Ok, so I've been trying to sell my condo for 6 months, and the HOA just announced they are filing a lawsuit against the builders for construction defects. Since no mortgage company will issue a loan against a property with pending litigation, I'm SOL.

So, my plan is to buy a new house and then dump the condo. I've already got plans worked out with my mortgage broker to get the new loan before dumping the condo, but I'm not sure the best way to get rid of it from a credit report standpoint. I can let the bank foreclose, I can file Chapter 7 bankruptcy, or I can file Chapter 13 bankruptcy. I was told by my current mortgage company that a deed in lieu of foreclosure wouldn't work for me. Regardless if that was true, I would still be liable for any losses during the sale of the condo, which I could be as high as $20k - $30k (because of the lawsuit).

I've been told that a Chapter 7 looks worse than a Chapter 13. I've heard that a foreclosure (with up to 7 months of missed payments) looks worse than either of them. I've also been told that a 7 looks the same as a 13. I've also been told that if I file either type of bankruptcy, I'll still have the foreclosure from the condo (although no missed payments).

Anyone know my best route to take?

- Geoff

 

I am not expert, but...

I would try to avoid the foreclosure at all costs, even if you can get this new mortgage...it can really screw up your life. You would be looking at a scar on your credit report for the next 7 years I believe.

So you would have the new house, but you can forget about getting any decent financing on a new car, your credit card rates would increase and just about any other loan would probably be denied.


If you could get a line of credit on the condo, then you could potentially continue payments while the litigation is going on and hopefully everything will get worked out, that way there is no money really coming out of your pocket and worst come to worst you foreclose on the condo in the end when you run out of money from that loan in a couple of years, but best case is that you will be able to make payments over the term, get your new house and when things get worked out with the litigation, you sell the condo and save your credit report.

Just do not link that line of credit or home equity loan to the new house in any way shape or form, only the condo, so if everything falls through, then you just stand to lose the condo.

 

Are you kidding. You better have a really really good reason to move out of that condo! Can you find a tempary place to live that's cheaper that you could afford while your waiting to sell the condo. Your parents relatives friends something? Good luck, I'm sorry to hear of your misfortune.

 

I have to sell the condo to get a bigger place for my family. It's a 900sqft 1 bedroom, and I now have a 5 month old (and my fiance has a 10 year old also). There is simply no room in the condo to fit us all, and the two bedroom duplex we are staying in now is bringing us to the end of our nerves (too small). I must get a new house now, and it has to fit 4 people.

Right now, I am paying a mortgage on the condo, and rent at the duplex (condo is vacant). I can't rent the condo, because rental prices in that area are too low. I would have to pay over $700 a month out of my pocket along with charging rent to make the payments on mortgage, taxes, HOA, etc.

If I got a loan to make the payments, I would have to borrow like $20k, and the payments to repay would dimish the amount I could spend on the house. And, it may be all for not as the condo might still not sell.

Yes, this situation is messed up.