Foreclosure vs. short sell vs. waiting out the storm ....

[Lilith]

te:[/b] 7/29/2009 11:00:48 PM
Author: TravelingGal

I feel bad for you. The same belief (some may call it arrogance or delusional thinking - not saying that you are this, but I see this a lot) that affluent areas won''t tank is a big time factor in our area. I grew up in Manhattan Beach. VERY affluent area. They said it couldn''t happen. Well, in 1995 we could not sell since the market had tanked and we lost our house there. And yet still, the wealthy in this area think think they won''t be touched. The top areas are the last to fall, but they DO fall.


You must have bought in the spring? Things always look like they are going to stablize in the spring. Look at all the ''yay, housing is turning around'' headlines you are seeing now. Nope, duh, it''s peak selling season.


It''s tough for many in Gen Y and some in Gen X. We grew up in boom times. Big bull markets. We have never seen anything like this and didn''t think it could happen. Most of the people in trouble are in this generation. Or are out of towners that underestimated how crazy Cal RE is (right PP?)

Anyway, water under the bridge. Go have your husband discuss this with his company. Even if they were to give you 300 a month toward this, it really helps it sound more manageable. Most working professionals can cover $200 a month by cutting some things here and there.


Good luck! If if you wanna sell your house for 100K loss, let me know, I''m the market to buy - but will probably wait 1-4 more years!

[/quote]

You''re right on all counts: especially the out-of-town bit. Where I''m from, real estate just doesn''t *do* this. It''s ... freakish, to say the least. Re: your next post, just to avoid abuse of the quote-button, we have a 2 bedroom, perfect for a single person with a space-consuming hobby, a nice pair of DINKs, or a couple with one kid and a lack of lawn fetish. I will cross all of my appendages, ''cause this is the best solution I have been able to come up with!

 

[Rock_of_Love]

Have you thought of a loan modification? It sounds like it still may be considered your primary residence...possibly...and you have a potential hardship with the new job and all.

They are going through very easily right now with Obama''s Home Affordable plan...they will make your payment no more than 31% of your income, and they do this by lowering interest, extending your term, and/or reducing your balance to market value. This may make the payments more manageable so you can rent it out.

Here is the link...
http://makinghomeaffordable.gov/

 

[Hera]

Not sure if it matters, but will the home be still considered your primary residence? Some banks will not modify the loan if it isn't.

Ha, I cross posted with Rock.

 

[TravelingGal]

Date: 7/30/2009 12:37:01 AM
Author: Rock_of_Love
Have you thought of a loan modification? It sounds like it still may be considered your primary residence...possibly...and you have a potential hardship with the new job and all.

They are going through very easily right now with Obama''s Home Affordable plan...they will make your payment no more than 31% of your income, and they do this by lowering interest, extending your term, and/or reducing your balance to market value. This may make the payments more manageable so you can rent it out.

Here is the link...
http://makinghomeaffordable.gov/

I knew I should have bought more than I could afford back then! Stupid me!

 

[Rock_of_Love]

I wasn''t quite clear if they had actually moved yet...sounded like they hadn''t and were just trying to figure out what to do. If they haven''t moved yet, it is still their primary residence.

 

[Rock_of_Love]

Date: 7/30/2009 12:41:25 AM
Author: TravelingGal

Date: 7/30/2009 12:37:01 AM
Author: Rock_of_Love
Have you thought of a loan modification? It sounds like it still may be considered your primary residence...possibly...and you have a potential hardship with the new job and all.

They are going through very easily right now with Obama''s Home Affordable plan...they will make your payment no more than 31% of your income, and they do this by lowering interest, extending your term, and/or reducing your balance to market value. This may make the payments more manageable so you can rent it out.

Here is the link...
http://makinghomeaffordable.gov/

I knew I should have bought more than I could afford back then! Stupid me!

Yup! You could be living in a home you bought for $585K and only owe $360K now...think of the ROI on that!! Thanks, Obama!!

 

[cara]

Umm, I don''t think a lot of people are really benefiting from the loan mods. At least not yet, there are not enough incentives from the banks. See here.

 

[Sharon101]

Re there any tax benefits for you if you rent at a loss. Perhaps the loss can go to reduce your earnings and then your tax is reduced. Im in Aust and this is how it works here. ie negative gearing. The tax reduction helps you somewhat.

 

[zoebartlett]

Date: 7/30/2009 1:34:47 AM
Author: cara
Umm, I don''t think a lot of people are really benefiting from the loan mods. At least not yet, there are not enough incentives from the banks. See here.

