If my house is upside down but someone is willing to take over the balance of the loan, is that possible?

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If my house is upside down but someone is willing to take over the balance of the loan, is that possible?

I can’t afford the $1600/month mortgage plus property tax with my monthly net of $1,900/month at a full-time job, I still have my monthly rent where I live, and I have a car payment and credit card debts. I haven’t been late on any payments, but I can’t afford it anymore. I want to let it go one way or another. Someone is willing to take over the loan even though it’s $30k over it’s worth, is it possible for me to transfer the loan, what does that entail? If not, what can I do to get rid of this home? short sale, foreclosure, bankruptcy?

Asked on April 25, 2011 under Real Estate Law, California

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

It is really commendable that you have been able to maintain things thus far.  I do think that you need to seek help in figuring things out.  Now, you have a few options.  Unfortunately one of them is not transferring the mortgage.  Generally speaking mortgages can no longer be "assigned" to another party.  Years ago you could purchase a house with a contract of sale and the owner could assign  - or transfer - the mortgage to the new buyer with bank approval.  Those loans are long gone.  Have you tried modification of the loan to a lower interest rate? Or would you rather just be rid of it?  A short sale is an option here.  But you must make sure that you have bank approval of the sale AND you MUST make sure that the bank "waives the deficiency."   The deficiency is the amount of money that is left on the loan when you sell the house for less than the mortgage.  A foreclosure will hurt you as will bankruptcy.  If you are up to date then there is no need for that.  If you want to transfer the property back to the bank then ask about a "deed in lieu of foreclosure." Again, make sure that the deficiency is waived.  Good luck.   


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