Our daughter and son-in-law are in a financial bind, and it's clear that they will not be able to stay in their home. They are "upside-down" in their mortgage, so their options are limited. The bank is not open to working with them on options because they haven't missed a payment. The time is coming soon when they will be missing all of their payments due to a huge income drop, but they wanted to deal with this before it became a big problem. Should they simply stop paying now?
JeanLorie,
Our daughter and son-in-law are in a financial bind, and it's clear that they will not be able to stay in their home. They are "upside-down" in their mortgage, so their options are limited. When you say upside down, that usually means they owe more than the house is worth. If that is the case, you are correct about them being in a limited option mode.
The bank is not open to working with them on options because they haven't missed a payment. I have yet to see a lender who will work with someone who is not behind. Lenders simply don't think like that even when the borrower tells them there is trouble ahead.
The time is coming soon when they will be missing all of their payments due to a huge income drop, but they wanted to deal with this before it became a big problem. Should they simply stop paying now? If they know when they will be taking the big hit and are sure it is coming, you are correct in assuming they should stop paying now and divert those funds to other more pressing relevant matters. Mind you I say this because you are convinced they will be losing a huge portion of their income.
Here is another option. Have them call the lender and explain the situation one more time and offer a deed in lieu of foreclosure. Have them tell the lender they plan to cease making payments and would like to work out their situation now.
On the other hand, if they can find someone to buy the home via a short sale, that would be wonderful for them because it would keep their credit from being beat up by a foreclosure or deed in lieu of.
If you would like, pm me and I will send you my email address. I'll try to answer their questions. FYI, I currently do short sales so I am familiar with the foreclosure process inside and out. In fact, I'm building a site to teach people how to invest in foreclosures. I'd like to see as many of those properties occupied as possible so the local economies don't take giant hits.
Sandalwood, thanks for your reply; a PM will be coming your way. We'll be getting together with our daughter over the holidays, so I'll pass on everything you wrote here and encourage them to be in touch. Again, thank you so much for your reply and offer of assistance.
you are more than welcome and let's hope we can help them...
If they can't continue to make payments and they know that they are GOING to lose their home regardless, then they should let it go into foreclosure and begin to work on other plans.