We called our mortgage company to see what we could do in terms of refinancing, etc. but there wasn''t really much that could be done. So yeah, sometimes people don''t benefit from loan modifications.

 

[MichelleCarmen]

Date: 7/30/2009 9:30:09 AM
Author: ZoeBartlett

Date: 7/30/2009 1:34:47 AM
Author: cara
Umm, I don''t think a lot of people are really benefiting from the loan mods. At least not yet, there are not enough incentives from the banks. See here.

We called our mortgage company to see what we could do in terms of refinancing, etc. but there wasn''t really much that could be done. So yeah, sometimes people don''t benefit from loan modifications.

Isn''t there a greater chance of a mortgage company approving refinancing if you''re behind in your mortgage? If you miss a few payments, that''ll catch their attention!

Mara pointed out that she has great renters that she hopes may want to buy her townhome. I just wanted to add that my husband and I are renting a home that had been taken off the market because the owner was asking too much (not to say that Mara was - but the fact is our landlady wanted top dollar just as the market was going downhill). We''re considering putting an offer on the place after our 1-year lease is up. Maybe you can try renting it and see if that happens. ****OR**** rent your house as a rent-to-own option. Usually with those, the renter pays more or puts down a bit of case (say $10K) upfront.

 

[D&T]

I''ve been hesitant to chime in, because I''ve been out of the residential real estate loop for a couple of years now. But just my 2 cents, If I were you I would consider doing a short sale first, who knows it may not go through and the house will be foreclosed on- as this happened to one home I listed (had muliple short sale offers) and the banks kept changing negotiator after negotiators , stating they lost contracts or no paperwork - well this went on for one year, I even had an investor ready to buy the house in cash, but the bank wouldn''t budge, needless to say the house went into foreclosure and auctioned at less than what the investor was offering!. A couple of years ago, (not sure how it is now since there it seems to be the "norm" now) you have to be at least 30 days late on your mortgage, before you can even consider a short sale, it may differ now, just by calling your mortgage holder and telling them that you are considering a short sale, They may have the same answer that you must be 30 days late. If you are considering a short sale or even foreclosure, you have to make a conscious decision not to make any more payments. Pocket that money and stay in there until the auction date. Who knows it could be 6 months or even 9 months, not sure how long it is where you are, and also depends on whether there is a viable contract or - banks having idiots to do the paperwork. Honestly, talking with a few of my financial friends, now a days, you''re in the companies of millions as well with foreclosure or short sale on their credit. So in 2, 3 or whenever you are ready to buy a home, it won''t be so frowned upon. Just another note, I did a short sale on one of my own house and honestly the bank that I used, did not even report that it was a "paid as agreed" it was Paid off! so my credit didn''t even tank - just showed that I was late 60 days and that was it - however this was two years ago, just something to think about, not all banks will report "paid as agreed" on a short sale, depending on how fast the home sale and what was communicated.

 

[Rock_of_Love]

Date: 7/30/2009 9:30:09 AM
Author: ZoeBartlett

Date: 7/30/2009 1:34:47 AM
Author: cara
Umm, I don''t think a lot of people are really benefiting from the loan mods. At least not yet, there are not enough incentives from the banks. See here.

We called our mortgage company to see what we could do in terms of refinancing, etc. but there wasn''t really much that could be done. So yeah, sometimes people don''t benefit from loan modifications.

I know what the article says, but I am speaking from experience. My friend has a small mortgage & real estate brokerage and they are obviously not doing a lot of loans these days, so they moved to doing a few short sales to help their clients, then in talking to the banks, they started helping their clients stay in their homes and obtain loan mods. The loan mods are now practically all she is doing....and successfully!

She started doing them in about Jan of this year, and she said it was very difficult at first with the banks...you absolutely HAD to be behind on payments to really push the bank. But, she said around Apr/May loan mods started going through much quicker and easier...from a 3-6 month process to a 1-2 month process. And, banks have become way more receptive.

I work out of her office part-time - mainly just do real estate for friends & family - so I hear about all the ones she is doing (successful and unsuccessful) and all the trials and tribulations. Also, I just started doing one for a friend with US Bank and they have already ordered the appraisal for market value and are extremely responsive.

