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Strategy Help Please

Discussion in 'Debt Settlement' started by crutch, Aug 23, 2013.

  1. crutch

    crutch LoanSafe Member

    State: VA
    Property Value: $115,000??? See explanation below
    1[SUP]st[/SUP] Lender: PFCU
    1[SUP]st[/SUP] Loan Balance: $98,000
    Purchase money? Yes____ No_X___
    2[SUP]nd[/SUP] Lender: US Bank
    2[SUP]nd[/SUP] Loan Balance: $63,000
    Purchase Money? Yes____ No_X___

    It is a house we moved out of after building another. Been vacant and on market for three years. The house is now in a state of disrepair. A leak of the chimney crown has caused moisture in the crawlspace. This has caused the solid hardwood floors to buckle and mold to grow in the crawlspace. The sill plate has rotted in one area and will have to be replaced.

    If there were no problems the value per CMA would maybe be $135,000 to $140,000. With these issues I am guessing $115,000.

    I am contemplating one of two things:

    1. Fill out the paperwork to send in to US Bank requesting that they consider a short sale.

    2. The second option I am thinking of is stopping payments on the 2nd with US Bank and settling that debt. Then selling the house for just enough to cover the first mortgage.

    What is everyone's thoughts? Is it a problem if I try option one first and see where that goes? If that doesn't work out and I move to option two, is it a big deal that will have my current financial info when it comes time to settle?

    Will US Bank pursue foreclosure since they may have some equity? That is one reason I am thinking of taking option one first so they will know from the hardship letter the property is now in disrepair.

    Thanks so much for any help you guys can provide
  2. Erik Sandstrom

    Erik Sandstrom Mortgage Expert - Call 1-800-779-4547

    Hi Crutch,
    Welcome to the forum!

    I'm not sure what state you live in however there are different foreclosure laws.

    In California here's an example:
    No deficiency judgment is permitted after a non-judicial foreclosure or for a foreclosure on a non-purchase money loan. If the foreclosure is judicial, a deficiency judgment is allowed if the foreclosure was not a purchase money loan. California’s one-action rule requires the lender to foreclose and sues for a deficiency at the same time. If the lender elects to foreclose only, it can’t elect to sue for a deficiency later on (again this only applies to judicial foreclosures.)

    We might be able to help you better understanding what state you live in.

    And a short sale is going to be the best direction if you're planning on purchasing a home in the near future with most mortgage programs today however FHA is starting to look very attractive to people with previous short sales, foreclosures, deed-in-lieu...etc.
  3. crutch

    crutch LoanSafe Member

    Thanks for replying Erik.

    The house is in VA. We are already in another house.

    One of the things I am concerned about is the amount of time a SS will take. I am thinking after 6 mos of nonpayment on the 2nd it will discharge and then I will begin negotiating a settlement which I know is somewhat contrary to the strategy of settling 2nd's but I really want to get out from under this house.
  4. Erik Sandstrom

    Erik Sandstrom Mortgage Expert - Call 1-800-779-4547

    In your state it sounds like they will come after you for a deficiency judgement for the difference between the sales price and what you owe. You're right about the statement on the second, and you may want to tell them upfront that they can either take some money or have the potential of getting nothing.

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