can stay where you're at for a rock bottom price as long as possible. If the first mortgage is say $1000 and you have nice house and like the neighborhood and everything and a comparable rental would be equal to or more than that.... why not just see how long you can drag it out. I guess it would depend on the individual situation. hhhmmm

04-14-2009, 03:21 PM	#6 (permalink)
maxx233 Senior Member Join Date: Mar 2009 Location: California Posts: 58 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: I can't decide! ORNV, Some things to consider off the top of my head: 1) will your lender even let you make payments every other month? Mine doesn't, they demand payment in full once it's reached 3 months past due. So you may be able to pull off "every other month" once, but I'd imagine it's not a very long lived solution? 2) I'm in a similar situation. I've had roommates pretty much forever in order to afford the mortgage. I told the mortgage company my hardship is loss of rental income. Really, my roommates are fine, my hardship is just a realization that I'd rather foreclose on my own prerogative than wait for a roommate to lose a job and force me to foreclose - but "roommates are gone" sounds better to the bank. Anywho - Once I decided I was walking though, I immediately let the roommates know what was going on. They wanted to know if they'd get free rent, and my answer was no. They're not the ones suffering the credit hit or probably taking a tax hit, etc - it's life as usual for them except that now there's a termination date for their stay there. What I did do for them though is offer to take one of them to the apartment I end up getting, and until then I gave him about 25% off rent. The others (a couple) I offered super cheap rent, pretty much just enough to cover my expenses having them there, and we agreed they'd move out after 4 months. That way they can get their own place, which they could never afford to save up for before, and they're gone (they bug me) before the minimum date I have to leave by - leaving me able to really enjoy my house for a month. In exchange for the lowered rent amounts everybody has to pay in cash now - which goes straight to my safety deposit box, and nobody's allowed to answer the door should anyone come knocking, such as the lender checking on who lives there. This works out good for everyone involved and I think is a fair deal. You may consider finding out with your lender if paying every other month is even going to do anything for you/if they'll even accept the payments to allow you to keep the house. If not, you might just let your tenants know what's going on, cut them a sweet cash deal to soften the blow, and stash the cash knowing you did your due diligence to at least try giving the lender that money. You might also want to consult with an attorney But as far as I know, you're the responsible owner of the property til they foreclose you, and it's within your rights to rent it out and there's no right to that money by the lender (it's not what the debt is secured by.)

04-14-2009, 03:45 PM	#7 (permalink)
AZnOUT Member Join Date: Mar 2009 Posts: 5 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: I can't decide! ORNV3 - That is what I'm driving at where the financial analysis (and unknown direction of housing recovery) and timing for foreclosure are more important to your financial future than market stabilization (deeply underwater with nominal downpayment). I live in a nice neighborhood with many foreclosures/short sales. I estimate that I'm underwater $400k or so with dim prospects for recovery in the near term (5 yrs.). The thought of banking $6-7K (1st is $5k) per month in exchange for a good credit history becomes more appealing every month (especially with local rentals in the $2k range)...anti-deficiency protection, no debt forgiveness income, etc. Prolonging the process and forcing the lenders hand seems to be the most beneficial approach.

04-14-2009, 05:18 PM	#8 (permalink)
ORNV3 Senior Member Join Date: Jan 2009 Posts: 168 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: I can't decide! Maxx233, Thanks for responding. Unfortunately I live in another state and use a property management company to deal with the renters (at the time it seemed easier and smarter). I wish I knew the people and could make some kind of cash deal with them. Anyway... I don't really want to give any more money to the bank. I've paid them basically all of my money over the last few years. I'm just worried about how it will look when I go to file BK. That's really my only concern. I will do right by the renters for sure... they'll probably get a few free months in the end at least.

04-15-2009, 10:05 AM	#9 (permalink)
dogatemy Senior Member Join Date: Mar 2009 Location: Phoenix, AZ Posts: 315 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: I can't decide! I firmly believe you should include the tenants in the decision process. The fact that you are debating the idea indicates you have a moral compass and I would stick with it. If my landlord said, "hey.. I can evict you in 30 days and give you your deposit back.. or I can keep your deposit and you can stay in the house rent-free as long as possible (which could be many months)".. I would let him keep the deposit and hang out rent-free.

04-15-2009, 12:22 PM	#10 (permalink)
maxx233 Senior Member Join Date: Mar 2009 Location: California Posts: 58 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: I can't decide! Yeah, fire the management co and just fill the tenants in. I would definitely consult with a BK attorney regarding the legal, not moral, implifications. But here's how I see it: The house is deeded to you, it's still your property to do with what you will until it's taken back and sold. If you have tenants in there, and the plumbing breaks - you're responsible to fix it. If the tree in the driveway is dead and falls over on someone - you're responsible for it. Those are liabilities you assume still. Therefore, I would think, you should also be perfectly able to continue collecting rent as that's a right you still assume until the property is taken and sold. They shouldn't have any legal right to the money you collect on rent before they take posession of the property any more than they have legal liability if something were to happen before they take posession. Just my $.02 - ask a BK lawyer! (and let us know)

04-15-2009, 01:21 PM	#11 (permalink)
ORNV3 Senior Member Join Date: Jan 2009 Posts: 168 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: I can't decide! I have a contract with the property management company thru the end of August when the lease is up. Can I just tell them that I'm letting the house go and that we need to end the contract? I'm not sure if I should contact the management company first or the renters themselves. I should add that the renters are college boys....

