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Getting Out From Under |
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Hi Edith,
We are living in a house with a home equity loan still owing on it and the condition of the house is now such that it is no longer viable for putting needed repairs into it. Specifically, it desperately needs foundation work, wiring, some roofing, and a new driveway. We couldn’t sell for enough to pay it off. We don't know how to proceed to get out from under because if we take the debt forward we won't be able to afford rent or a mortgage on another place. We have owned the house for 25 years and paid off a first mortgage on it. The equity money was taken to consolidate debt from many events of compromised employments. We have a large amount of credit debt and a large debt on our overdraft coverage in our checking account. We still miraculously have a decent credit rating because we maintain payments but we never get ahead only paying minimums. But the major first issue is how to get out of the house as it has become unsafe to live here in my opinion. –B. M. |
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You don’t say whether you’ve consulted any real estate brokers. Call three who are active in your neighborhood. Those are the people who can look over your house and give you the best advice. The place may be worth more than you think. It may be in better shape than you think. If it isn’t good enough for a bank loan, perhaps an investor might give you enough cash to pay off the home equity loan.
Give it a try. It won’t cost anything and you have nothing to lose.
If that doesn’t work, talk with your mortgage lender’s “workout” department. Given your debt situation, it’s possible you could arrange a short sale. With that, the lender agrees to cancel the mortgage in return for whatever you can sell the place for. Your credit report would reflect the arrangement, but it’s a lot better than having a foreclosure. One drawback: sometimes the IRS asks for income tax on mortgage money you once received and never paid back (“forgiveness of a debt. |
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Edith
Originally published on April 13, 2007 |
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