When my wife and I married in the summer of 2009, I left my apartment and moved into her house. The mortgage and the deed are both still in her name only. But, the package also came with some history:

She has two mortgages. The first, for the house itself. The second, was because two of her relatives who lived with her, swindled her by begging her to bail them out of credit card debt by getting them a debt-consolidation loan, using her house as collateral. Only one relative signed a promissory note to make monthly payments to pay her back until she sold her house with enough profit to cover his debt. This was back in 2007. The house has been for sale since then.

That relative defaulted. We sued him, and won the full amount. Before we could collect, he filed Chapter 7. We even lost the lien against his own house that he had bought with his newly restored credit after my wife bailed him out. We’ll never see a dime of what he owes her.

The second relative stopped making payments for a while, but then resumed months later.

The current balance on the first mortgage is about $209,000. The second mortgage is down to $95,000. (The evil relatives each owe 50% of the second mortgage.) The house is appraised at $332,000. We are asking at least $325,000 for it, and are currently attempting to sell “By Owner”, as we feel that between paying a Realtor’s commission, and helping the buyer with closing costs, we would otherwise be in the negative if we didn’t try to sell it on our own. By our own admission, we are terribly overpriced given the current sales prices of similar homes in our area.

NOW for the big issue: In early 2011, I am being forced to take a job position several hours away in another state. It’s in a nice area, with a pretty fair economy. Since I’ll be putting in 12+ hours at work per day, daily commuting back and forth to home is not an option.

Due to my wife’s career, she could easily find an equal paying job in the area I’ll be going to. And of course, we’d like to be together...not separated by a few hundred miles. Plus, we’d both like to be in a new area, with a fresh start in life. But, what to do with her house with the two mortgages that’s not selling?

Plan #1:
I could buy a house in the new location on my salary alone, with the mortgage and deed being in my name only. I could get approved for about $200,000...but I would probably still seek something that costs much less. This way, I could pay my mortgage, she could move in with me, and would continue to pay her house notes despite being absent from that house. Still, we’d have to hire a realtor in order to aggressively market her house.

Then, we’d lower the price on her house, thus making it more competitive for the area. The difference between the sales price and the balance of her debts would be continued to be paid by her, without being associated with the house. (If this is possible...otherwise, we’d have to transfer the balance to the house that I’ve bought.)

Plan #2:
I would simply rent a room as a boarder somewhere near my work, and drive home every few days as my schedule permits. The money I’d save could be used to double up on the monthly mortgage payments until the price of the house lowers enough so it sells. (But that might take years!) Then, we race to find a new house at the last minute, and risk the possibility of ending up with something we’re not happy with.

So...any thoughts?

Thanks,
Frustrated in Maryland

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 Tags: Must move, can't sell

Answers

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Benjamin Sovacool    November 7, 2010

This is a textbook example of needing a short sale!

A short sale is where your lenders allow you to sell your house for less than you currently owe. If it is a primary residence you can try to go through the HAFA program and your lenders will forgive the difference between what you owe and what you sell the property for.

In order to HAFA short sale your house you will need to list the property with a qualified short sale agent in your area. Your lender will not allow you to go FSBO. Please post which city you are in and I can try to help you find a good agent in your area to answer your questions and help you with the process.

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Benjamin Sovacool    November 7, 2010

This is a textbook example of needing a short sale!

A short sale is where your lenders allow you to sell your house for less than you currently owe. If it is a primary residence you can try to go through the HAFA program and your lenders will forgive the difference between what you owe and what you sell the property for.

In order to HAFA short sale your house you will need to list the property with a qualified short sale agent in your area. Your lender will not allow you to go FSBO. Please post which city you are in and I can try to help you find a good agent in your area to answer your questions and help you with the process.

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Leone Harris-Ewing    December 29, 2010

This seems to be a primary example of "needing" a short sale, with the exception of two things.

There must be payments missed because of a hardship. They owner needs to prove the hardship. The bank is going to ask for a hardship letter, bank statements, tax returns and other items. If you can not prove a hardship the banks will not allow a short sale.

From what I have read it appears there has been a struggle but the wife has been able to make the payments, probably with hubbys help. If the banks see tax returns or bank statments with the husbands income on there, then the banks may refuse to allow a short sale.

My suggestion would be to rent the home for a few years until you can sell the house without being upside down. Find a property manager who can screen potential renters and manage the property for you. It can be too difficult to manage a property from a few hundred miles away, much less find a qualified renter.