What is the best way to get rid of an underwater mortgage?

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What is the best way to get rid of an underwater mortgage?

I own a condo and have an interest only loan and I am not behind on my payments. I am severly underwater; I owe $89,900 which is what I bought it for 6 years ago. It may appraise in the high 160’s. I would like to just walk away but I know in my state that they can come after me for remaining balance. So I was wondering about how to do a deed in lieu? Or what my best option would be?

Asked on June 28, 2012 under Real Estate Law, Kentucky

Answers:

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

Answered 9 years ago | Contributor

I am a little confused here.  If the mortgage is $89,900 but the value of the condo is $160,000+ then you are not under water.  If you sell the condo then the mortgage will be paid off and the rest will be yours.  If you were really under water then a deed in lieu of foreclosure would be a good idea.  Or a short sale with a waiver of deficiency in both cases.  Please get help from some one in your aera.  Good luck.  


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