1st mortgage 50k 2nd mortgage 20k. doesnt want house.

4 Replies

I have a friend who has been wanting to get rid of their house for awhile. Problem is market has dropped so low that after paying on the house for 11 years, there is no equity on the house. There was equity in the house after they purchased, which was 2004, reappraised a few years after purchase and appraised at $115k.

Friend was told by a Real Estate Agent about 2 years ago could put on market if fixed up at 89k. However they would have to put about 10 k in it. Not seeing any point in all the hassle of putting 10k in it and possibly breaking even, they didn't upgrade.

Now 2nd mortgage is due in Full.

Foreclosure not sounding like a good option, because 2nd mortgage says they would still owe the 20k.

Friend wants to move out of the house and move about an hour away.

Friend is wondering if she should see about renting it, but would probably need 10k for upgrades, doesn't have 10k but wondering if she approaches hud, if hud might pay for repairs to use the house as a hud rentable house.


get a private lender or someone to lend the 10k, to rent it out, but then how would they pay that person back?

She currently has forms to turn back in to 2nd mortgage company but only has till Friday to turn them in. She is lost in this matter and would just like to walk away.


full basement, not finished, not a walk out. approx. 988 sq feet. In St. Louis, MO.

2nd mortgage company originally said before checking numbers that they could put 2nd and 1st together and make one payment of less than $400 a month for 30 years, which seemed ok, wouldn't include taxes or insurance. Friend thought cool, She could rent it out and make $300-400 a month in cash flow. Now 2nd mortgage company is saying cannot combine, but they can do a ARM on the 20K. Payments are around 150.00 per month.

1st mortgage is currently at $700 per month.

Friend has to move by 2016 School year, so by July or so, but would like to move like

6 months ago. She feels stuck in her house and doesn't want to be there. Doesn't know what to do.

Any suggestions on how to get out of this mess?

find a local realtor that is familiar with doing a Short Sale and put the house on the market, as-is.  Have your friend give the realtor authorization to be a "third party negotiator" and you will be able to get the real story. A foreclosure is likely to be an option but is worse for the credit score.  The Short Sale will require some kind of hardship.  Find the Making Home Affordable" website, do some research on the options and get working on a solution.  

Good luck.

Hi Dina,  Some of the mortgage folks on here should know more about this than I but I just got info from a mortgage broker about rules that would allow an underwater owner to rent their home and have that rental income show as income in qualifying for another property as long as there was a lease.  Not sure if this would be helpful in this situation or not but wanted to share a potential solution.  Best, Teresa