Short-term rental property: any hope?

[seemedlikeagoodidea]

I've tried reading through the loansafe forums for similar situations, but I can't find any scenarios that are much like ours. I'm hoping for some help with our next steps.

We have an investment home in Florida, which I market and rent out as a short-term vacation rental. We bought it 3 years ago at the peak of the frenzy there. We stretched ourselves to buy the house, based on optimistic projections and an inaccurate Good faith estimate (I think our broker purposely estimated prop taxes ridiculously low b/c we were unhappy that the monthly payments were higher than he verbally promised). Anyway, we took out an 80% primary (30 yr fixed rate), 10% variable HELOC, and took equity out of our primary home in CA to put 10% down. Last summer, we saw the signs and knew that our expenses at home and in FL would become unmanageable if rents slacked off. So we tried to sell the FL house, but had no luck b/c we needed to get almost what we paid for it to break even. We decided to get out of our CA home and reduce expenses by renting, and we were fortunate to sell it to someone who could pay cash! That helped somewhat. However, the rent from visitors has never been enough to cover monthly expenses, and we've been pouring money into keeping it. Now, the Sterling has dropped and our typical British guests are not booking. Furthermore, we're seeing cancellations and competition driving down rental rates. Although we were prepared to lose money for a short time, that was when we assumed the house would keep/rise in value. Now, it's likely that we'll have to wait 10 years just to get back to par. It may not be worth it to us to try to keep holding on if we can't get any kind of modification. Further, my husband is self-employed and has seen his work slow down recently, making things even tighter. I would prefer to keep the house, and I'm confident I can keep it booked pretty well because it is still one of the more desirable properties in the area, but we need the expenses to come much closer to the level of income it generates.

Our 1st and 2nd are both with Countrywide. We are currently behind, having not paid Jan, Feb, and now March payments. We received a notice of intent, and I've talked to Countrywide about providing them our income/expenses to see if we "qualify" for any programs.

I'm trying to figure out what they are going to look for in those numbers (specific ratios, for example) and what their steps will be. Do we have to provide that info by phone before we send a hardship letter, for instance? Or would we better off sending them a complete picture of our circumstances in written form? Is there even any hope in pursuing a modification in this case?

If there is no chance of modifying it, what will happen if we just let the foreclosure process proceed in Florida. Should we try to do a deed in lieu? What we can do to limit the consequences, especially avoiding a judgment for the difference.

Also, I do have renters staying at the house through March 27, and others due to stay there later in April, so I need to make sure I understand the timing and likely actions CW will take to inspect or secure the house. I definitely don't want to be responsible for ruining a nice family's vacation

Lastly, has anyone faced anything similar with good results? Would hiring an attorney make any difference in this case?

Thanks in advance!
Lisa

[Moe Bedard]

Hi Lisa,


Welcome to the forum and thank you for joining............


What you would need to do first is to speak with a real estate foreclosure attorney in Florida that understands the deficiciency laws and would be able to let you know the worst case scenario because you have other assets.........and then make a decision from there after hearing the options.

You can go through Home Retention and they will let you know what information they will need you to fax in to proceed..........if modification is going to be the best route to take.................

CW Home Retention
1-800-669-0102


this is what they ask you to get together from their website...........

Your Loan Number and Property Address
Bank Statements and Tax Returns for the past two (2) months
Recent income documents (e.g., pay stubs)
List of current expenses
Brief explanation of your current financial circumstances warranting assistance

[seemedlikeagoodidea]

Thanks ***,

I guess my question was more about what they are looking FOR in all those numbers I give them. Actually, the phone rep said they want only total income and total expenses verbally to determine if they will go any further with assistance. Does anyone have any idea what secret formula they will feed those amounts into to make that decision?

[Moe Bedard]

there isn't any secret or magic formula.................you would need to give an accurate financial picture in order for a modification to be of any help. The lenders want to make sure that you can afford the house and expenses that go with it and not just the mortgage alone.