I got a new job in a new location. We planned on selling our home and purchasing a new home in the new location. As it turns out, our home is $20k underwater. I'm not sure what to do at this point. I need some advice. I looked into renting it and using that income to get a new home, but have heard that that isn't an option anymore. I could do a short sale, but then couldn't qualify to buy a new home. I could foreclose...not something I wish to do at all. Anyone else have any ideas? The rental thing sounded great to me, in fact we did that about 5 years ago, but I was told by Wells Fargo that I would have to have rentals for the last two years. Quite frustrating.

How many miles (or hundreds of miles) away is the new job ?

Is it practical to consider a multi-day commute for an extended period of time until the market corrects itself (and you verify that the new job is worth the effort to go through all this)?


What's that mean . . . . two years experience as a Landlord, or leasing it for a minimum of two years . . . . or what?

If you have not missed payments, and you are forced to short sale your home to relocate, you will be able to get a mortgage on the new home. Check with some different lenders.

Actually if you short sale it does drastically affect your credit. More than likely you will not be able to get a home loan for atleast a year if not two. When you say you need to show two years rental history is that what the lender is saying you need to get qualified? This is probably because they do not want you to do what is called a buy and bail. When you purchase a second home then foreclose on the first.

Yes years ago you could get away with these tactics.Now banks have controls in place to where you can't hardly use any of these strategies.

You have a job and income you probably do not qualify for a short sale. You left out the obvious choice. Sell the house and bring the cash to the table to absorb the loss. Then your credit is spared etc..but yes you are out 20K from some revenue source.
Not willing to do that, rent the first house, rent a second house in your new area. In two years, buy a house now counting rental income, etc. If you are only 20K down now; who knows in 2 years maybe your are 10K down or good it nbe-10K ahead. Point of story is why should the bank and the rest of us absorb your 20K underwater difference?
Short sales require financial hardship-where is your hardship?

You moved because of a new job, that is the hardship. Many people short sale their home without missing a payment. For example, if you can show your bank that you will run out of money in 5 months (this is an example only, it could be more or less months), that is enough for them to consider and even approve a short sale, the bank would categorize this as an imminent default.

Your hardship is that you have or had to move and can not possibly maintain two homes. This situation is 'not a tactic'.

Speaking of 'tactics' the Mortgage Bankers Association purchased their headquarters for around $80 million and because the building lost value and it wasn't good for their investors, the building was sold short for half, about $41 million.

Morgan Stanley purchased several buildings in San Francisco and they are walking away from 5 because it also is not good for their investors. It's a business decision guys.

Let the little guys make their own business decisions too. If not now, sooner or later it will happen unless you are planning to live there for a looong time (banks know this and that's why they are considering these types of short sales now, because eventually it will happen. The short sale approval terms may be different, it all depends on each unique situation).

Check with your lender. Moving alone is not a hardship.

Can the property be rented? Can you show due deligence that you attempted unsuccessfully to rent the home? What other assets do you have to meet your loan obligations.

Consider a real estate attorney before you take this kind of hammer to your credit and future standing for 20K.

Also remember you intent is to purchase a new home and a very recent short sale will make that very difficult even if by chance you can be approved for a resale without defaulting on your payments.
Take the specifics of your issue to a qualified attorney and get the facts-dont listen to hype.

hmmm....what hype are you talking about?

Is your credit good??

If you had to pay 20k a closing would you have enough for an FHA loan to purchase the new property at 3.5% down??

If not sometimes the bank will let you hold a promissory note for the small balance or you could get a small loan somewhere for the 20k and make payments on it.

With the small payment you might still qualify for the home purchase.

You do not want to ruin credit over 20k as it will cost you way more than that in all borrowing facets of your life moving forward.

Also right now interest rates are at 40 year lows.If you wait to purchase in a few years interest rates could rise from in the 4's to the 7's from inflation.Markets could start appreciating again.This would cause you to only buy maybe 60% of the house you could get now in a down market with a low interest rate.

If you are going to sell and pull this off do it now and do not chase the market down where you will be stuck.

no legal advice