Some words about loan mods -
- Every bank is different and has different requirements
- Some use their own in-house mod program, some use the Obama "31%" program, most utilize both
- On the Obama program, you don''t have to be behind on payments
- If it doesn''t work the first time, wait a few weeks then resubmit - my friend has had to do this on numerous occasions and sometimes the banks just need to see a little more income or a little less expenses or something to qualify you
- If you ask for the Obama program, banks are *required* to do a calculation analysis based on market value and the costs/benefits of modifying your loan vs. foreclosing, if they analysis works out that it is more cost effective to do a loan mod and keep you in your home (most do) then they have to bring your payment down to below 31% of your income.
- Some people just won''t qualify - too much income, not really a hardship, not really upside down on house

And, BTW...you don''t need someone to help you, you can do this yourself...but you need to know what you''re doing in order to get a successful outcome!!

 

[zhuzhu]

Date: 7/30/2009 11:18:11 AM
Author: D&T
Honestly, talking with a few of my financial friends, now a days, you''re in the companies of millions as well with foreclosure or short sale on their credit. So in 2, 3 or whenever you are ready to buy a home, it won''t be so frowned upon. Just another note, I did a short sale on one of my own house and honestly the bank that I used, did not even report that it was a ''paid as agreed'' it was Paid off! so my credit didn''t even tank - just showed that I was late 60 days and that was it - however this was two years ago, just something to think about, not all banks will report ''paid as agreed'' on a short sale, depending on how fast the home sale and what was communicated.

You might have "lucked out", but it is not to say that this is the norm. Furthermore, just because something that might not be "frowned upon" does not necessarily mean it is the right thing to do...

 

[D&T]

Date: 7/30/2009 2:02:11 PM
Author: zhuzhu


You might have 'lucked out', but it is not to say that this is the norm. Furthermore, just because something that might not be 'frowned upon' does not necessarily mean it is the right thing to do...

its not right or wrong. heck back in that period was all wrong in the first place. Unfortunately circumstances happens-- you don't know what each individuals circumstances are - I had two business back then both failed, and had to take a hit- guess what one of house had to take that hit- . I'm not going to say I "lucked" I did my homework, knew the consequences and made my decision.

ETA: at least I avoided bankruptcy which I think would be worst than doing a short sale

 

[cara]

Date: 7/30/2009 12:13:24 PM
Author: Rock_of_Love

Date: 7/30/2009 9:30:09 AM

Author: ZoeBartlett

Date: 7/30/2009 1:34:47 AM

Author: cara

Umm, I don''t think a lot of people are really benefiting from the loan mods. At least not yet, there are not enough incentives from the banks. See here.

We called our mortgage company to see what we could do in terms of refinancing, etc. but there wasn''t really much that could be done. So yeah, sometimes people don''t benefit from loan modifications.

I know what the article says, but I am speaking from experience. My friend has a small mortgage & real estate brokerage and they are obviously not doing a lot of loans these days, so they moved to doing a few short sales to help their clients, then in talking to the banks, they started helping their clients stay in their homes and obtain loan mods. The loan mods are now practically all she is doing....and successfully!


She started doing them in about Jan of this year, and she said it was very difficult at first with the banks...you absolutely HAD to be behind on payments to really push the bank. But, she said around Apr/May loan mods started going through much quicker and easier...from a 3-6 month process to a 1-2 month process. And, banks have become way more receptive.


I work out of her office part-time - mainly just do real estate for friends & family - so I hear about all the ones she is doing (successful and unsuccessful) and all the trials and tribulations. Also, I just started doing one for a friend with US Bank and they have already ordered the appraisal for market value and are extremely responsive.


Some words about loan mods -

- Every bank is different and has different requirements

- Some use their own in-house mod program, some use the Obama ''31%'' program, most utilize both

- On the Obama program, you don''t have to be behind on payments

- If it doesn''t work the first time, wait a few weeks then resubmit - my friend has had to do this on numerous occasions and sometimes the banks just need to see a little more income or a little less expenses or something to qualify you

- If you ask for the Obama program, banks are *required* to do a calculation analysis based on market value and the costs/benefits of modifying your loan vs. foreclosing, if they analysis works out that it is more cost effective to do a loan mod and keep you in your home (most do) then they have to bring your payment down to below 31% of your income.

- Some people just won''t qualify - too much income, not really a hardship, not really upside down on house


And, BTW...you don''t need someone to help you, you can do this yourself...but you need to know what you''re doing in order to get a successful outcome!!

Opps, didn''t mean to imply that a loan mod wasn''t worth trying. OP, try for a loan mod, what can it hurt? But just that its not necessarily a golden ticket for everyone upside down in their loan that made an unfortunate/unwise housing purchase in the recent bubble.

 

[Lilith]

Rock, thanks for the tip. We''re definitely trying for loan modification as our first move, but it''s apparently a veeeeeeeery long process, and we have to be out of her by September ... hence my need for back-up plans in case loan modification falls through. Managing this from across the country is going to suck, I think. Unfortunately, we don''t qualify for the Obama program (this is only our primary residence for another couple of months), but I do thank you for the suggestion.

