Can I sell home right before foreclosure?

[momoftwo]

This is a what if question......trying to figure this all out!!!

I do not wish to reaffirm my home mortgage. I am in an adjustable rate mortgage that adjust every six months, and after months of pleading with countrywide they will not let me refinance due to the fact that I am self-employed and have only been for one year. They require at least 2yrs of tax returns of self employment income. So, I feel the only choice I have is to let the house go.

Let's say I do not make any more payments to countrywide and try to hold them off from foreclosure during the 90 day period before filing bk. Could I sell the house to an individual right before I file bk? I would sell it to them for what I owe on the home, not for profit, just to get out of it. Would the mortgage company be willing to do that and stop foreclosure?

I know it wouldn't help me out credit wise, but this person I know would really like to buy my home, but just can't right now. (has to get some financial affairs in order) They do have some credit issues from their past, but they have a good stable income and good 12month rental history. I thought that lender might be willing to help them out w/getting approved if it meant not having to foreclose with me.

I know that I can stay in the home for awhile before they evict me, but I am affraid of trying to find something to rent after bk. I have a toddler and I have to have a decent home to live in for him. If it were just me I could live anywhere.

Or should I just stay in the home as long as they will let me, save up my money and quit trying to help others and help myself? Worry about renting something when the time comes???

Any advice?

[HHM]

Well, the only snag is, you cannot sell the home without the BK trustee's permission during an open BK. But otherwise, yes, generally, you can sell your home for the FULL amount due anytime before the scheduled foreclosure sale date. (note, if the house goes into foreclosure before you sell, the purchase price would have to include any late fees, attorney's fees, etc).

People over estimate the effect BK has on the ability rent...all landlords care about is whether you have sufficient income to pay the rent. No one, absolutely no one on this forum, as best as I can recall, has had a problem renting after a BK. When a landlord pulls a credit report, they are really only interested in the public records section looking for evictions...(granted, they will review other aspects of your credit report, but short of being a total deadbeat, a BK will not generally effect your ability to lease a residence).

[keepmine]

Or should I just stay in the home as long as they will let me, save up my money and quit trying to help others and help myself

You have problems of your own to solve. Take care of yourself first. Everybody else goes to the back of the line.

[FreshLikeADaisy]

Momoftwo, Keepmine has a great point. If you know you're going to file, and you know you're not going to reaffirm, I think you might want to consider staying until the foreclosure sale and just saving that cash for a rental. Every state is different; I know in some states people have stayed for as long as nine months! I went through a foreclosure in NC and it was four months from the start of foreclosure to the actual sale.

While you may be able to sell your home prior to foreclosure, don't put all your eggs in that one basket -- especially since you have children to care for. Your options are open until you get that "Notice of Acceleration" letter from Countrywide; at that point, count on saving your cash and getting a rental.

I don't think that Countrywide is interested in avoiding a foreclosure with you, sorry to say, and I don't think they will be willing to deal with your friend either. You can try, but again, don't count on this or wait to solidify your plan until the loan is accelerated. What you CAN do is steer your friend to a mortgage broker, who can review his/her credit history and then submit him/her to whatever lenders the broker feels might be friendly. This will help your friend get the best financing deal (something I just don't think Countrywide has to offer right now!) and it will also quickly demonstrate how serious your friend is about buying the place. If he/she won't go see a mortgage broker or bank on their own steam, this is not a person you need to be counting on. I'm certain they're good as gold and sweet as puddin' pie but if they are not willing to be actively seeking funding on their own I personally would rethink their seriousness and commitment to doing a deal.

I know this isn't what you maybe wanted to hear, and I apologize... but I don't want you sitting around waiting on a slim hope if you can do better for yourself and your kids by exploring other options. I wish you all the best. Good luck!!!

[CindyLou]

Many times a lender WILL NOT work on a loan to finance a property that is in foreclosure. In fact while looking at homes recently, any time we looked at a Wells Fargo foreclosure, this listing would say, "must have own financing, will not offer financing"

Don't know why, but I got this impression on others too.

[DivorceRuinedMe]

It has been over a year since I haven't paid the mortgage on the home that I'm letting go. The lender STILL has not notified me of the date of the sale and the house still shows in my name on the property appraiser's website. So, it can take some time. Especially with the market being the way that it is. People are bailing left and right leaving the lenders scurrying to get all the foreclosures taken care of.

[momoftwo]

Thanks for all the great advice. I believe that you are all correct that I should just stay as long as possible. Though I am burdened with the guilt of not being able to pay my creditors, I honestly have no remorse with my mortgage company.

They put me into a situation that even they knew was doomed from the start. I blame myself for not educating myself more on the terminolgy of financing, but I was pregnant and recently divorced and desperately needed a place to live. They provided me with a loan I could afford AT THE TIME, but what I did not realize was that payment was only good for two years. On December 31st of 2007 my two year pre-payment penalty expired and my ARM kicked in raising my monthly payment $175/month.

It is very sad to see what is happening to people all over the country. Losing your home is very degrading, at least to me. I had hoped to raise my children in this home and now I have no choice but to uproot them and live in rentals until I can rebuild my credit to hopefully purchase a home again. Next time I will certainly be more careful.

Thanks again everyone, and with your encouragement and advice I know everything is going to be okay again someday.