UnThreaded | Threaded | Whole Thread (8) | Ignore Thread Prev Thread | Prev | Next | Next Thread
Author: Dmon826 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 127680  
Subject: Another Underwater Thread Date: 2/8/2013 11:20 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
Hi all,

First, let me take a moment to say thank you in advance for taking the time to read this and offer me any advice you may have. It is much appreciated.

I came on here to post this question about a situation I'm going through and ask for your help, only to see that another similar thread had been started in the past day as well. However, this one's a bit different and so I'm starting a new thread for it. Hopefully this makes it less confusing.

Anyway, here's the situation. It actually has to do with my mother-in-law's home, not mine. She lives in Florida and has been talking for a few years now about moving up to the Philly area to be closer to her three kids. And for some brief background, she is low-income, disabled, and living entirely off of Social Security Disability. She put her name on a waiting list for a HUD housing community in the Philly suburbs a while back, and her name's come up and she's been invited to move up here. However, she has to decide in the next week or so if she wants to make the move, and part of that process involves figuring out what to do with her current home in Florida.

Obviously, per the title of this thread, that home in Florida is also fairly underwater (70k left on it vs. being worth 50k or so). She has been trying to find out whether walking away from it or short-selling would be better. From what I could find out, there are three main differences: 1) credit implications, 2) tax implications, and 3) the bank's ability to come after the 20k deficiency. In her case, 1) the credit implications are not that big of a deal because she just went through a bankruptcy last year and so her credit's already mostly shot; 2) the tax implications seem to be nil because of the current law (through 2013) forgiving that deficiency as income on a primary residency; but it's #3, the bank's ability to come after her for 20k, that seems to be worrying her. Now, she really doesn't have much to come after (her car?), but this is still her big concern. Short-selling in general seems like a better option, if it's doable, but I'm trying to figure out if it's worth it or not for her. It seems like a lot of trouble even finding a buyer, and that's if the bank will go along with the plan at all.

I have a few specific questions, if anybody knows the answer to any of these:

1) Are there any negative consequences of walking away that I've failed to consider aside from the three I laid out above?

2) If she chooses the short-sale option and the bank agrees to it, does she have to keep paying her mortgage until a buyer is found?

3) This is more of an opinion question, but would you recommend going through the trouble of trying to short-sell or should she just walk away?

4) When someone is debating short-selling vs. walking away, is this something they generally talk to the bank/lender about or is the fact that you're going through that decision-making process something you to try keep secret from them?

That's all I can think of for now, but I'm sure I'll think of more questions over the course of the rest of the day. Also, I'm sure I've left out some pertinent information, so feel free to ask me any questions you may have. Any general thoughts you have are more than welcome. I'll be around all day and through the weekend checking in as I try to sort this out.

Thanks again for any help you may be able to provide.
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (8) | Ignore Thread Prev Thread | Prev | Next | Next Thread

Announcements

Useful Resources
Our Home Center has all you need to make buying and owning a home a great experience. Get or refinance a mortgage and much more!
Buying/Selling a Home FAQ

Mortgage Professor
Offsite resource for mortgage questions.
Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Managing Your Wealth
Our own TMFHockeypop from Rule Your Retirement fame on the TV show Managing Your Wealth.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement