Debt Questions & Answers

Hi All,

I'm completely overwhelmed right now and hoping to hear from someone who can offer advice or someone who has been in a similar situation. My husband and I bought our home 4 years with an 80/20 mortgage. We are managing our mortgage payments without too much stress. Our problem is that we are planning on moving to Scotland, my home, and have had our home on the market for the past year. In that year we have had maybe 4 viewers. The value of our home has completely dropped, and there is no way we can sell for what we owe. I feel like we are backed into a corner and I want to get out the best way possible.

I am interested to find out if anyone can offer advice on deed in lieu of foreclosure vs short sale and what they both involve. From doing a little research online it looks like we will need to get lender approval for either option. Being that we have more than one lender I'm guessing this may be a little more difficult. Although I am concerned about our credit scores, since we will be moving out of the country this shouldn't be too much of a problem.

ANY advice is greatly appreciated, thanks in advance!

Grubette

Hi, Grubette!
Thank you for sharing your story with us. I'm sorry that you are in such a tough situation! I really don't have the info for you that you need, but I'm sure that someone will be along soon that does know. The housing market is still tough right now and is looking up, although not fast enough.

I hope that you can work something out soon - please let us know how things go and what worked for you. In the meantime, please feel free to look around, jump in wherever you are comfortable!

Wishing you all the best.

I believe there is a program to help you.  It is a result of the Mortgage Debt Relief Act of 2007.  There are some requirements, such as the debt must be on your principal residence (which it sounds like the case for you), etc.  The program applies to debt forgiven from 2007 to 2012, so I believe you could protect yourself from any mortgage debt.

Here is a link to read more about it:   http://www.irs.gov/individuals/article/0,,id=179414,00.html

If you have not done so it probably would be a good idea to pick up the phone and call your lender to discuss your situation.  Either option you originally posted involves your lender.  The short sale will not involve you negotiating the sale.  The buyer makes an offer and the offer is submitted to the lender for acceptance or rejection.  Should you be facing a foreclosure or short sale the Mortgage Forgiveness Debt Relief Act and Debt Cancellation is what will protect you from any indebtedness to your lender.  At that point this is really the only important matter: clearing the debt.  Should you wish to return to the US or visit, the unpaid debt could prohibit you from entering the country until your debts are paid.  It's a genuine issue.  Even those who have unpaid parking tickets must pay those before they can enter.

Hope this helps.

Carolyn