Sub-Prime Lender Hell

[Kate]

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[ybrew]

You either need to lower the price of the properties or you need to lower the rent.

You've said you're not renting them at the current price because it's too high and you're not selling them at the current price because it's too high.

Leaves you little choice.

[1time2many]

I see a BK 13 or 11 on the horizion.

[willingtocope]

I think it probably would be wise to go talk with a couple of BK attornies. Most will give you a free consultation.

I don't know how it works, exactly, but LadynRed over in the BK forum mentioned that under the new BK code, individuals can file chapter 11...that's the format that allow you to reorganize yourself possibly without losing any assets.

You need to talk to a lawyer...

[mattandallismom]

I tend to agree with speaking to a BK attorney. You have a lot on your shoulders right now and hopefully they can advise you on how to remove the stress and further advise on the medical defense. Good luck and let us know how it works out.

[amortgageman]

I saw this the other day when you originally posted the question, and found it a little too complex to get a decent solution. It seems that you are in one big predicament with no easy cure. I do not think that letting all the properties go would be in your best interest, and to save a few may still provide income.

The best I can think of would be to lay off a couple of the mortgages and use the rentals from those to try and keep the other mortgages current. I know this may be cheating the mortgage companies somewhat, but it may keep you from losing all your properties.

To determine which properties you may want to keep, I would look at the ones which may benefit you the most. By this, I mean properties which may be bringing in positive cash flow (your income). You may also want to keep in consideration that even though you will inevitibly lose one or more of these properties, keeping one happy lender may be beneficial as well, most likely Wells Fargo, because I can predict the next thing you are going to tell us is that the properties are all set up on adjustable rate mortgages and the interest rates will be due to adjust at any time.

I am sorry that you have had to learn the hard way with being a real estate investor, and hopefully others can learn by your mistakes.

P.S. It was not the lenders that are hell, this is a bad case of a bad broker that made everything seem so rosy.

[Kate]

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[gypsie]

I too have read this thread a couple of times and thought- Wow, what a predicament!

I don't have anything to offer. You've been given some sound advice.

I'm glad to see that you've not approached the situation with the "no hope" attitude. You seem to be smart enought to realize the mistakes, and strong enough to do something about it.

With spring here, I just bet you get some offers.

I hope things work out in your best interest. Let us know how things go and Good Luck!

[jq26]

They will give me a 1099 form -- I'll have to pay taxes on it, but I am so grateful for their help.

Best of luck to you. One thing to offer- you may not have to pay taxes on the 1099 issued. Section 108(a)(1)( states that income from discharge of indebtedness (the amount on the 1099) is not includable in gross income if the discharge of indebtedness happens when you are insolvent. From the prior postings, it sounds like you are underwater and so this may apply. You may be able to roll the 1099 gain into the basis of the property (section 1017((3)) and since you may be facing a short sale, then the basis reduction on the property will sop up the 1099 gain. See a professional!