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Should I Foreclose My House

Have two houses not selling or renting out and we are broke. My husband says we must as christians pay our debt. I'm thinking foreclosure. I understand what it does to your credit, but what good is good credit with no money, ever? Has anyone else had to foreclose and what is it like?

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 ---Dianne on 6/28/07
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One thing to do would be to rent the properties for less to help you make the payments. Have you lowered the price of the property for sale so that it will sale quicker? Now is a poor time to sell as it is a buyer's market.
---Susie on 11/22/08

I am in the same boat! Our subprime loan went up $500 per month, and will continue to adjust for the life of the loan. We have such bad credit, we cannot refinance. I could careless about my house...I can live in an apartment. I'd be anxious to hear of any foreclosure experiences.
---hockeybag on 7/29/07

Perhaps an investor would be interested in buying a % interest in your home for cash & a % of your future equity.

Example: home is worth 300,000, you owe 200,000

You sell 35% equity interest (not ownership) of your 100,000 equity for 25,000 cash & 10% of future equity over 100,000.

Investor makes 10,000 immediately plus 10% of future equity. You keep your home, 65,000 current equity, & 90% of future equity.

F/C loses all.
---a_servant on 6/30/07

Real estate transactions are a speculative business, in todays lending economy. Lenders charge interest fees, which factor in a certain amount of forecloser's and non-payments, due to unforeseen circumstances. Your husband is a bit out of touch with modern finance when he says that "we must as christians pay our debt." I advise you to hire a session with a professional Christian financial couselor, instead of looking for good advice on a blog.
---harold on 6/30/07

There are many options that you really need to discuss with your bank or mortgage company. Those are the people you should be asking, not bloggers. If you have a lot of equity in the homes, you can refinance and even take money out for yourself. If you have a high rate you can refinance to a lower one. There are even loans where you pay interest only or partial interest, but those would be only to buy you time while the houses sell.
---ralph7477 on 6/30/07

Remember also that God is still in the miracle business. God can sell and rent that property just as quick as HE wants to do it. We just have to wait until his time. Been there, done that!
---Susie on 6/29/07

I sympathise with you, been there, done that. Have you thought about putting them both up for auction? That is what we did, and with prayer, we came out ok, we did not get what we wanted, but, we can live with what we got. IF you decide on this, look around and see the advertisment, from companies, and choose the one you like the best. Be Blessed !!! This too shall pass....
---Gayla on 6/28/07

Dianne, as an alternative to traditional renting, I've also known of people to rent bed space in their rental properties. Some do it as a ministry to help people in transition get back on their feet and others only do it for profit. At any rate, they're putting three or four beds in each bedroom and renting them to people for $100 - $800 per month (depending on the market and motive). Letting outreach organizations know that bed space is available keeps their beds rented.
---AlwaysOn on 6/28/07

Do not foreclose. Start talking to people in rental properties.Talk till you cant talk no more and then some.Just take a look at how your living and cut back on everything. Eating out,movies,ect. Youll get through this. This bad market will break. and when it does you will have better income,and you wont be kicking yourself. Think of how much you will be able to give to others. Trust me.Been there. anything but foreclosure.
---mike on 6/28/07

#1 Dianne, I am a Realtor in California. If you are behind on your payments the first thing the bank will do is file a "Notice of default." This is the first step of forclosure, it is a filing within your county that they have not received payment and you are in default.
---Ryan_Z on 6/28/07

#2 Dianne, Others here have mentioned a "Short Sale." For the bank to agree to a short sale you must show them evidence of distress such as, but not limited to, death of a spouse, loss of job, and in some cases a drastic rate increase from an ARM. Keep in mind that if you do go into a short sale scenario whatever monies the bank "gifts" you, you will have a tax liability on.
---Ryan_Z on 6/28/07

#3 Dianne, For example, if you owe $350,000 and you can only get $300,000, the $50,000 is considered income by the IRS and you will have a tax liability on that $50,000. I suggest you discuss this matter with a CPA. It is very important to pay your debts; however, in the current housing market many sellers are getting hit hard due to poor loan programs that they used to purchase or people who used their home as an ATM and pulled out all their equity to purchase "Toys".
---Ryan_Z on 6/28/07

#4 Dianne, The foreclosure process is twofold. There is "In Forclosure" which means that the property is pending foreclosure and the bank is in the process of taking the property back and there is "Foreclosure" or "REO" which means that your name has been removed from the deed and the lending institution is now the legal owner of the property. Also keep in mind both forclosures and short sales will negatively effect your credit score.
---Ryan_Z on 6/28/07

Am so sorry about what u are passing through, but dont u think ur faith is been tried, i prefer u sowed it as a seed and xpect the miraculous upliftment and promotion from God. Think about it
---Chikezie_Julia on 6/28/07

Why not sell it before it's foreclosed on? Besides a traditional sale, you can do a short sale or even a lease option. If you're in debt, I would think you'd want to recoup at least something from your investment. My suggestion is that you pray about it and then seek professional guidance on your options.
---AlwaysOn on 6/28/07

If your not living in either house, rent them out to someone, that is how you can pay your debt in monthly payments. Your husband is right, we must pay for our debts. But it is not a sin to foreclose on your home. But before you decide to foreclose on your home, think about renting or selling the two houses.
---Rebecca_D on 6/28/07

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It will not be you who does the foreclosure. It will be the bank. You can sell your property at what they call a "short sale" where it can be sold for less than you owe. You must contact your bank and get them to agree to this. If your property is foreclosed on, there is a good chance that you will be forced into bankruptcy because they can come after you for the balance if the house does not end up selling for what is owed. Foreclosure will mean that your credit is ruined.
---Susie on 6/28/07

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