I have bought a house in 2004 in Sacramento & took 100k equity out of it and bought another house in bay area?

Question

I have bought a house in 2004 in sacramento and took 100k equity out of it and bought another house in bay area. Now my question is this I cannot afford both payments.As market is slow in Sacramneto I cannot even sell it there is no buyer. Can I forclosure that house & keep the 100k equity which I use to buy my another house where I am living now which is my primary residence. What should I do? I don't wanna file bankrupcy.Please advise.

Answer 1

First go to this very informative site and read EVERYTHING on it whether you think that it applies to you or not:

http://www.hud.gov/foreclosure/index.cfm

I am assuming that you put the ENTIRE 100k from the first house into the second one. If not, you certainly put SOME of it down, right? So, on the second house, you subtract the current principal amount that you owe from a current fair market appraisal of its value (whether or not you can find a buyer right now). If the difference is positive, that is how much actual equity you have in the house right now. It may be more or less than your original down payment was. If the difference is negative, you have gone upside-down and you actually owe more than the house is currently worth.

Here are the options that I would consider:

Whether or not, you have any equity in either house, go to the lenders, tell them you are having problems, and try to work out a small time-frame to explore options with them and protect your credit and avoid foreclosure. They should be willing to give you a couple of months if you have a good history with them.

If you have any reasonable amount of equity (10% of property value or more), consider negotiating a reverse-type mortgage or equity loan to use some of your equity to reduce your payments and allow you to hold on to these assets until the market comes back up

If you have a little equity, you might want to ask either one or both of the lenders if they will simply take the house and let you out of the debt completely without going through a foreclosure process. They might even pay you back some of your equity after they sell the house.

If you have no eqity, or you are upside-down, a lender MIGHT take the house back without foreclosure and work out a reasonable payment schedule with you for the difference (which may be unsecured if you have excellent credit, or which may be secured on some other asset that you hold). This will save your credit rating.

If you are going to attempt to keep both of these houses for any length of time, DEFINITELY rent ONE of them out in order to defray your payments. Use an AGENCY!!!!! It's worth it, believe me. But, don't sign any leases before you talk to the lenders.

Best of Luck and Bless You!!!

Answer 2

Too many unkowns to give an exact answer or advice - however in short the answer is no. If you allow the house to be foreclosed then you are giving up all rights to the property. The lender will more than likely auction the house and hope to simply recover the loan balance owed on the house. If the auction brings in less than the loan balance then the lender still has the right to recover the balance from you. I would communicate the situation with the lender as most lenders have programs in place to avoid these situations. They do not want to be in the real estate sales business as they lose money on most forclosures. They would rather work something out that would be more beneficial to both of you. At worst you could do a deed-in-lieu of foreclosure. This is voluntarily relenquishing the property and should only be done if the lender will provide this without recourse, meaning they can't come after you for any money owed after they auction the property. (get this in writing) However, I would suggest discounting this property and selling it yourself and chalk it up as a loss and lessons learned. I know 100k is tough to let go of but you certainly aren't going to get it through foreclosure or bankruptcy.

Answer 3

In the Sacramento Region Lender's are holding onto the property hoping that a buyer will come by and buy your property. Meaning that you are still responsible in finding a client while your FICO score's go down the tube. If you decide to buy another house you will more than likely have to go hard money in which the interest rates are in the double digits. If you can swing that type of payment why couldn't you of paid off your current mortgage? Talk to the Lender and see what type of payments you can make to bring you caught up. You will be amazed on payment plans most have for there clients. This month alone over 1000 short sales where reported in CA. I currently get about 20 a day in the Sacramento region and word around the buisness is that Lender's are not budging on Price or negotiation to a good deal for a buyer. They are still trying to get there money back. Find a good REALTOR who is going to do a good job and understands the Short Sale. Do Not... I repeat Do Not.. find a REALTOR who does not know how to handle a Short Sale. It makes it difficult for the rest of REALTORS and possible buyer's Agents who have questions about the property if the property while in Short Sale status is not correctly run. Need more advice, comp on your property in Sacramento contact me.

