Paper Money - Paper Tales

Thursday, December 21, 2006

Up a Creek!

Here is a sad but increasingly more common case from the latest Washington Post's "Real Estate Live" with Maryann Haggerty.

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Up-a-Creek, Md.: We bought our house a year and a half ago, and took out a home equity loan to pay of some bills about six months after we bought. Prices in the area had gone up so much in the six months that we had no problem getting the home equity loan. Now, though, my husband has been transferred to Ohio. We've had our house on the market for more than nine months now, and have reduced the price three times and it still hasn't sold. We've had several offers at a lower price, but the price we have it listed at right now is the bare minimum we can sell it for and be able to pay off the mortgage and home equity loan. Our lender won't let us sell unless we can pay everything off, and we don't have any spare money. We thought about renting, but we live in a small town and there is no rental demand at all. Do you have any suggestions of what we can do? There must be other people in this situation, now that the market is softening.

Maryann Haggerty: I'm very sorry. This is, indeed, the worst-case scenario for many people. In the early '90s, when the market was soft, it was not uncommon for people in your situation to have to write a check at the settlement table when they sold. So, first, try to rent it if you can. If you must sell, you may have to take a loss. Sometimes it is possible to turn the house back to the bank in lieu of foreclosure and work out a payment plan.

What you DON'T want to do: Get yourself into any complex "rescue" plan with a third party that in some way involves you taking out MORE loans.

3 Comments:

  • Maryann should have advised her to dump the place NOW for any price. Renting is just standing by, watching the hole get deeper.

    By Anonymous Anonymous, at 12:21 AM  

  • Not a clue that her own greed and stupidity ruined her life. "There must be other people in this situation," so that must make it all right and the government will bail her out.

    Try hemlock, Maryann.

    By Anonymous Anonymous, at 2:53 PM  

  • The best option right now is to sell it at the price being offered even if losses might be made. It's better than nothing.

    By Anonymous Lance Puig, at 11:32 PM  

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