possible exit strategy...?

[lithi78]

Hello everyone,

My investment partner and I have been thinking about an exit strategy on our investment property for quite some time now. Our lender (Countrywide) has not been able to help us with a loan modification and we are currently about $100k in the hole (loan bal $380k property values about $280k). The loan bal goes up every month about $1k since we are on the option arm program. In our case, what would be the best best; short sale, foreclosing or filing BK? I was thinking about filing BK since my thought process was that with any option, your credit will be adversly affected and since I have other outstanding debt such as credit cards and other loans that it might be feasable to go this route.

It is my understanding that either option will stay on your credit report for 7 years... Also, by filing BK, the lenders can not send you a 1099 at the end of the year since you filed BK? Any thoughts? We would of course get an attorney to represent us in any of these exit strategies... Your comments would be greatly appreciated!!

Thanks John

[Moe Bedard]

Hello John!

There is no simple answer as you know and yes, our advice will be to speak with an attorney on this because it is getting into serious legal territory and every state is different to how it treats foreclosures, deficiency judgments etc.

First, study your states laws. Sometimes it is best to just be foreclosed on, but that will be determined by the type of loans you have and your sates laws as well as what assets you have and want to protect.

Pretty much anything you do will adversely affect your credit. You just need to decide which one is best for you now and what will be best in the future.

If it was me in your situation. I would try for a loan mod, go for a short sale (most likely will not sell) and then a deed in lieu. The Banks want to see that you have tried to off the property in every way you can and then they will consider the DIL. If they don't then you have no alternative but to foreclose.

[lithi78]

Thanks for theresponse. Could you shed some light on the "deed in lieu". Does this mean that I would deed the property back to Countrywide and if so what are the ramifications if any on my end?

[tricia123]

SO I have thought the same thing in my situation, considering it now in fact. I mean if the bank won't help and I am going to go down anyway...why not at least wipe out some other items and get myself in a better position financially. SO do you know if you file BK first and include the property or do you let it be foreclosed and then file the BK?