Hera, that''s one of my worries ... thanks for thinking of it.

TGal, on the one hand, you''re right, on the other ... the financial side of things isn''t operating in a bubble. The overall recession means that a lot of people can no longer afford what they thought they could. Some of them lived way beyond their means to start with, but a lot of them were doing find under the existing circumstances ... until their partner got laid off (or, for that matter, transferred), or their hours got cut, or their state employer started talking about furloughs and handing out IOUs ... and with this many people affected, it makes sense to leave room for an adjustment. It''s not so much "taking advantage of the system" as it is "mitigating just how screwed the system is" ... and probably better than having hundreds of thousands on the streets, right?

Sharon, that''s a really good point. I''m going to have to look into that ....

MC, we did skip a payment to get their attention, and after two months of patiently calling and leaving messages and trying to go through approved channels ... guess what? They''re finally responding. Sometimes you just have to laugh .... As for the rent-to-own option, that is a really good idea. I will have to look into that, too.

D&T, I''m really glad you did chime in, because that''s really good advice, and a really heartening example. Thanks for laying out the possible ways for it to go ... I''m starting to get the idea that "real-estate time" and regular time run a little differently, but this puts it more into perspective for me.

Rock, any chance your friend is in CA?

Seriously, though, all of your tips are really helpful.

Zhuzhu ... I appreciate your taking the time to read the thread, but I don''t quite see the value here. Do you have any alternative suggestions? I''m not being snarky, I honestly would appreciate them: I just don''t see quite what you''re trying to say here. Better my husband quits his job and we lose the house in less than a year anyway? I don''t quite see how the moral absolute is being violated if we can get the bank to renegotiate its terms or agree to a short-sell ....

Cara your lips to God''s ear ... we''re trying for the loan mod right now. I know it''s a long shot, but it really is highly preferrable to the alternatives ....

As always, thanks to all of you, both who post and who are reading along and hesitating on whether or not to chime in - I appreciate you taking the time.

 

[TravelingGal]

Date: 7/30/2009 2:57:27 PM
Author: Lilith

TGal, on the one hand, you''re right, on the other ... the financial side of things isn''t operating in a bubble. The overall recession means that a lot of people can no longer afford what they thought they could. Some of them lived way beyond their means to start with, but a lot of them were doing find under the existing circumstances ... until their partner got laid off (or, for that matter, transferred), or their hours got cut, or their state employer started talking about furloughs and handing out IOUs ... and with this many people affected, it makes sense to leave room for an adjustment. It''s not so much ''taking advantage of the system'' as it is ''mitigating just how screwed the system is'' ... and probably better than having hundreds of thousands on the streets, right?

You think of it however makes you sleep better at night. I say that with sincerity. These are tough times for sure. I also believe in shades of gray. But where I am sitting, it doesn''t sit well with me how this mess is all panning out thus far, that is all.

 

[Lilith]

Date: 7/30/2009 3:15:36 PM
Author: TravelingGal

Date: 7/30/2009 2:57:27 PM

Author: Lilith


TGal, on the one hand, you''re right, on the other ... the financial side of things isn''t operating in a bubble. The overall recession means that a lot of people can no longer afford what they thought they could. Some of them lived way beyond their means to start with, but a lot of them were doing find under the existing circumstances ... until their partner got laid off (or, for that matter, transferred), or their hours got cut, or their state employer started talking about furloughs and handing out IOUs ... and with this many people affected, it makes sense to leave room for an adjustment. It''s not so much ''taking advantage of the system'' as it is ''mitigating just how screwed the system is'' ... and probably better than having hundreds of thousands on the streets, right?

You think of it however makes you sleep better at night. I say that with sincerity. These are tough times for sure. I also believe in shades of gray. But where I am sitting, it doesn''t sit well with me how this mess is all panning out thus far, that is all.

I''m in a bit of a weird spot, debating this: I have the luxury of a year of appealing decisions and losing money while a lot of other people don''t. It looks weirdly self-serving if I stick to the views that I had when I was *even luckier* (like, say, a month ago, back when I was just an Upright Member of Society who was happy with her home), and sort of cold-blooded when I apply those same standards to myself, factoring in for that. But, hey, it''s the internet, right?

