I am trying to sell my house before I have to take a pay cut at work.
Because of the current state of the market, I was wondering how much
damage a foreclosure would do to my credit, and for how long? I have
excellent credit, but, I’m almost to the point where I’m willing to take
the risk, just to get out.
Hey there, foreclosure will damage your credit, yes… in your case there would be several options available. Lets start with the basics though:
Where are you located and what are the stats on your home and area?
Example, you owe $100k, your home is worth $105k, and the market around you is dead.
What bank is your loan with?
How long have you lived there?
Chase
Chase,
To begin, I am located in Palmdale California, it’s about 60 miles north of Los Angeles. While the market has slowed considerably, there is still new construction all around. I owe roughly $427,000 and the house is worth about $445,000, I took out some money earlier this year in a refi, turns out that wasn’t the best move. I have a loan with Countrywide and one with Chase (not you, or is it?). In November I will have lived here for 2 years. I’m not looking to make any money off of the house, I’ve already used the money i would have made, I just need to cover closing costs. I guess I should also tell you that i’m in the middle of a divorce and maybe the pressure of that, and work, and selling a house are getting to me, causing me to come up with this plan where i move to an apartment and start over before forclosure ruins my credit.
Since my original post, I found out that there was a major problem with my real estate agents’ listing service. It turns out that about 3/4 of thier listings were not being posted. This meant that nobody was seeing them, so, as of tommorrow, my house will be a new listing all over again. Maybe that will help things along. we’ll just have to wait and see.
Okay,
Well in your situation there is really only one option, and that is a short-sale. You wouldn’t be able to do a deed-in-lieu(give the home back basically) due to there being two mortgages. And no, I’m not that Chase, 
Do you think the agent will be able to get it sold, if not, then someone needs to begin negotiating on the liens, especially that 2nd, to get them talked down some so your agent can sell it. I can help you with that if needed. What I can do is talk to you, get a few documents from you via mail or fax and get the shortsale worked out for you. My compensation would be an agreement with your listing agent to give me a percentage of the commission when the home sold to cover my time in the shortsale. On the other hand, the agent couldn’t sell it without getting pay-off lowered so it would be a win win all around.
It takes approx 30 days for a short sale to be completed and another 30 days to close.
Let me know!
Thanks,
Chase Gochnauer
Is anyone else thinking what I’m thinking here?
Keith
Chase,
I think the place will sell, we just lost some time with the whole computer deal. I’ll just have to be patient and see what happens now.
Keith,
Are you thinking about buying my house? Or are you thinking that I have too much on my plate and I’m going to go nuts?
Thought I’d chime in and address your initial question. Foreclosure will cause significant damage to your credit record and will follow you around for the next 7 years. That being said, chances are that you could qualify for a new mortgage in 2-3 years if everything else was spotless.
A short sale is probably your best bet - a 445K sale price isn’t going to cover your 427K outstanding debt unless you bring cash to closing.
I agree with swg. Say it sells for $445k, assuming not even any concessions, if you are paying a 5% commission you will walk away with about $423k, not including seller fees, and that the buyer doesn’t want closing costs and there is 0 negotiation. A shortsale cannot hurt to at least find out if the bank is willing to take a discount.
Chase
<<Are you thinking about buying my house? Or are you thinking that I have too much on my plate and I’m going to go nuts?>>
No, I’m thinking that RDR is jumping the gun saying, “Well in your situation there is really only one option, and that is a short-sale” and then proceeding to tell you how HE can bail you out (edited out) and that you need to contact him right away (also edited out)…like a jackal wating to pick the bones as clean as possible, when in fact there are several ways to proceed.
Keith
Keith,
Then I’m curious to know the other alternatives, perhaps I’m just missing something.
A sub-2 would basically be out of the question due to there being little/no equity.
A straight out sale would not net the seller enough to walk away.
A lease option/rental would not eliminate any problem because if there were any issues with the tenant the seller would not be able to support the property due to the pay cut and fall behind anyway, but now the home may possibly be in worse condition.
The other option would be a “deed-in-lieu” but that would not be possible due to there being two liens on the property.
You could work out a forebearance plan to try to catch up on your payments but that would be impossible due to the paycut.
The last alternative would be a short sale, which would negotiate down the 2nd mortgage with Chase to be able to sell the property outright, causing the least damage to credit as well as the quickest way to get the burden off of your chest.
If I am wrong about anything I just said, please let me know so I can change my course of action with other homeowners. My career is to help homeowners, while of course, making a few dollars myself. I would never put a homeowners best interests above making money, though.
As far as being pushy, if you waited 30 days until you decided a course of action, you would be 30 days back from getting the burden off your shoulders, as well as treading into the territory of missed payments as well. Granted, the bank may not be very receptive to a short sale at this point due to no deliquency and a few missed payments may be what is needed to get them to budge, but due to the short not needing to be more than 10-15k it might be possible.
This is my reasoning behind my “jumping the gun” about a short sale being the only option. If there are other options to be explored here, please share.
If offering help is “picking the bones” and the only way I can offer advice is to say “do a short sale” but “sorry, I cannot help you do this”, then what advice are we offering at all?
Thanks,
Chase
The question begs, “What does he want out of this”? If he is looking at making a profit at the expense of ruined credit for the next 5 to 7 years, then his priorities are misplaced. He should be looking at getting out from under the property before the foreclosure even if he needs to bring some money to the table to do it.
My issue is not with you offering help, it was with the statement that he only has one option - a shortsale and that you are the one that can take care of that for him but he has to act now…because you need 30 days for this and 30 days for that…
What most folks are not seeing is the part that had to be edited out for several Forum Rules violations. You rush into help for YOUR profit, not his relief – at least that was how your post read.
Keith
I never offered the homeowner a profit, I’m confused of that part, but I had assumed that bringing money to the table wasn’t an option if he was contemplating letting the home go and not just reducing the price… perhaps I was assuming.
In my mind there is only two options, letting the home go or a short sale, yes there is the ability of someone to bring $15k to close on an asset but i infered from his original comment that he did not want to.
Also the full amount of my comment started by saying(which is still there) “Do you think the agent will be able to get it sold, if not, then someone needs to begin negotiating on the liens, especially that 2nd, to get them talked down some so your agent can sell it.”
I was saying, if you think you can sell it at what you owe and the price it’s at, good, if not, then a short sale would be the next step.
I rushed in for a mutually beneficial relationship… if you do not think the services you as a business provide truely are a benefit to the client or homeowner, then what is the point of being in that type of business?
You rushed in for your business…read the rules about this - (No Advertising - do not post advertisements, solicitations, or offer your services and No “Contact Me” Posts - do not ask to be contacted by email or phone in your post and do not include your email address or phone number in the body of your post). If you want to “rush in for a mutually beneficial relationship…” then rush in off-line with an e-mail or a PM…
Keith