Upside Down Sellers

2 Replies

Here's today's dilemma......

I have an older retired couple in a stable working class neighborhood who are anxious to sell and move to a suburban retirement community.  Unfortunately, they're upside down on their mortgage (like many home owners these days).  The market value is about $107K, but they owe about $120K (values have increased a bit lately).  A short sale doesn't seem to be in the cards, and a foreclosure would ruin their credit and make the retirement community move unlikely.

What are their options here?  Would a lease option or a land contract deal work? If so, how should it be structured? 

As always, thanks for any guidance.

Gary

Only option is short sale, not sure why that wouldn't be "in the cards", nothing else will get rid of that 1st mortgage.  

Only other option if you want to go the low road is to have em move out and defend the foreclosure while you rent it out and split the rent with em to help pay the legal bills.  

Medium screen shot 2014 09 26 at 3.23.05 pmDavid Sicherman, PBCHomeAuctions | (855) 888‑4853 | http://www.EasyTitleSearch.com

Need more information here. How many years left on the mortgage? Is it a fixed rate mortgage? What is the monthly payment PITI? What is the rental rate for the house? And what is your interest here? Do you want to buy it or are you just trying to help?

I would look at the monthly mortgage payments and the rental rate to see if there is a reasonable spread. If there is, I would make a subject to offer, take over the payments and rent the property out.

If the existing mortgage rate is high, is there an opportunity to refi to get a better rate to reduce the payment so I can implement the above strategy. Be careful on the refi costs and the payback period makes sense. 

If this was a 30 yr mortgage and they have less than 15 yrs left you could even give the sellers a few thousand dollars to move because most of the monthly payments will be going towards reducing the principal amount increasing your equity.

Hope this helps,

Good luck