I am finding it fascinating how this whole thing brings out the schadenfreude in some people, and the just-world phenomenon in others ... I mean, I''m with you on disliking this whole entire situation. But for the last two years, I''ve watched my husband read the papers and wonder just how the hell the papers kept finding such unsympathetic people to profile for their pieces on foreclosure - that one struck him as being impractical in his spending, this one had made a stupid job decision, etc. And for 2 years, I''ve said that they''re sympathetic figures, it''s all just a matter of perspective/empathy. I don''t think that it ever occurred to him that you could be a completely respectable member of society who''d made all the right choices who would be in this mess. So, me, I''m feeling pretty consistent in my views: it just seems to shore up that the world is an unpredictable place, and getting all judge-y (not you, TGal) is no prophylactic against eventually being in the very situation you deride. I think the measure is in how you handle it, and I think it''ll make me sleep better at night if I know I''ve exhausted every avenue (starting with getting as much advice/education as I can). I *don''t* see how it would help - with my sleep, or the situation in general - if we stuck to the terms of our loan for the next year, bankrupted ourselves, and *then* lost the house ....

 

[TravelingGal]

Date: 7/30/2009 3:35:33 PM
Author: Lilith

Date: 7/30/2009 3:15:36 PM
Author: TravelingGal

Date: 7/30/2009 2:57:27 PM

Author: Lilith


TGal, on the one hand, you''re right, on the other ... the financial side of things isn''t operating in a bubble. The overall recession means that a lot of people can no longer afford what they thought they could. Some of them lived way beyond their means to start with, but a lot of them were doing find under the existing circumstances ... until their partner got laid off (or, for that matter, transferred), or their hours got cut, or their state employer started talking about furloughs and handing out IOUs ... and with this many people affected, it makes sense to leave room for an adjustment. It''s not so much ''taking advantage of the system'' as it is ''mitigating just how screwed the system is'' ... and probably better than having hundreds of thousands on the streets, right?

You think of it however makes you sleep better at night. I say that with sincerity. These are tough times for sure. I also believe in shades of gray. But where I am sitting, it doesn''t sit well with me how this mess is all panning out thus far, that is all.

I''m in a bit of a weird spot, debating this: I have the luxury of a year of appealing decisions and losing money while a lot of other people don''t. It looks weirdly self-serving if I stick to the views that I had when I was *even luckier* (like, say, a month ago, back when I was just an Upright Member of Society who was happy with her home), and sort of cold-blooded when I apply those same standards to myself, factoring in for that. But, hey, it''s the internet, right?

I am finding it fascinating how this whole thing brings out the schadenfreude in some people, and the just-world phenomenon in others ... I mean, I''m with you on disliking this whole entire situation. But for the last two years, I''ve watched my husband read the papers and wonder just how the hell the papers kept finding such unsympathetic people to profile for their pieces on foreclosure - that one struck him as being impractical in his spending, this one had made a stupid job decision, etc. And for 2 years, I''ve said that they''re sympathetic figures, it''s all just a matter of perspective/empathy. I don''t think that it ever occurred to him that you could be a completely respectable member of society who''d made all the right choices who would be in this mess. So, me, I''m feeling pretty consistent in my views: it just seems to shore up that the world is an unpredictable place, and getting all judge-y (not you, TGal) is no prophylactic against eventually being in the very situation you deride. I think the measure is in how you handle it, and I think it''ll make me sleep better at night if I know I''ve exhausted every avenue (starting with getting as much advice/education as I can). I *don''t* see how it would help - with my sleep, or the situation in general - if we stuck to the terms of our loan for the next year, bankrupted ourselves, and *then* lost the house ....

I should clarify that when I say "this mess", I meant the housing bubble in general and not your situation.

I think anyone could be in your situation. I also think everyone who got caught up in the housing mess thinks their situation is sympathetic.

I do think though that if things were truly WELL thought out, it would be tough to be in the mess you are in. My husband and I are looking to find a home we can afford for some time with only one salary, and in a pinch even if we BOTH lost our jobs (this is assuming we could get unemployment). We don''t make a TON of money, but we are probably urban professionals like you and your DH are. If we were in your situation, my husband would just get laid off and would find work here and we''d make the payments while he finds another job. If the company really wanted him and wanted to transfer him, we would discuss with them the house situation and either get the to give him a bonus making up any differences or a monthly allowance to help.

Death of one us? We''ll make sure to get life insurance. Divorce? That''s the only real sticky situation I can see, and we''d just have to grit teeth and figure that one out, but I am a big believer that marriage is lots of hard work, and so is he.

