Help - option to walk away from an investment property

[rsg1020]

I bought a condo in 2005 as a second home in Florida, that I then had for rental. I have an outstanding balance of $225k. Due to high foreclosure rate in this community, I saw 3 similar units in the MLS listing for $99k. The unit is currently sitting empty and is becoming to be a sinklhole, considering the mortgage and HOA fee I pay monthly which total $2k. Even with a tenant, I am on a negative cashflow because of the low rental rate and maintenance expenses required. Loan re-structuring will not work (had talked with the mortgage company) because it will only lower my monthly payment by $250, but with added extra out-of-pocket expense of close to $6k for closing cost. Loan modification is not an option because it's not a rental property. I am looking for an attorney to help me walk away from this property, without going into foreclosure. I wonder if deed-in-lieu of foreclosure is an option I can take. Please help and/or direct me to an attorney that can help me work this out. Thanks.

[Marshall Rosenbach Esq.]

RSG - there are several options. You can try a short sale. You can try a modification and get a better deal than the mortgage company told you. Have you submitted a loan modification package? On the other hand, if you have no interest in keeping the property, and you say you are upside down by $125k, maybe it makes sense to dispose of the property by a short sale or deed in lieu. In either case, you want your lender to agree a waiver of deficiency.

[rxmama]

Where in Florida? We are in a similar situation in Tampa (not nearly as underwater though- ugh!)

Good luck!

[rsg1020]

Thanks to both your prompt responses. The property is located in Naples, FL. I had spoken with the lender ... no deal on loan modification package because it's an investment property. I spoke with a realtor handling short sale ... her recommendation, if ever the lender agrees, not to pursue it because short sales ultimately end up in foreclosure. I do not know what a "waiver of deficency" is, and calling the lender personally only to be talked out by a customer rep because of my ignorance will be a waste of time. I am at a lost; hence, requires a good, knowledgeable real estate/tax attorney to help me go through this. BTW (rxmama), where you successful in walking away from your property without heavy repercussions?

[Marshall Rosenbach Esq.]

I think what your realtor is saying is that oftentimes, the banks are very slow in approving a short sale, and by the time it's approved or denied, the borrower is long into the foreclosure process. But I believe with the proper representation, you should be able to get a short sale approved on a timely basis.

[rxmama]

I've heard the same thing regarding the banks dragging their feet on approving short-sales... as if they think they're going to get a better offer down the road?! Hmmmm... some $ today vs. NO $ without a fight. Seems like an easy answer to me... but what do I know?

To my understanding, Florida is a deficiency state- thus, the bank can come after you for the "deficiency" bw what you sell the property for and what you owe on it. ... The attorney can help you negotiate that amount via a waiver and help protect you down the road. I wouldnt expect to completely walk-away without incurring some penalty (via the deficiency or tax purposes) though since this is not your primary home.

We're early in the short-sale/FC process and are just evaluating options and getting educated at this point. Will keep you posted.

[thegoat]

I have a mess in my condo in Tampa as well....at the Enclave...where is yours?

[rxmama]

I know the Enclave- nice area. I grew-up around there. My condo is in SOHO about a block from the Bayshore.

[rsg1020]

I have spoken yesterday at length to two lawfirms, one of which was rxmama's recommendation. I tried to get from them some measure of success or expectations, based on past results, in handling cases similar to mine. However, all I was able to get was a "no guarantee" answer. Do you guys know of any successful negotiation that had come out of this? Right now, in desperation, I just want to grant the deed to the lender, eating the loss and whatever deficiency, in terms of taxable 1099 the lender would issue, as a result.

[rsg1020]

To rxmama, what has the lawfirm done to help you so far that made you feel good about them? Thanks.

[rxmama]

Met with them yesturday to discuss our options- very enlightening. We discussed specifically the loss of our primary home vs the loss of an investment property. As expected, the loss of the investment property hurts you financially much harder than that of your primary residence regarding deficiency, taxes, etc. Typical FC is taking approx 12-18 months in Florida assuming you use an attorney to contest the bank and prolong the process as long as possible.