Not Eligible for Credits

As is the case with many, I am ineligble for the first-time homebuyer credit.  I am also ineligible for the current homeowner credit because I have been in my home for less than five years.  I talked with a realtor and appraiser and I owe $10,000 more on my home than it is worth (despite all of the extra payments I have made on my mortage since closing in April 2007 and the post-closing upgrades).  If I sell for less than I owe, it is a personal loss for which I get no type of tax credit.  A short sale will hurt my 800+ credit score.  Is there anyone else in my boat?  What options do I have to not be in the hole by $10,000 if I sell.  I am relocating and renting out my house is not an option.

I am also single with no children so I get no other tax breaks other than deferred comp.  Seems I am losing out all around, but that's another topic for another forum! 

Any advice will be greatly appreciated.

Just curious, why isn't renting out your place an option?

Depending upon your lender you might be able to negotiate a short sale.  As long as you aren't delinquent it shouldn't be a huge hit to your credit score.  You should do some research on it and discuss the possibility of a short sale with your lender.  Here is an article that I picked up the other day on how Bank of America is handling short sales.

Bank of America, widely recognized as the most uncooperative lender in short sale negotiations, has recently partnered with California-based Equator (REOTrans) to electronically process short sale transactions.

Bank of America is using the Equator short sale platform to streamline the short sale process through better communication, faster approvals, and quicker sales. Criticized for its lackluster performance under the government’s Making Home Affordable plan, Bank of America is implementing this platform to get more properties sold before they end up in foreclosure.

According to Equator CEO, Chris Saitta, this is the first electronic short sale process for a large national lender such as Bank of America. “Equator's short sale module automates decision making, handles approvals, provides quick fulfillment, and complies with government programs”, Saitta said.

A short sale is the process where the owner of a distressed property works with the lender to sell the property before it goes into foreclosure. The term short sale was coined because the property is sold for less than the amount owed on the mortgage. The keys to a successful short sale are being accessible, being responsive, communicating, and then performing.

Lenders, such as Bank of America, recently have been leaning more toward short sales versus foreclosure sales because of the steep decline in the real estate market home prices. According to Equator, the number of successful short sales has increased exponentially across the country in the wake of the foreclosure crisis.

In the not so distant past, short sales were extremely difficult if not impossible with some lenders taking months to make a decision. As a result, the homeowner often ended up in foreclosure even though they had a viable offer on their home.

Bank of America has also reduced its strict short sale policy of requiring 10% of the second mortgage balance in a short sale. Now Bank of America will accept 5%. This is another indication that they are getting serious about selling homes before they are foreclosed.

In adopting this short sale platform, Bank of America, will be able to provide access 7 days a week, 24 hours a day to its borrowers. Borrowers can easily enter the necessary information and will receive real-time status updates. David Sunline, Bank of America’s Real Estate Management Executive, says “homeowners considering short sales should contact the bank within five days of getting an offer on the home and expect its cooperation as long as the offer is within the range of other sales in the area and the borrower can demonstrate financial hardship”.

The verdict is still out whether this platform will improve the short sale process through Bank of America, but it is a step in the right direction.

Author Andee Allen is freelance writer, Strategic Media Coach/Consultant, Real Estate Investor, and California Realtor (License #01854926). You are welcome to contact Andee at mailto:andeeallen@gmail.com or on her website www.strategicmediacoach.com.

Depending upon your lender you might be able to negotiate a short sale.  As long as you aren't delinquent it shouldn't be a huge hit to your credit score.  You should do some research on it and discuss the possibility of a short sale with your lender.  Here is an article that I picked up the other day on how Bank of America is handling short sales.

Bank of America, widely recognized as the most uncooperative lender in short sale negotiations, has recently partnered with California-based Equator (REOTrans) to electronically process short sale transactions.

Bank of America is using the Equator short sale platform to streamline the short sale process through better communication, faster approvals, and quicker sales. Criticized for its lackluster performance under the government’s Making Home Affordable plan, Bank of America is implementing this platform to get more properties sold before they end up in foreclosure.

According to Equator CEO, Chris Saitta, this is the first electronic short sale process for a large national lender such as Bank of America. “Equator's short sale module automates decision making, handles approvals, provides quick fulfillment, and complies with government programs”, Saitta said.

A short sale is the process where the owner of a distressed property works with the lender to sell the property before it goes into foreclosure. The term short sale was coined because the property is sold for less than the amount owed on the mortgage. The keys to a successful short sale are being accessible, being responsive, communicating, and then performing.

Lenders, such as Bank of America, recently have been leaning more toward short sales versus foreclosure sales because of the steep decline in the real estate market home prices. According to Equator, the number of successful short sales has increased exponentially across the country in the wake of the foreclosure crisis.

In the not so distant past, short sales were extremely difficult if not impossible with some lenders taking months to make a decision. As a result, the homeowner often ended up in foreclosure even though they had a viable offer on their home.

Bank of America has also reduced its strict short sale policy of requiring 10% of the second mortgage balance in a short sale. Now Bank of America will accept 5%. This is another indication that they are getting serious about selling homes before they are foreclosed.

In adopting this short sale platform, Bank of America, will be able to provide access 7 days a week, 24 hours a day to its borrowers. Borrowers can easily enter the necessary information and will receive real-time status updates. David Sunline, Bank of America’s Real Estate Management Executive, says “homeowners considering short sales should contact the bank within five days of getting an offer on the home and expect its cooperation as long as the offer is within the range of other sales in the area and the borrower can demonstrate financial hardship”.

The verdict is still out whether this platform will improve the short sale process through Bank of America, but it is a step in the right direction.

Author Andee Allen is freelance writer, Strategic Media Coach/Consultant, Real Estate Investor, and California Realtor (License #01854926). You are welcome to contact Andee at mailto:andeeallen@gmail.com or on her website www.strategicmediacoach.com.

Yes.  I thought about that too.  I will check with my bank and work with the credit simulators.  If I lacked integrity, I'd voluntarily default like many others have done just to increase my chances of the bank "working with me," but my conscious will not allow it.  Looks like I may just be out of 10k if nothing else works out.  And to top off, no credit for my next purchase when i relocate.  I just wish I had not added the post-closing upgrades.

Thanks for your reply.

Ralph,

Based upon my conversation with local property management companies, I will clear only about $800 after fees.  Because of slow sales in the area, far more properties are for lease.  This means that even mid to larger homes are renting for less because pricing has to be competitive, and it is taking longer to rent out houses because of the abundance of inventory.  This also means that I would have to put $500+ dollars to the actual mortgage each month as well as pay rent at my new place when I relocate.  Two lenders have advised that I would have to make a down payment of 20% to purchase another house if I still have this house in my posession.  So keeping this house and renting it out will make me a renter as well as cost me an additional $500 per month.  Then there is the time between tenants when I'll be responsible for the full mortgage. 

For the reasons above, renting is not an option. 

BTW, I drive a nearly 13 year old nissan, and did not qualify for clash for clunkers either because of gas mileage.  I have missed all of the perks!

Richard