04-15-2009, 01:32 PM	#12 (permalink)
ORNV3 Senior Member Join Date: Jan 2009 Posts: 168 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: I can't decide! Maybe I'll just contact the property manager and tell him what's up. I honestly don't care if the renters move out or if they live there for free. I really don't even want the money because it feels morally wrong to take it. When I talk to other people about it they think I should get as much money as I can and run with it. Doesn't feel right to me. If I were still living in the house I would be totally fine with living there for free as long as possible, but taking other people's money and not holding up my end of the deal seems off. Maybe they can just pay the HOA and enough to cover insurance and taxes and see how long they can make it before they get kicked out. I just want to move on. I can't wait for next year so I can be done with this whole mess.

04-16-2009, 08:34 AM	#13 (permalink)
kent302 Senior Member Join Date: Mar 2009 Posts: 54 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: I can't decide! If I feel the way you do, I'd take the money and give a "bailout" to the renters or donate the rest to charity. I say that is because the financial wizards that set up this game of bankers win when home prices go up, taxpayers lose when home prices fall.

04-16-2009, 10:15 AM	#14 (permalink)
atfavs70 Member Join Date: Jan 2009 Posts: 7 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: I can't decide! ORNV3 Sine you are contemplating BK, be careful with what's called "fraudulent conveyance". Best seek an ATTY for a clear understanding of that. Good Luck

04-16-2009, 06:44 PM	#15 (permalink)
ORNV3 Senior Member Join Date: Jan 2009 Posts: 168 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: I can't decide! Thanks for the input everyone I think I'll just hold on to the money that the renters have given me so far. I'm not ready to file BK yet so I'll just keep it in an account like one attorney that I talked to suggested. Maybe when it gets closer to filing time I'll talk to the attorney again and see what I should do about it. Again... I don't even care about the money, I just want this whole thing to be as clean as possible. I'm going to write an email to my property manager this weekend and tell him what's up. I'm scared. I don't know why.

04-17-2009, 11:44 AM	#16 (permalink)
Enough Already Senior Member Join Date: Jan 2009 Posts: 438 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: I can't decide! ORNV3, I think your plan to be as up front as possible is the best way to go. That will be best for everyone involved. Good luck, and keep us posted.

04-22-2009, 01:26 PM	#17 (permalink)
ORNV3 Senior Member Join Date: Jan 2009 Posts: 168 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: I can't decide! I finally told the property manager today, he immediately forwarded my email to my former real estate agent. The realtor called me and asked if he could give my number to his partner who specializes in short-sales. I just talked to her and she's going to talk to the banks and see if sort-sale is an option. I doubt that it is an option but what the heck, I've got nothing to loose now. I told her that I would only be interested if both lenders would agree to release me from any future liability. As far as the rent goes, I guess I'll just keep getting it and saving it and see what happens for now. Maybe I can save up enough money to settle the second and not have to file BK.

05-08-2009, 08:43 AM	#18 (permalink)
ORNV3 Senior Member Join Date: Jan 2009 Posts: 168 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: I can't decide! Just thought I would update.... Just faxed in all the paperwork for the short sale, it looks like we're going to list it for $152000 and lower it if we don't get an offer in 2 weeks. I bought the house for $308000 in 2006, how sad Anyway, the renters now know what's going on and they can decide if they want to stay in the house or end the lease early. I feel better trying for the short sale and letting everyone know what's up, I'm not hopeful but at least I can say I tried.

05-08-2009, 09:11 AM	#19 (permalink)
ORNV3 Senior Member Join Date: Jan 2009 Posts: 168 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: I can't decide! I just thought of a question... if this actually works. If I do get a short sale to go through, will there be tax consequences? The house was purchased as my primary residence and I live there for 2 years.

05-08-2009, 05:10 PM	#20 (permalink)
azpoor Senior Member Join Date: Apr 2009 Posts: 60 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: I can't decide! From what I know, doing a short sale could bring a deficiency judgment against you and maybe tax consequences. I'd pay for a real estate attorney to review your short sale docs before you sign anything. I hear the banks are slipping things in to get more out of you.

05-08-2009, 06:13 PM	#21 (permalink)
ORNV3 Senior Member Join Date: Jan 2009 Posts: 168 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: I can't decide! I won't sign anything unless I have an attorney look things over. The whole thing is pointless to me if they can still get a deficiency judgment and/or if I will be taxed on the forgiven debt. I'll just wait and see if I get an offer and if the banks accept it. Then I'll get someone to look over the docs before I sign them. If I do eventually need an attorney where should I find one. I live in Oregon but the house is in Nevada. Would it be best to have someone who is familiar with Nevada law or better to have someone close by?

05-10-2009, 12:28 AM	#22 (permalink)
atfavs70 Member Join Date: Jan 2009 Posts: 7 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: I can't decide! Foreclosure and short sale resulting to a transaction wherein the outcome is less than the loan amount will trigger a 1099 reporting. The IRS treats that as income and will be taxed as such. However, if the house was occupied for 2 years, even if the time of occupancy was staggered, you are allowed an exemption of $250k single or $500k if married plus any permanent expenditures that you incurred that increased the value of the home such as the cost of a adding a swimming pool.

05-10-2009, 05:35 PM	#23 (permalink)
azpoor Senior Member Join Date: Apr 2009 Posts: 60 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: I can't decide! Regarding tax consequences, check out the IRS' Mortgage Forgiveness Debt Relief Act of 2007. It's on the irs.gov website.

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