Short Sale Concerns
My husband and I bought our house in December for 239,900. We refinanced to a 5.5% rate in May. We have decided to get divorced and we owe too much on our house now to sell(we owe about 248,000) and neither of us can afford it on our own. We have it up for short sale(it is listed for 235,000) but are still current on our loan-which is through the VA. What do you think are our chances that the bank will forgive the difference? Do you think we have any other options? Bancruptcy is not an option, we own everything but the house. Please give me any input. Thanks! 
I am sorry to hear about your situation.
Have you talked to the bank? Usually keeping them in the loop upfront will help you to work things out with them.
You will want to let them know the hardship, and exactly what you are trying to do. You will have to paint a bleak picture, that you can not afford to pay it, or to pay the negative equity you have in the property on sale. They might be willing to work with you, the worst that can happen is they say no. You are better off finding out now, so you know your options.
Good luck.
We did try. That is who told us to do a short sale. We tried to extend our loan from 25 yrs to 40( We are both only 25 years old) but they said with the intrest rates going up they couldn't do that because we would have to refinance and the VA would not approve it. Thank you for your quick reply. I really appreciate it.
I like to think so
What about selling it lease option or subject to? I would get a nice down like 10-15k and carry the note on the short term with a balloon in 2 years.
Sorry to hear about the divorce, httie or not 25 is young.
[addsig]
ksutera,
Stockpro has given you a couple of good options if you are ok staying involved with the property.
I still do have a question about your post. It says that you spoke with the bank and they said that you should do a short sale. Does that mean they want you to eat the difference in the sale price? Did they offer you any forgiveness in the loan value if someone came in with thier own loan. (not taking yours over)
I am also not sure what you meant about the interest coment unless that was going to a 40 yr note.
I guess one thing to ask is how bleak of a picture did you paint with your lender? If you lead them to believe that you will have to walk away from the property at some point because you are not able to continue making payments, and forclosure/bankruptcy are options that are closer then they think, they might start working with you.
On the other hand if you told them how good your credit is, and how you are going to do anything to not adversly effect it then they will make sure you pay every dime.
You just need to make them think that they will be losing thier money if they are not willing to help you. Banks do not want to foreclose on a property and will become very helpful if it is only a little loss. (forgiving some debt to get the loan paid off).
Is the property currently listed? Get an agent to list the property, and have them run sold comps of surrounding properties. That way you have amunition of what things are selling for. When you sign with the agent try to negotiate down on thier fee, try for a point or two. Try to also show the bank the house in the worst condition possible, do not make the repairs prior to pictures or bank visit.
It has to look like this is the best option for them if you want them to forgive some of the debt.
Hope that helps. If you have any questions you can PM me about it.
Victor
what state?
Keep in mind that VA short sales are completely up to the VA. They decide whether or not it makes more sense to go ahead and sell the house at public sale vs. Letting you short sale it. They will pick the one that makes the most sense and least amount of collateral damage for them.
Ive done a few VA short sales and its a some will some wont situation. The best thing is to talk to your VA entitlement officer regarding this. Keep in mind that if the house goes to auction and brings in less than what the VA is owed, they can try to collect the difference from AND you will lose VA entitlements until the balance is paid in full