Answer 4

Some of the advice of the other posters is sound. You need to speak with a CPA and BK attorney ASAP. Not just because you may file BK, but because your rights as based on the BK laws, so you need to understand them and what your options are from a BK, Foreclosure and credit score standpoint (wage garnishments, etc.).

The refi loan for $100,000 is with recourse, meaning that you cant just walk away from the home and give the keys back to the bank. They will either sue you for the difference between what you owe them and what they get from the home sale (probably nothing) which means you will owe at least $100,000 (plus selling costs, etc.). Or the bank will forgive the debt, but send you a 1099-C, which means you will pay tax on the $100,000 forgiveness of debt, which taxes could be $20,000 or more depending on your tax bracket.

If you are insolvent, then you are okay, no one can sue you and you can file BK. But if you have a job, which I assume is so, then you are in trouble. Look forward to wage garnishment(s), etc. (or) a ruined credit rating for the next 7 to 10 years.

Finally, if you lied on either of the loan apps (put that they were owner-occupied on both), then you are up the creek without a paddle, because you have committed loan fraud. This would not matter since many people who invest do this to leverage mutliple properties, but since you are now in default, you wont be able to do a full discharge BK - if you lied on the loan app(s).

I cannot stress enough that you need to seek out wise CPA and attorney counsel now.

Answer 5

UK - yes they can do it with the equity, if you need for example £50,000 for a property and their property is worth that they they sell it to the finance company and get the 50k, I presume they are retired and too old for a mortgage but if they do it on the equity it means when they die the bank owns the property or owns the amount they releaed on the equity, the only other way it can be done is if they release the equity and pay so much back each month but it will cost them a lot more than the same amount mortgage. As for the credit rating here in UK it doesnt drop when you reach 18, if you have never had credit it has nothing to build up on to see how good you are at paying your debts, there will be companies that will give you a mortgage on a low credit score, Good Luck

Answer 6

Time to take that $100K equity back out, and use it to keep your payments made while you attempt to sell the other house. Or find a renter for it, if you can. Or use it to pay the difference between what you can actually get for that house and what you owe already.

Banks do have the right to attempt to collect on losses from foreclosure. They usually don't bother if you have nothing, but that's not the case for you. You don't want to have your credit trashed and have them come after you for their losses on top of it.

Get an equity line of credit on your primary home and start working on a better solution. Foreclosures are nasty, very damaging to credit, and they are public.

Answer 7

If they forclose and sell the house and don't recover the amount of the loan .they may be able to file judgement for the difference.
I would seek advice from an attorney or a good cpa.as there may be an issue on capitol gaines.

Answer 8

bankruptcy ..will stay with you and effect your ability to buy

you will end up paying....for someone to finance you (as you dumped on the previous lender)

try to stay above.....phone your people you owe money to..and ask..if they will accept a payment plan until the home is sold..


.....the market is slow..but as you enter spring..it is picking up..

winter is a slow.......for families..
now you have the 300 mile distance..working against you..
hire a realtor.........
a good one.....and follow the advice........give them all the priveledges...keys..etc..........

email the location and I will buy it for the 100K..????very serious..price, etc. ready to go ..have you out in 2-3 months.
[e-mail] a real bona fide buyer.

www.realtor.com

Answer 9

Hey bro sorry to hear that you have to be going through this. I am a loan officer and i hear stories like yours everyday. Its really sad with the house prices so high and most loan officers putting people on the wrong type of loan. i have a friend who works at a law office who deals specially with bankruptcy and foreclosures. He usually refers his clients to me, and we see if we can help them out by refinancing their house or consolidating their debts. Or just contact me and i could ask my friend any questions about what steps to take in regards to the rules and laws. You can contact me at
Email:[e-mail]
Number: [phone]
P.S. Good luck

Answer 10

Talk to a real estate agent that deals with forclosures. See what they suggest for you to do.