Rent while trying to short sale/foreclose?

[Heat4212]

What is the name of your state (only U.S. law)? IL

My husband's company isn't doing very well (lay-offs, hiring and raise freezes, slashed benefits, etc.). This has been going on for about 5 years and things are starting to get too tight as our insurance premiums and cost of living increases.

He found a new job with a solid company over 2 hours away in another state. We'd like to take it, reduce our cost of living, and start over.

And you know what's coming next.... we are about $50k underwater on our house. The new company will give us relocation assistance, but that does not include buying out the house. We also have excellent credit; I know we'd be giving that up to get out of Dodge, but nevertheless, I feel it's time to take the hit and move on. Since we will be away, can I rent out my property (rent for this type of property is about $400 less than our mortgage) if I disclose to the renter that it will only last as long as it takes to short sale or foreclose?

We can't afford to maintain 2 households (we plan on renting ourselves in the new city). I could drive down every-other weekend to cut the grass and check on the place if it sits empty, but it seems to me that it would be better for everyone if someone lived here during the process.

I plan on sending the rent to the bank. I am not trying to pull a fast one.

One last question, if I do this, would it be better to cancel my escrow and pay my taxes separately? Should paying property taxes take precedent over paying the mortgage? There is no HOA.

Other facts: We called around to re-finance to try and reduce our payment enough to equal rent, but no luck. We only have one loan (VA). We have no other debt except Child Support which is our #1 priority (cars are paid off and no credit card debt).

Thanks for your time.

 

[Zigner]

Perhaps your husband should commute...

Really - paying for the house is a commitment you took on and it is one that you are able to continue doing.

 

[Heat4212]

Perhaps your husband should commute...

Really - paying for the house is a commitment you took on and it is one that you are able to continue doing.

While I do appreciate any and all replies, I am curious if you actually consider a response such as yours helpful? I take it from your reply that you could really care less about our circumstances and the well-being of my family, but just for fun, I will explain why I will not be taking you up on your suggestion.

If my husband were to commute, that would be 216 miles a day round trip. That would cost us approximately $700/mos in gas, not to mention wear and tear to his vehicle and the environmental toll. We live outside a major city, so add a 1/2 hour to the commute each way for rush-hour traffic and that's a six hour drive round-trip.

That $700 gas cost alone would be enough to make us default on our mortgage. I don't have a cell phone, we don't have cable or satellite TV, we use a very cheap Internet/voip provider for our phone, we haven't turned on our A/C in over a year, my kids wear hand-me-downs, and we drive older cars that are paid off. And if those were to go (from excessive wear commuting 6 hrs a day perhaps), we would have no room in the budget for even a used car payment.

As my husband's company trims the fat, we have like-wise tightened our belts and made due. But like I said before, the writing is on the wall, and I fail to see how it is responsible of me or advantageous to the bank to wait until his job is gone before we start planning for the future. Once that happens, there will be NO payment. Not only will my household collapse, but my stepson's household as well (as his mother has never been able to find work in this economy and relies on CS for 100% of her income). Not to mention we will no longer afford to be able to fly my stepson out for visits since he lives 3,000 miles away and that is the only way to see him.

But because we made one bad business decision, my husband should just cross his fingers and hope his company hangs on another 27 years until our mortgage is paid off? Jeopardizing the security of not just the children who live with him, but his ex-wife and their son as well? And reducing the amount of time he spends with all his children to virtually zero? Really? That's the ONLY choice that fits into your ethical code?

And in case you're wondering, things were not tight when we moved in. We did not buy a $400k house just because we could. We bought a $235k house... for a city suburb in 2008, that was pretty darn good. That was before his company cut our health-care plan, axed annual bonuses, froze raises and got rid of their affordable in-house daycare. Like I said, we really want to do our best by all parties involved, but we need options not moral superiority. If my bank's attitude is anything like yours then that will actually help alleviate the moral burden I carry to do the best I can by them. I will just run out and sign right up with "www.youwalkaway.com/". So I just wanted you to know that your callous attitude actually makes people care LESS about "obligations" and just adopt the same "too bad for you" attitude that you have shown me today.

 

[Heat4212]

Bank has declared bankruptcy

Last night I got a letter from my mortgage bank saying they were declaring bankruptcy. Does anyone know what affect that will have on the short sale/foreclosure process? Is that likely to slow things down for me if I pursue one of those routes?

If I try to refinance to a 40yr to be able to cover the payments if I rent the house out, will a bank going through bankruptcy be able to do this or will I have to try to go through another bank?

Thanks for any help.

 

[FlyingRon]

Absolutely none except you are unlikely to get them to do something until the bankruptcy plan is approved. Either they'll come out themselves under a reorganization or your loan will be assigned elsewhere.