I''m not saying this to judge you - in fact, you yourself said you need to educate yourself...I''m not sure how much you were educated when you made the decision to buy a condo in 2006. If you read the thread where PP talks about her experiences, I think I said there that even though I don''t agree with it from a moral standpoint, at some point you have to do what makes financial sense for you. Yes, as a whole it annoys me that a lot of people are doing it with little regard to what happens to the system, but most people aren''t concerned with the system - they are in the end only concerned with themselves. And that''s normal.

 

[cara]

TGal, so only dual-earner families with reasonably balanced incomes (enough that either spouse alone could support the family) and ample enough reserves to survive almost any calamity or unexpected transfer or market event should buy houses? I don't know if I agree with that, but maybe I am just thinking selfishly. I want my husband and I to be able to buy something without waiting another 5 or ten years. My concerns about stretching too far are very real, but I'm not sure that the proper response is just to become extremely conservative with our risk tolerance and resign ourselves to renting forever. I mean that not just for us personally but also for the wider economy and society - at what risk level is it good for the economy and an individual to take on a large home loan? Because any loan is a risk, and the days of your average couple saving and saving and buying a house in cash just aren't realistic in many areas of the country. I'm not saying its not a good idea for people to plan for events like unemployed stretches or death and disability, but I don't know how one ever gets the risk all the way to zero nor that zero risk is really the right goal. Low risk certainly is, but how low?

As for your family's solution to Lilith's problem (husband quits, looks for local job), it may not be applicable. Without knowing what field and specialty her husband's job is in, you don't know that he would be able to find a suitable job locally in a timely fashion at the same or better pay scale. He could quit his current job only to sit around for months losing money and then end up with a job paying somewhat less, which leaves his family still in the hole a bit each month without a loan mod. Even if that isn't how it panned out, turning down the transfer is still a risky move, depending on his situation.

 

[TravelingGal]

Date: 7/30/2009 4:40:23 PM
Author: cara
TGal, so only dual-earner families with reasonably balanced incomes (enough that either spouse alone could support the family) and ample enough reserves to survive almost any calamity or unexpected transfer or market event should buy houses? I don''t know if I agree with that, but maybe I am just thinking selfishly. I want my husband and I to be able to buy something without waiting another 5 or ten years. My concerns about stretching too far are very real, but I''m not sure that the proper response is just to become extremely conservative with our risk tolerance and resign ourselves to renting forever. I mean that not just for us personally but also for the wider economy and society - at what risk level is it good for the economy and an individual to take on a large home loan? Because any loan is a risk, and the days of your average couple saving and saving and buying a house in cash just aren''t realistic in many areas of the country. I''m not saying its not a good idea for people to plan for events like unemployed stretches or death and disability, but I don''t know how one ever gets the risk all the way to zero nor that zero risk is really the right goal. Low risk certainly is, but how low?

As for your family''s solution to Lilith''s problem (husband quits, looks for local job), it may not be applicable. Without knowing what field and specialty her husband''s job is in, you don''t know that he would be able to find a suitable job locally in a timely fashion at the same or better pay scale. He could quit his current job only to sit around for months losing money and then end up with a job paying somewhat less, which leaves his family still in the hole a bit each month without a loan mod. Even if that isn''t how it panned out, turning down the transfer is still a risky move, depending on his situation.

Fair enough Cara. I''m just pretty conservative when it comes to money matters.

And yes, to some degree I think buying a house is a privilege not a right. I''m not saying there should be zero risk. I am saying for us, I want there to be minimal risk.

 

[cara]

Yeah, I want there to be minimal risk too. I''m having to balance that with my husband''s desire not to be 60 yro renters, or my own desire to have a little plot of land and some more room for raising kids someday (at least for when the kids are bigger.)

 

[Haven]

Lilith--I know TGal already suggested this, but I'm going to say it again.
Have your husband talk to his company. If they really want to relocate him, then they need to make it worth his while.

A friend's husband's company started up a new branch in Florida last December, we all live in Illinois. His company was very serious about helping them relocate to Florida so he could start up the new branch. He refused, they didn't want to move.
The company came back and asked him to spend two months there to get everything started. Again, he refused--they had recently married and my friend didn't want to be apart for two months. (Not my decision to judge, she was adamant about it.)
The company came back again and said they would pay for their mortgage here in IL, their housing out in FL, *and* they would give him an extra bonus to cover my friend's take-home income if she got a short-term leave from her company. This was a bonus on top of the one they offered for him to go to FL in the first place.

SO, her company welcomed the unpaid leave because they're in a financial crunch, and they took his company up on the offer.

Now, I don't know the details of your situation, but it does seem that when a company really wants an employee to relocate, they are often willing to make it worth his while.

