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Ellen, Lawyer
Category: Real Estate Law
Satisfied Customers: 36715
Experience:  25 years of experience helping people like you.
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We live in VA and have a home that I purchased in 2003 and

Customer Question

We live in VA and have a home that I purchased in 2003 and then after getting married we subsequentlly refinanced for about $220k. In 2007, we put it on the market and started building a new home. At the time, we were confident about it selling as the market had been booming, particularly in our area. Fast forward six months, our new house was finished and we moved in but the old house had not sold (December 2007). We knew someone willing to rent the old home and even though the rent would not cover the entire mortgage (due to the refinance where we pulled money out for renovations) we decided to go this route to at least get some help with the mortgage. In 2008, I became pregnant with twins, had preterm labor and had to go on bedrest for over a month. Previously, I had two jobs working from home. During this time of bedrest, I lost one of the jobs (the more lucrative one). The twins were born early and had to spend over a month in the hospital. My time and the twins' time in the hospital led to medical bills that we are still trying to pay off.

During this time, we struggled and managed to keep both mortgages current as well as everything else. We have sold everything that we can to help provide more money. Now those monies have been depleted and we just don't have anywhere else to pull the money from. We contacted Green Tree, the mortgage company for the first home and completed a hardship packet. We do not qualify for the Making Homes Affordable program since it's not considered a primary residence now. We are two months behind but have made the subsequent payments to keep the loan from proceeding to foreclosure; these payments are being "held" and not applied to the principal at this point (at least this is my understanding).

Our rep at Green Tree also recommended putting the home back on the market because she said if we wanted the option of doing a deed in lieu of foreclosure, it would have to be on the market for at least 60 days. We did this about a month ago. Supposedly our paperwork has been submitted for a home modification in early June and we have not heard anything yet. I am not hopeful of this coming through. I am also not hopeful of the home selling because we owe so much on it and the value of the home is low at this point.

I'm wondering if the modification doesn't come through, would a deed in lieu be our best option? Should we hire a real estate attorney to represent us in this matter? (I'm guessing the answer is yes to this). and is it concievable to get a deed in lieu agreement where they will not pursue us for a deficiency?

Thanks! Sorry this was so long but figured it was better to give a full explanation of our situation.
Submitted: 8 years ago.
Category: Real Estate Law
Expert:  Ellen replied 8 years ago.

I am the JustAnswer expert that will be helping you today. I am a lawyer with 25 years experience. Although I am not your attorney, I hope that I can give you helpful legal information.

Based upon your post, you have sold your assets to pay your debts and are still struggling. You may want to consider a chapter 7 bankruptcy. I will explain.

As an individual, there are two types of bankruptcy available. A Chapter 7 and a Chapter 13. There are distinct differences in between a Chapter 7 and a Chapter 13 bankruptcy.

A Chapter 7 bankruptcy could discharge (erase) all of your unsecured debt such as medical bills, mortgage deficiency, credit cards, judgments and personal loans. It would be an opportunity for a fresh financial start. However, you may have to surrender assets, if any, that exceed your exemption.

A Chapter 13 bankruptcy is a repayment plan for an individual. It may require that you repay some of your unsecured credit card debt over a 3 -5 year period. However, you may retain assets that exceed your exemption.

Here are the exemptions for Virginia:

Best wishes for a successful outcome. If you have additional questions, please do not hesitate to submit them to me directly.

Thank you,