Short Sale, Foreclsure, BK: oh my!

[nailbiting]

Hi all! Newbie from NV here. Tried looking for info, but maybe my situation is a little more 'intricate'?

Deets:

- Stopped paying 1st (US Bank) and 2nd (BofA) mortgages 12/09.
- Have been unemployed since 1/09
- House is in NV, currently $180k underwater, and is under my name only
- Currently, my home is in a short sale, with a buyer. BofA accepted the SS, USBank wants a prom note of 35k
- My realtor is trying to get me qualified with HAFA so I don't have to pay the prom note with US Bank once the SS is closed. US Bank is playing hardball and stalling the process

- Recently, my husband and I separated. He is living in the home, I am living at my mom's with our child, and I am receiving no financial support from him


Question: I want to just foreclose on the house and file CH7 BK. My realtor said I should just accept the prom note, and not pay (or pay a month), then file BK (which will include the prom note) so that I don't have both a foreclosure and BK on my credit report.

Any opinions? Also, does it hurt me that I'm not in the property, but my husband is?

Thanks for all your help!

[AngelinaCatHub]

Hi all! Newbie from NV here. Tried looking for info, but maybe my situation is a little more 'intricate'?

Deets:

- Stopped paying 1st (US Bank) and 2nd (BofA) mortgages 12/09.
- Have been unemployed since 1/09
- House is in NV, currently $180k underwater, and is under my name only
- Currently, my home is in a short sale, with a buyer. BofA accepted the SS, USBank wants a prom note of 35k
- My realtor is trying to get me qualified with HAFA so I don't have to pay the prom note with US Bank once the SS is closed. US Bank is playing hardball and stalling the process

- Recently, my husband and I separated. He is living in the home, I am living at my mom's with our child, and I am receiving no financial support from him Why, he has child responsibilities in any case.


Question: I want to just foreclose on the house and file CH7 BK. My realtor said I should just accept the prom note, and not pay (or pay a month), then file BK (which will include the prom note) so that I don't have both a foreclosure and BK on my credit report. This is fraud outright and will easily be picked up. Shame on your Realtor. Do you think she is right, or wishes a commission?

Any opinions? Also, does it hurt me that I'm not in the property, but my husband is? Not at all.

Thanks for all your help!

Do what you have to but screwing over that second mortgage could be a problem. Consult a lawyer NOW not later and get his take on this. If I were your Trustee, you would be grilled big time if you do this. Only my opinion. 'Hub

[nailbiting]

Thanks for responding so quickly, HUB! I really appreciate it!

I don't know if my realtor just wants the commission or what, but I'm to the point where I am so fed up with the whole thing, I just want to give up and be done with it all! And I don't want to accept the prom note just so I can short sale the house - it seemed unethical to me... but my realtor keeps telling me how much better it'll be for my credit score to have the mortgages show up as 'paid in full' (or the verbiage with a successful SS), than to have a foreclosure AND a BK.

At this point, it really doesn't matter to me since my credit is in the pooper. And as far as my husband not giving us financial support, we've talked and are trying to arrange child support. We're just in a terrible financial position and because of it, separated. It's just a terrible chain of events...

[tanmag]

Just wanted to say I'm in Nevada as well. Also, in just about the same situation as you minus the short sale. We opted to not go that route for out situation. It is all scary and the feelings change from day to day. Our house is now in foreclosure:O( which my lawyer said will come to a temporary hault when they receive notice of our BK. Sorry I don't have any suggestions just wanted to say I know how you are feeling!

[nailbiting]

Thanks, tanmag! I still sit here and am amazed that this is happening to me! Not that I take comfort in knowing other people are going through the same situation, but, it is comforting knowing that my situation isn't unique. It still is painful, but at least it isn't totally stripping me bare, you know? Thanks again for the support! :-)

[HHM]

Don't accept ANY LEGAL advice from your Realtor. That person appears to be just looking to close the deal and get their commission.

If you accept the Prom. Note the risk is this; if you do not pay and file BK soon after, the 2nd mortgage lender has an argument that you fraudulently induced it to accept the short sale on your acceptance of this new debt and would argue that the debt is non-dischargeable in BK. Time to call the bluff and let the house foreclose, there is no benefit to you of doing a short sale anyway.

[nailbiting]

Woah. Thanks for telling it like it is, HHM. I suppose the only reason I initially agreed to doing the SS is because I was hoping for two things: 1) to avoid BK in the case that 2) both my 1st and 2nd mtgs would release me from any deficiencies. Obviously, I will have to rethink this whole thing since it's not turning out the way I'm hoping it would...

[AngelinaCatHub]

Thanks for responding so quickly, HUB! I really appreciate it!

I don't know if my realtor just wants the commission or what, but I'm to the point where I am so fed up with the whole thing, I just want to give up and be done with it all! And I don't want to accept the prom note just so I can short sale the house - it seemed unethical to me... but my realtor keeps telling me how much better it'll be for my credit score to have the mortgages show up as 'paid in full' (or the verbiage with a successful SS), than to have a foreclosure AND a BK. As I said, and HHM verified and baked what I suspected, he said it far more succinctly. Your Realtor is looking out for himself not you at all. Credit score to me is absolutely valueless. If you cannot afford to purchase don't mortgage your future. It is what got you here.

At this point, it really doesn't matter to me since my credit is in the pooper. And as far as my husband not giving us financial support, we've talked and are trying to arrange child support. We're just in a terrible financial position and because of it, separated. It's just a terrible chain of events...

Your last statement bothers me the most. Now is the time, if any, that you two have to stick together. I'm not prying and I don't wish to know all about this, but if the finances caused you a separation, GUESS WHAT, that is the number ONE cause of divorce. Not infidelity or alcohol, but over spending and getting into a financial bind.

It is my suggestion, that, if practical, that you two get together on neutral ground, and without emotion and only business facts, decide on no discussion barring bk and money in a most business like fashion and form a plan. Do this on an early morning over coffee, not in the evening with alcohol.

Decide two things: Go back together, adhere to your vows of "richer or poorer, sickness and health" as you both are now poor and THIS stress will make you sick. You must lean on each other as a crutch and both of you give up pride and neither of you are right or wrong. Work this thing out as it is more important than a bk, a legal procedure that will set you free. Learn from it.

Next, go to a PRE- marriage class. I suggest a Catholic one as I am not Catholic, but my wife was/is and I was never more influenced with real facts in my life. NO RELIGION was discussed at all. It was not given in a Church atmosphere.

You have a child? Yes. You are dealing with another life and how that child may become in the future. THAT is your real responsibility, not your credit rating nor making some Realtor's commission for them at your expense. 'Hub

[nailbiting]

Hub, thanks again for your advice. My husband and I have only recently been able to speak to each other over the phone after many months of being apart. Hopefully, our separation has given us a bit of time to breathe and gain our bearings. I do hope that we will be able to weather this storm, and I am more than willing to do the work necessary to keep our marriage and my family from falling apart. I hope, hope, hope that this financial crisis will not break us.

I did happen to make an appointment with a trusted BK attorney, so I will at least get some sound legal advice and a little peace of mind. :-)