Wayne

[mattw]

I reside in FL and had a log cabin built in TN as an investment/2nd home.
Citimortgage obtained my loan after it was completed in Dec 2008. With the economy I couldn't sell it as an investment. So I wanted to rent it out on a nightly basis ( which is feasible in the high tourist area it is in). I could not afford the 7% interest rate on the loan and the cabin is appraised for 30k less than what I owe. I have tried to work with citimortgage since they have obtained the loan in Dec and got as far as them putting me in a forbearance program. After they set me up in the program which they said I had to do for Fannie May to modify the loan now they say the rules have changed and Fannie May won't do modifications on 2nd homes. I've wasted sending money to citimortgage on a loan that can't be modified so I'm trying to find out the best way to get out of this mess. Thanks to Citimortgage my credit is already messed up and I'm not so worried about my credit for 3 to 7 years my principle house in FL is almost paid off and my vehicles are fairly new. The other thing I need to mention is the Cabin and one other small rental house I have in TN is in my name only everything else I own is in both my name and my wife's. I don't know if that would make a difference in a bankruptcy or not? Also Citimortgage said they would not take the deed in lieu of foreclosure, and I'm concerned of the taxes I would have to pay on the deficiency of a short sale. So what are your suggestions. Thanks Wayne

[Evan Bedard]

Hi Mattw welcome and thank you for joining the forum.

Have you considered going the short sale route instead of foreclosure?

Negotiating Deficiency is Key when atempting a short sale:

With a short sale, the lender has three possible ways to handle the deficiency balance, which is the portion of the mortgage debt not covered by the sale of the home.

First, the lender can attempt to collect the deficiency balance from the seller after the property has closed.

Second, the lender may require the seller to sign an unsecured promissory note for the deficiency balance as a condition of agreeing to the short sale. If the new note is for less than the balance of the original debt, the difference would be considered canceled, or forgiven, debt.

Third, the lender may agree to cancel the entire deficiency balance.
You must negotiate for the release of both the property lien and the underlying personal debt secured by the note. If you fail to do this, the lender may not forgive the personal debt and it will become a collection.

It is wise to consult with an Attorney or Real Estate Agent who is familiar with Short Sale negotiation and has significant experience working with lenders. Keep in mind that Attorney’s fees or Realtor fees come out of the lender’s net proceeds, therefore, you should not have to pay out of your own pocket for an Attorney or Realtor to assist you with the transaction.