Help: My Home is in foreclosure

[^Hawk^]

Sorry this is a bit of a novel, but I'm really need to know if I'm handling this correctly.

In Feb 2005 My wife and I filed CH 7 bankruptcy, but we reafirmed on our home.  We filed bankruptcy as a last resort to keep it.  We had started a MAJOR home improvement project that spiraled out of control.  We had an original mortgage of around $125,000 and a second from one of those 120% lenders for $70,000.  The project was moving along fine, until I hurt my back working on it.  It delayed things by nearly 6 months.  Then my job of 11 years, suddenly put a freeze on all overtime.  I went from making $75,000/yr to $50,000 overnight.  The extra money was helping pay the bills, the extra mortgage and buy materials to keep the house project moving.  Once we filed CH 7 and stopped paying the credit cards, I was able to resume working on the house.  Things were looking to be OK.  Then in early April, I lost my job.  3 days later the CH 7 paperwork arrived and debts were dismissed.  I honestly thought I could find a job and still swing things, but the stress from the project, CH 7 and loss of my job, had caused my marriage to dissolve into one big screaming match.   So we divorced in July.  I was on unemployment until October, I now have a fledgling Handyman company, that is making no where near what I made before.  My ex and I have both moved out of the home, and have been working with a comapny that buys distressed homes, works with the lenders to get them to do a short sale, and supposedly lets us pick up the pieces of our lives.  We'll this has been going on for several months, we just had a foreclosure cort date a week ago.  The guy we're working with says the 1st mortage company wants to play ball because they'll get paid in full no matter what happens.  The second mortgage company is being difficult as they stand to lose around $35,000 if they accept the short sale, and significantly more if the house goes to auction.  This was a 750 sq ft Cape Cod, that I added a complete 2nd floor to and a 20x22 addition.  It is now 2500 sq ft.  None of the inside is finished, it is only weathertight and framed.  Everytime we ask the company that is helping us what is going on, they say it still moving forward, the 2nd Mort, is playing hard ball.  They keep reassuring us that this is how the game is played, and to not worry.  We written hardship letters, explaining everything that has went on this last year.  The 2nd Mort, insists that since we signed the reaffirmation they expect us to pay.  
So that is what is going on.  I'd be happy to provide any more info if needed.  

Please, someone who has some insight on these type of issues, are we really doing this the right way, or did we get conned?  It unerving to have the Sherrif's office serve you with papers every few weeks.  Please help.

[marcus335]

Your short sale company needs to make a better case to the 2nd lender.  Show them photos of the inside completely undone.  They'll quickly realize they are going to lose 100% of their money if it goes to auction.  They should budge on the short sale.  

[^Hawk^]

The short sale company has extensively photographed the inside.  He documented every scuff, scratch and ding too.  The main floor which is original, has major work that needs to be done due to holes I had to punch in walls and ceiling to re-wire electric and for plumbing.  One problem is from the outside, the house looks amazing.  Without seeing the inside, realtors are apprasing the house for $250,000+.  He keeps telling the 2nd Mort. that they need to do a walk through but so far no dice on that front.  

[sybadon]

Dam Hawk, sorry to hear of your hard times....i hope someone can shed some light here in the forums......keep your chin up....there's alway's light at the end of the tunnel....best of luck to you

[mtg123]

so you owe roughly 200k?  plus interest, penalties and back payments.  is this something worth saving?  i get the idea that the 250k value that some people are putting on it, you think is really high.  

[^Hawk^]

The house would be worth the 250k IF it was completely done.  The entire upstairs is roughed framed, that is it.  Most of the electric, plumbing, insulation needs to be finished.  Then it needs to be drywalled, painted, and carpeted.  The downstairs literally needs to be demo'd to the studs, the wiring needs to be updated, since it is 60 years old, and flooring needs to be replaced.  Depending on materials it could cost 50 - 75k to have someone finish it.   After we paid a real estate agent to sell it, we'd still be in a significant hole.  The whole project hinged on the savings that we would be making by me doing all the work.  Yes, I am qualified to do all the work.  

[Roger J]

Hawk,

I'm not sure if you're trying to keep the house, or just find an easier way to get rid of it.

From what you've posted, however, trying to "save" the foreclosure is probably pointless.  You've already filed for BK, you've been divorced, I dare say that by now, you've also got some late pays and charge-offs on your credit, too.  At this point, a foreclosure isn't going to do much more harm to your credit.

Keep in mind that this is only an opinion based on what you've posted and not legal advise (full disclosure ), but here's what I'd do.  Contact the lender(s) and see if they'll do a 'deed in lieu of foreclosure.'  Basically, you agree to give them back the property without them going through the foreclosure process.  This also seems not to affect your credit as bad as a full foreclosure.  If they won't do that, then I'd suggest that you simply leave the key in the door and move on with your life.

My 2, hope it helps,

Raj

[^Hawk^]

Thanks Raj,  I guess what I'm asking is.....what can honestly and probably happen to me in my situation.  I technically don't even have a full time job.  I'm guessing that the house would pull maybe $150k on a good day based on all the work it needs.  That leaves the 2nd Mortgage company in a big hole.  What can I expect them to do in terms of coming after me for the remaining money.  I'm nearly 100% sure that the first mortgage and any back payments and interest will be paid off by the auction.  

[Roger J]

Hawk,

That's a question probably best suited to a local RE atttorney, as states have their on laws and guidelines concerning foreclosure.

It may also help to review your documents that you signed when you got the loan.  It should be outlined in them what will happen and what can happen if you default.

Raj

[mtg123]

that was what I was getting at when I posted.  In my opinion, it doesnt seem worth fighting for.