alternatives to short sale

**Maisiedotes** · 02-03-2009, 01:28 PM

We currently owe the following on our house:
Mortgage: $110,000
home equity loan: $43,000

The house was appraised 3 years ago at $165,000 but of course that has gone down. We have not made significant improvements to it other than new appliances and a wood stove. I imagine we could not get more than $150,000 for it since we need a new roof and furnace. The house is in my name and the home equity is in mine and my husband's names. I don't want to do a short sale but I certainly can't come up with the extra money to pay off the H.E. loan at closing. What are our options? If we have a settlement for the HE Loan that would effect both our credits, right?

Is there some sort of logical solution?

**MommyTrap** · 02-03-2009, 01:37 PM

I'm not sure but I think if you are keeping up with the payments the bank will not take a short sale. But you could try it.

**scottp999** · 02-04-2009, 03:48 PM

Some large banks are considering short sales now for people that are current. Please call your lender and ask them if you attract a buyer and the offer is less, and the offer is supported by current comps, will they consider it.

If you do not have the money to bring to closing if you are underwater then a short sale is the best thing to do. If you do not perform on the home equity loan, that bank has an option to foreclose and pay of the 1st lien which they may do if there is room for them to get what they want out of it.

1) Short Sale
2) DIL (Deed in Lieu of Foreclosure)
3) Foreclosure

# 1 is the best option and if they will consider it while you are current then you would still show 0 times 30 even though there would be a tag line on the credit report. You need to discuss that with the lender, and also ask about them not going after a deficiency judgement if that is allowed in your state.

#2 Just speeds up getting the property in the hands of the lender, deficiency judgements could still apply if allowed in your state, and the lender will still have carrying costs and to find a buyer on their own. Worse for your credit.

#3 The absolute worst thing to do and for your credit.

I would advise you to call them and see if they will consider it while you are current and then find a realtor in your area that is experinced in putting together short sale packages for lenders to review.