Expert: Dick Dennis - 5/2/2010

Question
I bought my home in 2005 at the peak of realestate values,I tried to sell my home 2 yrs later because I got engaged and wanted to buy a home in my fiance's area. Values kept falling and I was unable to sell and eventually ended up with an appraisal for $165k on my home I owed $180k on. I went through the torture of the obama loan modification process to find out I do not qualify after 9 months.Since I cant refinace to lower my rate because of the loan to value difference,I cant rent because my mortgage is about $400 more a month than I would be able to rent it for.I have excellent credit I dont want to ruin,but I just scrape by financially. Is there another solution to sell/rent my home and keep my credit standing good???

Answer
Would that I be able to help you the way I would want to, Terri, but unfortunately, the only way you'll be able to retain your present excellent credit is by continuing to make your payments.

I could stop there and that would be the crux of this message, but be aware that you are not the only one in this identical financial position. The way you can damage your credit the least is to sell your house as a short sale. To simply explain a short sale: It is when the lender agrees to accept your sale of the property while agreeing to accept less than your mortgage balance. A foreclosure knocks your credit down about 100 points at least. A short sale might knock it down about half as much.

Then if you're in a state that allows the bank to sue you for a deficiency on what you owed, you then have another problem. You did not say in what state your property is located, but in states like California, Arizona and a number of others, the lender is not permitted to sue for a deficiency . . . as long as the loan is the loan that was used to buy the property. If the property was refinanced, then for sure the lender is allowed to sue.

You can ask your local GOOD Realtor what is the deficiency requirement of your state. Or you can email me at the email address below and I will be able to tell you. I do wish you well.

Dick Dennis
dixiedee13@aol.com