mortgage Dilemma?

Question

My aunt has a 2-story 2001 home at Glendale, AZ
this month, we are unable to to pay for our monthly payment. It has been on the market for 1 1/2 years now. We had a buyer, but right before closing the funds were not transferred b/c they found that he had been fired in his job.
Anyway, my aunt did a refinance to have money to keep paying the monthly mortgages for that house and the house she is currently residing.
I know this might not be the best place to do this, but we are desperate. The orginal price for the house was 310,000 and it has been lowered to 270,000 but we still have no buyer.
Is it even possible to have someone just continue the monthly payments and have the prop. transferred to their name?
I don't want to see my aunt do a foreclosure... I need advice.
Sorry this was long, thanks for your time

Answer 1

Arizona is a very difficult market right now and will probably not improve any time soon.

You do have some options and a lot depends upon the type of mortgage on the house e.g. an adjustable rate mortgage or a fixed rate mortgage.

1. Rent the property. If it is an adjustable rate mortgage and the rate is going to "adjust" upward soon causing the payment to go up then renting the property becomes less viable. If it is a fixed rate mortgage then perhaps renting would work. If the rent will cover most or all of the payments + property taxes + insurance then it may be worth doing.

2. Have a buyer assume the loan. Many adjustable rate loans are assumable. However, this option is unlikely. Who would want to assume a $310,000 loan on a property worth only $270,000 or less?

3. Have a buyer purchase "subject to" the existing mortgage. The buyer would just start making payments on the loan but not officially assume the loan. There are risks in this because most mortgages have a due-on-sale clause that states whenever the property is conveyed to someone else the mortgage must be paid off in full. Again, however, who would want to take over a $310k loan on a $270k or less property?

4. Loan modification or Forbearance. Sometimes if you explain your hardship to the lender they will modify the loan terms to lower your payments or allow a forbearance so you can skip some payments until you get your finances straightened out.

5. Pursue a short sale. This is probably the most likely scenario. Obviously you are not going to be able to sell the property for $310,000 and you are already having difficulty making the payments. A short sale occurs when the bank agrees to take less than the loan amount and "forgives" the remaining debt. Of course the bank has to approve it. But, if they do, and many are nowadays, you can try to find a buyer at whatever the market price is and submit that offer to the lender for approval. If the market price for your home is $250,000 and you can find a buyer at that price then you'll have to convince the bank that that's as good a price as they're going to get and that you have no way of making the payments. The bank is motivated to move the property because they don't want to go through the time and expense of a foreclosure and then have to end up selling the property themselves anyway at potentially a lower price due to market deterioration. A short sale is somewhat complicated but I'm sure there are agents in your area that now specialize in them that could help you.

6. Deed-in-lieu-of-foreclosure. This occurs when you just deed your property over to the bank without them having to go through the full process of foreclosure. It's a negative on your credit report but not as bad as an outright foreclosure.

7. Allow the home to go into foreclosure. This is the worst option. A foreclosure will have the most negative effect upon your credit report and score. It can cost you over 200 points on your credit score and stay on your credit report for up to 10 years.

Also, keep in mind that options 5,6 and 7 may result in "debt forgiveness" or "debt relief" which is taxable. If you short sale your home for $270,000 then you'll have debt forgiveness of $40,000. Possibly more depending upon your homes tax basis. The lender will send a 1099 to the IRS and you may have to pay taxes on the $40k. They're are ways around it. Look at section 108 of the IRS Code and Form 982. If you are bankrupt or insolvent at the time of the sale then the IRS may exclude the amount from taxation. Talk to a good attorney or tax accountant to see what your tax options are.

If you haven't already, you should contact your lender right away and explain the situation to them. Find out which options they are willing to look at. Be aggressive pursuing whatever option you choose because time is of the essence. If you choose to try a short sale then lower price aggressively until you get an offer. That will give you a starting point in dealing with the lender. And, definitely get an agent that is experienced with short sales. Good Luck!

Answer 2

HI, not I would think that could get her into a big mess. More than she wanted. We have a house in Texas that we had on the market for a few months and just bought a new home where we had to move due to the military. We just finally got a contract on the house but I was setting things up to put it up for rent at least for a yr then would have put it back on the market if it looked better. If she rents it out the mortgage would at least be paid for each month. She could hire a property manager . They take about $10% of the rent amount as their fee. They do background check and all on the renters. I know she would rather sell but if there are no buyers this may be an option. Whoever she rents to after a yr or so however long she wants to rent it for and wait for the market to improve she could offer then a deal to buy if they want to stay put. She will also be able to still claim it on her taxes.

Answer 3

There are options. You will need to act fast. Don't let her mortgage payments slip. To many of those and you cut off alot of your options. Second, the market is tough now but a year and a half seems a little long. You may want to look at other real estate agents.
Most mortage companies will not allow loans to be assumed, but you may be able to rent out the house and use rental income to pay the mortgage.
I have other options that may also help you sell the property, feel free to contact me at [e-mail] or call 443-789-8742.
Thanks, I look forward to hearing from you!

Answer 4

Some mortgages are assumable, but that's fairly rare. That would mean that if you found someone to take over payments, they could. Even then, they'd have to be approved by the lender.

Your best bet might be to try to rent it out. The real estate market is really down through much of the country these days.

Good luck.

Answer 5

I dont know what part of Glendale AZ you are in but the outlying areas have alot of homes for sale. There are places in the outer valley (and parts of Glendale) where the home values has dropped 20%. You would have to lower the price to $240,000. You may have to try a short sale.
Look for a Real estate agent and see if they can help.
Best of luck

Answer 6

Some mortgages are assumable, but that's fairly rare.
I found interesting information about your answer & the best options here. (mortgage opportunitty refinancing )
http://all-mortgage-calculators.blogspot.com/2007/06/mortgage-opportunitty-financing-and.html
Good luck!

Answer 7

sorry! I have no knowledge of mortgages. Get hold of some good mortgages attorney, instead of YA