Hot Real Estate Market - Would like to list - Need Advice

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Housebroken13

LoanSafe Member
Jul 17, 2009
820
13
18
Hi,

We are located in CT. right now home prices are skyrocketing around us due to low inventory and exodus from NY State.

We have a home loan being serviced by Gregory Funding (servicing rights recently transferred from Mr. Cooper).

Our home loan was discharged and not reaffirmed in a 2007 Chapter 7 BK and was modified at the time.

Right now my mortgage statement says:
- Current Principal Balance: $201,948.92
- Deferred Principal Balance: $80,396.36

We recently had a realtor come put to so a formal appraisal of the property and he said he would list the home at $299,999.

My question is if we were to sell for that price (or higher as most home are selling above list price) would we be obligated to pay the deferred balance considering there was a discharge? Would the servicer work with us on potentially paying less?

I guess my leverage would be we could walk away at any time and they wouldn't get a red cent.

Thanks in advance!
 

Jzone

LoanSafe Member
Jun 20, 2017
226
31
28
70
Hi,

We are located in CT. right now home prices are skyrocketing around us due to low inventory and exodus from NY State.

We have a home loan being serviced by Gregory Funding (servicing rights recently transferred from Mr. Cooper).

Our home loan was discharged and not reaffirmed in a 2007 Chapter 7 BK and was modified at the time.

Right now my mortgage statement says:
- Current Principal Balance: $201,948.92
- Deferred Principal Balance: $80,396.36

We recently had a realtor come put to so a formal appraisal of the property and he said he would list the home at $299,999.

My question is if we were to sell for that price (or higher as most home are selling above list price) would we be obligated to pay the deferred balance considering there was a discharge? Would the servicer work with us on potentially paying less?

I guess my leverage would be we could walk away at any time and they wouldn't get a red cent.

Thanks in advance!
Is the deferred balance secured by a lien? If it is, that lien will need to be settled/paid/negotiated. The buyer needs a clear title and if there is an outstanding lien, the sale would not close.
 

OneHugeMess

LoanSafe Member
May 30, 2016
612
55
28
I have terrible news for you. Likely, you'll need to bring CASH to Closing or try to get short sale approval. Your payoff is $282,345.28. A Standard Realtors Commission of 6% would be about $18,000. Meaning, you are $345.28 SHORT, from even completing the sale. And that is not even including the Buyers Closing Costs you'll have to pay, or any other surprise repairs or things that come up.

To answer your original question, the "deferred principle" balance, is the amount due upon maturity or payoff of the Loan. This amount would become due, upon sale or a refinance. In all likelihood, the servicing company (Gregory) would be unwilling to work with you, and would only be willing to accept a short payoff of a few thousand dollars, if need be.

If you want my advice, I would attempt a refinance to a lower rate, and stick it out. Otherwise, you are looking at basically nothing from selling the home.

I guess my leverage would be we could walk away at any time and they wouldn't get a red cent.
They will just foreclose on the home, and recover (almost all) of their money upon sale. Not only that, but this would destroy your credit, and make it very hard to lease or rent a new home.
 

OneHugeMess

LoanSafe Member
May 30, 2016
612
55
28
One last thought -- if you are going to walk away from the home, is there any possible way you could rent it out? You could hire a professional management company to handle most of the work, and you could get a Quality Home Warranty to cover repair expenses and probably still net a profit.
 

Housebroken13

LoanSafe Member
Jul 17, 2009
820
13
18
Thanks for the feedback; albeit not the best news.

We could certainly rent. The market rental rate is higher than our current mortgage payment. Current payment is $1630; rental rates for a property like ours are around $2000. I'd have to hire a property management company as I do not want to be a landlord. Not to mention there currently is a moratorium on evictions so its not the best strategy in today's political climate.

We are in the process of replacing windows, modest kitchen remodel (very dated) and modest basement remodel. I'm betting my hopes that we would get an offer above the $299,999 once these projects are done. The realtor said we have no competition within a 1/4 of our home.

Per haps we do go the refinance route. I'm thinking something may be amiss with the original modification so I'm going to go dig up that paperwork to review. The loan has changed hands so many times...

We plan on meeting with a mortgage broker in the next 2 weeks to see what options we might have. Even if they are limited. I do think we could come up with some cash at closing; and could swing at least a 10% down payment.
 

OneHugeMess

LoanSafe Member
May 30, 2016
612
55
28
We are in the process of replacing windows, modest kitchen remodel (very dated) and modest basement remodel. I'm betting my hopes that we would get an offer above the $299,999 once these projects are done. The realtor said we have no competition within a 1/4 of our home.
If I were in your shoes... I would invest that money into new paint, and potentially carpet or flooring, and I would focus on getting a deal on kitchen appliances (like Lowes Returns, Sears Outlet, or Scratch and Dent)... to get it rental ready, and I would rent it out.

Just because something is scratch and dent, doesn't make it worthless. Many times, the "scratch" is on the side of an appliance and can't be seen, or minor in nature -- which will allow it to blend in with the home. You don't need brand new appliances to sell or rent, they just have to work and be clean.

Rent out the home, and continue to pay down the loan. Maybe Refinance into a Lower Rate & Term (20yr or 25yr) -- which you would want to do before renting out, for the best rates as an owner-occupied property.

Erik Sandstrom is a great guy if you are looking for a broker. He won't steer you wrong or give you a terrible loan. https://www.yelp.com/biz/erik-sandstrom-prime-lending-san-diego


Not to mention there currently is a moratorium on evictions so its not the best strategy in today's political climate.
As long as the tenant has a good job in a good field, and good credit -- you shouldn't have a problem collecting rent. Just make sure you thoroughly research property management companies in your area and ask for references in addition to reading reviews.