It wouldn't hurt to ask, anyway, right? I assume they're already paying for your move and all related expenses.

Good luck.

 

[NewEnglandLady]

Date: 7/30/2009 4:40:23 PM
Author: cara
TGal, so only dual-earner families with reasonably balanced incomes (enough that either spouse alone could support the family) and ample enough reserves to survive almost any calamity or unexpected transfer or market event should buy houses? I don''t know if I agree with that, but maybe I am just thinking selfishly. I want my husband and I to be able to buy something without waiting another 5 or ten years. My concerns about stretching too far are very real, but I''m not sure that the proper response is just to become extremely conservative with our risk tolerance and resign ourselves to renting forever. I mean that not just for us personally but also for the wider economy and society - at what risk level is it good for the economy and an individual to take on a large home loan? Because any loan is a risk, and the days of your average couple saving and saving and buying a house in cash just aren''t realistic in many areas of the country. I''m not saying its not a good idea for people to plan for events like unemployed stretches or death and disability, but I don''t know how one ever gets the risk all the way to zero nor that zero risk is really the right goal. Low risk certainly is, but how low?

I''m in a similar situation as T-Gal. DH and I have been saving for a house for over a decade in hopes that we wouldn''t have to take out a mortgage, but we are not going to meet our goal. We will take out a mortgage that we can afford on one income and because we live in a high-cost region, that 10 years of savings will be the only reason we can reach that goal. If we can''t find a house that fits our needs in our budget, we will continue to rent for however long it takes. If we''d bought a house when we wanted to, we''d have bought years ago, but that is irrelevant. We''ll buy a house when we can afford it.

Renting is definitely not bad for the economy, in fact if more people had rented and not bought until they had at least 20% down, I seriously doubt we''d be in the housing mess we are in now. Not only that, but people wouldn''t have to shell out as much money simply to pay the interest on these massive loans. I absolutely think that zero risk is the right goal. Feasible? Not for most, but can you imagine how much more stable our economy would be if everybody were debt-free?

Lilith, I didn''t chime in in the beginning because everybody was telling you option #3 and I agreed, so you probably didn''t want to hear it one more time. Sorry that you''re in the thicke of this, you are definitley not alone. Good luck!

 

[steph72276]

I also think the company should offer you guy something. My husband''s job has relocated us 3 times now and each time every expense was fully paid.....they paid for movers to come in and pack everything, paid all closing costs and realtor fees on both the house we were selling and the one we were buying, and offered to buy our old house for what it appraised for if we couldn''t find a buyer. We have been very lucky in that he works for a great company, but I do think if it was their idea for you guys to move, they should be willing to help out in some way.

 

[Dancing Fire]

Date: 7/30/2009 4:52:47 PM
Author: TravelingGal

Fair enough Cara. I''m just pretty conservative when it comes to money matters.

And yes, to some degree I think buying a house is a privilege not a right. I''m not saying there should be zero risk. I am saying for us, I want there to be minimal risk.

i agree !! since when was it against the law for not owning a house?

 

[Dancing Fire]

Date: 7/30/2009 5:18:00 PM
Author: NewEnglandLady

I''m in a similar situation as T-Gal. DH and I have been saving for a house for over a decade in hopes that we wouldn''t have to take out a mortgage, but we are not going to meet our goal. We will take out a mortgage that we can afford on one income and because we live in a high-cost region, that 10 years of savings will be the only reason we can reach that goal. If we can''t find a house that fits our needs in our budget, we will continue to rent for however long it takes. If we''d bought a house when we wanted to, we''d have bought years ago, but that is irrelevant. We''ll buy a house when we can afford it.

Renting is definitely not bad for the economy, in fact if more people had rented and not bought until they had at least 20% down, I seriously doubt we''d be in the housing mess we are in now. Not only that, but people wouldn''t have to shell out as much money simply to pay the interest on these massive loans. I absolutely think that zero risk is the right goal. Feasible? Not for most, but can you imagine how much more stable our economy would be if everybody were debt-free?

Lilith, I didn''t chime in in the beginning because everybody was telling you option #3 and I agreed, so you probably didn''t want to hear it one more time. Sorry that you''re in the thicke of this, you are definitley not alone. Good luck!

then the housing bubble of 2006 would never of happened.

 

[Rock_of_Love]

Date: 7/30/2009 2:57:27 PM
Author: Lilith
Rock, thanks for the tip. We''re definitely trying for loan modification as our first move, but it''s apparently a veeeeeeeery long process, and we have to be out of her by September ... hence my need for back-up plans in case loan modification falls through. Managing this from across the country is going to suck, I think. Unfortunately, we don''t qualify for the Obama program (this is only our primary residence for another couple of months), but I do thank you for the suggestion.

