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Richard, Lawyer
Category: Real Estate Law
Satisfied Customers: 55720
Experience:  32 years of experience as lawyer in Texas. I'm also a Real Estate developer.
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I own a home purchased in 2007 for 365000 in baldwin ny. Its

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I own a home purchased in 2007 for 365000 in baldwin ny. Its now worth according to online estimates at 260, 000. I am going through a divorce and cannot afford the mortgage by myself. If I could afford I would like to keep it but my wife is on the deed and mortgage and wants to try a short sale. She does not want re modify anything she just wants nothing to do with the house. I dont think I would be able to sell and break even and the house needs some upgrades in the kitchen. What are some of my options to get out of this problem? Is short sale a guarantee or is foreclosure my best option?
Welcome! My goal is to do my very best to understand your situation and to provide a full and complete answer for you.

Good morning. There are basically 3 options available to you when considering walking away from the property: foreclosure, deed in lieu of foreclosure or short sale. New York, unfortunately, is a deficiency state...which means the lender can pursue the borrower for the deficiency...the amount owed over the amount of the foreclosure sale. Whether or not they will depends upon their assessment of the collectibility of a deficiency judgment. So, if you can convince them there is nothing for them to get, and that if they were to pursue a judgment, you would simply file for bankruptcy protection and get the judgment discharged—and even if you have no intention of doing so, it is still good leverage with the bank because they do not know whether or not you would… then it is unlikely the lender will spend the time and money necessary to get a judgment they believe is uncollectible in the end.

Short sales are dicey. It is generally preferable to do a deed in lieu of foreclosure with the bank (where the bank accepts a deed in exchange for releasing the borrower from the loan) or let the bank foreclose. A deed in lieu of foreclosure saves the bank the time and expense of foreclosure. A short sale only frustrates the buyer and costs the buyer more because the broker is paid a commission which results in less proceeds being available to the bank.....and if the bank is going to release the borrower from the deficiency, it would do so under a deed in lieu of foreclosure without the frustration to the buyer and the payment of the broker commission. If the bank will not agree to release you from liability for the deficiency as part of a deed in lieu, then just let the bank foreclose.

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Customer: replied 4 years ago.

So I can assume that since my mortgage is under water over 100, 000 dollars that it should actually be easier to get the deed in lieu option to work? Do I just tell the bank that I want try this option because of a divorce and I can't afford it by myself?


I receive offers to refinance every day and with these so called new rates they say they can get me, I would be able to afford it myself but my wife wants out of deed loan and marriage. Are there ways to refinance without her?

Good morning and thanks so much for your reply. Yes, you would want to contact the bank, explain the situation, and tell them you want them to do a deed in lieu.

If you get divorced, your wife should be willing to give up the house since there is no value. And, then, if you refinance, you can do so without her involvement because you'll be the only owner and a refinancing would not involve her.
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