A 700 credit score, but thinking of a Miami foreclosure and wondering how long will it take for my credit to recover? This question was asked on Trulia’s real estate search here and answered to the best ability below.
Q: My 1/1,5 condo in NMB Fl was purchased for $137K in 2006, BUT the complex now has units selling for $17K-$24K. We also have about 25% of units in foreclosure, and almost 65% of the owners are not paying HOA fees. I am thinking of sending the keys to the bank because the city will probably shut down the building. After all, the HOA couldn’t pay its monthly bills and was already sitting on $180K in unpaid HOA fees at the start of 2009.
I hate to see my credit go in the toilet, but I can’t wrap my brain around holding onto a property that has decreased 85% in value in the last year. I’m a responsible person and pay all other bills on time. I’ve never been late with my mortgage payment in the 3 years since I purchased it. The bank won’t consider lowering the principle. In my opinion, it would be the TRUE way to help in part save the economy. But that is just my 2 cents, now valued at -$5 due to depreciation. Thanks for any advice!
A: Whew, that’s a tough call. Where’s the Suze Orman of real estate when a good question like this one pops up!? It seems as though the association/condo board has failed to go after delinquent fees needed to maintain the building. Delinquent payments are very common in all condo buildings. Yet at this high level of 65%, it is a surprise the water is still on.
The new Fannie Mae guidelines from January 2009 would not allow financing, so it must be geared toward cash investors. Yet, no investor would take on the liability of covering everyone else’s slack with inevitable assessments on the horizon.
Deed in Lieu
A Deed in Lieu of foreclosure may be the most viable option. However, speak honestly to your bank(s) about the current circumstances and negotiate DOWN the deficiency lien. Do not take no for an answer; keep climbing the peon ladder until the manager can help. I say this only because I’m afraid a short sale just won’t fly from lack of a ready, willing & able buyer. If you could find a buyer, please jump on the short sale option. This ensures there are no deficiency liens or 1099’s if it’s an investment property.
I assume this is your “home.” I also heard an interesting concept yesterday: FICO (credit) scores will be weighted in favor of owners such as yourself. Owners who are forced into foreclosure or handed over their properties between the years of, let’s say, 2005-2009. Meaning less likely to greatly “break” the FICO instead weighted and factored in favor of the years of trouble down the road when you feel it’s time to borrow again. Just an idea that may make sense in the future because of the current circumstances (not a fact, but likely).
It’s been a tough battle over the last 4 years for most owners in similar circumstances as property values tumbled. This building WILL eventually turn around after a financial correction and an efficient condo board are established. Miami residential real estate sales are up 67% over this time last year and 20% over March!
I am open to more ideas & opinions, and my answers can be wrong as a fallible sales associate. These are only opinions and advice from today’s knowledge/understanding, and I welcome any further insights I may be unaware of, so contact me here.