Disabled Military Vet Wonders What to Do About Letting His Home Go.

“Dear Steve,

I am an disabled American War Veteran, Husband and father of three. I own a home in New Jersey and my employer (Federal Government) decided to move me to North Carolina. I have since rented a home here, but we decided to buy here also. The mortgage on the second home is about the same as the rent. My problem is; When I bought my home in Jersey 2009. It appraised for 407K. Today it appraises for less then 320K. I owe 339K. The Mortgage taxes escrow adds up to 2988 a month. We have moved permanently to NC. I can’t sell the house so I am thinking about foreclosing so I do not have to have the New Jersey mortgage, while I support my family in NC. I make decent money, but I really don’t want to pay two mortgages and I have 2 kids in college.

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Dear William,

For the most part the decision has been made for you. The two choices are to try to go for a short sale in the NJ house and then potentially have a deficit balance to deal with, hand the house back or let the home go. Even if you could get your lender to modify the mortgage it doesn’t sound like it would be affordable in your situation.

I’m not sure if the mortgage was a VA mortgage or not. If it was then a deed in lieu of foreclosure might make sense. The VA says:

If you will be unable to cure the default, and a private sale does not appear realistic, VA will consider accepting a deed in lieu of foreclosure. If there are no liens on the property, and VA agrees to accept a deed, you will have to sign legal papers making VA the owner of the property. Normally, VA will have to pay your loan holder a claim for the difference between the value of the property and the amount you owe on the loan. If a deed is accepted, you may be released from all further liability, or you may be asked to agree to repay the Government for all or part of the claim we paid. VA representatives can discuss this with you in detail.

If you eventually find yourself letting the NJ house go and you are left with a huge deficiency you owe then it might make good sense to consider a follow-up bankruptcy to eliminate that debt.

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