Still debating, short sale it or what?

Funny. One year ago we were in contract to buy a short sale. Everything was falling into place, we got loan approval, we found tenants to rent our home, all was good.

In just twelve short months they closed our office in Las Vegas, forcing us to either relocate if we wanted to stay with our employer or try to stay in Las Vegas and find employment in a market already beyond tapped. We reviewed our options and decided to relocate.

All in all, not a bad decision. However, in the six months since we have relocated my husband has taken a 75% pay decrease. It isn't because we relocated, really, there are a combination of factors involved. First of all, our co-workers that didn't relocate stayed in Las Vegas and opened up a new division of a competitor. We knew we would lose business to them, and although we don't know exactly how much business we have lost to them we can only guess it has been significant.

Second, the regulatory changes that hit the industry on January 1st of this year have really made a dent on how long it is taking to get loans to the finish line. More regulatory changes are in effect beginning July 1st and we have begun to wonder after those are implemented just how many people will be left standing.

The big thing for us is the morality of having to short sale a home. We didn't buy a home that was over our means. We weren't tricked into a loan product that we didn't understand. We bought that home five years ago and have remained conservative with our use of credit. We aren't in over our heads as far as some of the stories you read about people overextending themselves and then walking away. The sad thing is just that we have lost nearly 75% of my husband's income in the last 12 months. Considering he is the breadwinner, you do the math. We have also continued to make the payments on that home every single month even though it is putting us 4k in the negative. (Originally I calculated it as 5k but after recalculating we are lucky, it's only 4k).

I never got the fax from the first lienholder when I requested it so I called back. When I got someone from the loss mitigation department on the phone he told me that they never fax "work out" packages and he didn't know why the first guy told me he would do that. He also made a comment that angered me. He said "I can see your loan is current. I don't even know why you are calling us."

Well.

Our loan is current because we are going into the negative every single month to fulfill our financial obligations. We signed a note saying we would do that. However, we cannot do it indefinitely and we want to review our options. I asked him about discussing our situation with someone there to see if we would even qualify for a short sale and he told me that wasn't an option. Apparently they will not even review your workout package until you are at least 30 days delinquent (hint, stop making your payments so we can work with you) and also contrary to what the first person told me when I called, I cannot submit my package without a purchase contract.

So that puts us in a catch 22 position. We would have to list our home for sale and stop making the payments just for them to consider if they would work with us. And if the answer is yes, then great, it would maybe work out. But if the answer is no, then we have not only wrecked our credit but have also put our tenants to the streets.

We are considering marketing the home as an investment property with tenants, but even short saling it, you tell me who is going to want a 450k investment property right now?

My heart is just broken over all of this. My morals are telling me to just keep draining everything I have until either the market improves or our income improves. Neither of those options are looking likely in the near future. My heart is telling me that we have a family living in that home that has cared for it better than we have- they have even landscaped our courtyard that I could not convince my husband to do anything with. They deserve to live in that beautiful home and keep their children in one place. My financial sense is telling me that if we continued to deplete all of our resources to keep that sinking ship afloat we may wind up losing more than just that house. We have two kids to raise ourselves and the cost of childcare is not cheap. Not to mention, just a few minor emergencies and we could be living beyond our means in a hurry.

So here we are, a few weeks later, and we still have not made a decision if we are going to keep the house or pursue a possible short sale. Having been on the other side of the short sale fence just one year ago I just don't know if I have the patience to go through it again. Decisions must be made in the next couple of months though, so I will keep you updated.