I don''t know who your bank is, but they are going through a lot quicker these days with most - like 1-2 months - but you would have to get on it NOW and really push for it. You still have time...and it is your primary residence NOW so you DO qualify. Unless, there is another reason you don''t qualify like too much income.

 

[Lilith]

Date: 7/30/2009 3:55:50 PM
Author: TravelingGal

I should clarify that when I say ''this mess'', I meant the housing bubble in general and not your situation.

I think anyone could be in your situation. I also think everyone who got caught up in the housing mess thinks their situation is sympathetic.

I do think though that if things were truly WELL thought out, it would be tough to be in the mess you are in. My husband and I are looking to find a home we can afford for some time with only one salary, and in a pinch even if we BOTH lost our jobs (this is assuming we could get unemployment). We don''t make a TON of money, but we are probably urban professionals like you and your DH are. If we were in your situation, my husband would just get laid off and would find work here and we''d make the payments while he finds another job. If the company really wanted him and wanted to transfer him, we would discuss with them the house situation and either get the to give him a bonus making up any differences or a monthly allowance to help.

Death of one us? We''ll make sure to get life insurance. Divorce? That''s the only real sticky situation I can see, and we''d just have to grit teeth and figure that one out, but I am a big believer that marriage is lots of hard work, and so is he.

I''m not saying this to judge you - in fact, you yourself said you need to educate yourself...I''m not sure how much you were educated when you made the decision to buy a condo in 2006. If you read the thread where PP talks about her experiences, I think I said there that even though I don''t agree with it from a moral standpoint, at some point you have to do what makes financial sense for you. Yes, as a whole it annoys me that a lot of people are doing it with little regard to what happens to the system, but most people aren''t concerned with the system - they are in the end only concerned with themselves. And that''s normal.

Oh, I know, and I''m not taking it too personally - if I were to, frankly, I''d be acting like an idiot, since I did put myself out there in order to get the advice. But, here''s the thing ....

... I kind of think you''re indulging in a false sense of security. I think *anyone* who thinks they have all their bases covered for the next 5 to 10 years is, just because ... things change. I''m not saying that in some kind of stupidly ominous way, or to try to engender sympathy. It''s just ... best-laid plans of mice and men, y''know?

When we bought this house, we were planning to stay for at least 6 years, probably much, much longer. And, having to leave now ... well, the house is the least of our worries: this is torpedoing my career, and to say that I''m heartbroken is putting it mildly.

While I''m fairly poorly educated on fiscal terminology, I generally tend to play things safe. With the plans we had, everything would have worked out well. It''s not any one thing that sank us, because we did plan for emergencies: it was the combination of spousal transfer in a job where they damn well promised they wouldn''t do that + crap economy where he can''t get another job in his field right now (yes, we looked) + expanding family. We can''t take the risk of his having to switch professions right now.

This isn''t to say that I might not be stupid. Trust me, I feel really, really stupid right now, and I keep replaying history in my head, trying to figure out what I could/should have done differently, where I should have put my foot down, in order to change how things have played out. This is just to say, while it''s great to plan ahead and try to cover all your bases ... it''s sort of the nature of the beast that sh*t will happen anyway, and then you need to cope. So, here''s me, figuring out my game plan for coping, in full awareness that no matter how good of a plan I come up with (all together now), things might not work the way I plan ....

 

[Italiahaircolor]

I''m also in the rent it out camp. Even if you lose money. It''s better than losing the home, or trying to get a short-sell it because banks don''t want that.

The market isn''t going to be this bad forever...we will rebound at some point, and dealing just in the "for sure" facts, it''s so much harder to rebound your credit. If this home goes into foreclosure, you''re looking at 7 years before this blemish falls off your credit report and thats the best case senario.

My husband works for a bank, so I very little bit about short sale v. foreclosure. But the key thing to know is that banks rarely approve short sales because it doesn''t help them. A bank would much rather have home in foreclosure and bring in more money on that end because they''ve removed you from the equation--which is why many people who bid on short sales never hear back, sadly. If you go into short sale, you could get a full listing price offer, and never be able to close on it meaning that''s time you''re still paying your hefty mortage and inching closer to losing it all together.

At least if you still own the home, and rent it there is chance that in a year or two or three you''ll be able to sell it for a decent price. On a side note, if you are going to rent it out, contact your local fire or police department and ask about landlord classes, some states require them inorder to become landlord.