Thinking about a foreclosure in WA

**UnderwaterWA** · 04-06-2012, 01:25 PM

Hello,

I purchased my home in 2007 for 385k at 6.625% on a Fannie Mae interest only loan for the first 10 years, then I&P for the last 20 years. We didn't have to pay anything down for the loan and this is a 100% loan not an 80/20. The house is about $130k underwater.

We were advised to do this due to where the market was, and we were sure we could refinance to get us a better 30 year fixed loan a year or two after purchasing our home. Luckily my wife's credit was not in that good of shape, so the house is only under my name. I don't care about my credit that much at this point due it being useless since nobody will give me a loan since my debt from this house takes up all my available credit. We tried refinancing recently under HARP 2.0 but were denied by Fannie Mae in regards to my loan being too much risk for them, even though LTV was supposedly thrown out the door. I think that is crap. Even if we could get a loan under HARP 2.0, I don't think its worth it since we are struggling to make payments as is. In another 4 years or so, we will have a much larger payment since we will be paying I&P.

I just had my wife's credit ran to see where she is in order to purchase a home under her name and foreclose on ours and it seems like we can do this. I am just worried that the foreclosure would effect her ability to buy a home or her credit score. Does anybody know if my foreclosure could effect her in any way?

It sounds like if I had to file bankruptcy it would effect her, so I am trying to avoid this. I did read our deed and we do have the clause in there that allows the bank to sell the property if we don't pay, so I think they would do a non-judicial foreclosure. I am also worried what it would mean for us since the foreclosure would happen in 2013. Does anybody know what I would end up paying in taxes.

Any advice would be helpful. I am getting in contact with a real estate specialist, that may refer us to an attorney.

Thank you.

UnderwaterWA

**UnderwaterWA** · 04-06-2012, 02:32 PM

Actually, we bought in 2006. My wife just corrected me.

**UnderWaterinWashington** · 04-21-2012, 07:17 PM

We also live in WA. Any updates?

Thanks

**justinbro** · 04-21-2012, 09:42 PM

it could be possible to buy a house in just your wifes name since she isn't on your current loan. on a conventional loan your spouses credit would not come into play with fha it might but a tricky you may have to write an explanation letter and you might have to claim your are broken up or something. but you would still not want to start missing payment until after she buys the other house because any credit cards your both have together can be effected by a preforclosure. credit cards may cancel your cards if you miss a mortgage payment or two. As for the taxes in washington state a purchase money loan is non-recourse so there is no cancellation of debt therefore no cancellation of debt taxes. you will have to verify this with and accoutant and be sure that the bank denotes the 1099 they send you as such.