Dear Michael: In October of 2009 I completed and received my loan modification. The following April, I lost my job. Fortunately, I can afford my house note. The neighborhood has deteriorated and is now full of gangs. I no longer feel safe in my own home. I want to rent my home out by putting it on Section 8, and renting an apartment in a better area. I hope that I can build some equity to sell the house within the next two or three years. Is this legal? I don’t want to just walk away from my house. I have been here for 11 years but need to get out of here.
Answer: I find it honorable that you are making every effort to hold on to your home without defaulting on your loan, which, more often than not lately, seems to be the easy way out.
Having your loan modified and renting out your home have nothing to do with one another. Your lender will be content that you are making your mortgage payments and, therefore, will not be as concerned about who is living in your home.
The fact that the area has deteriorated to the point that you no longer feel safe is unfortunate and is really out of your control. The decision to leave the area is solely your call. Whether you apply for Section 8 housing or rent out your home on your own to an individual should not change the rental process, just the payee from whom you will collect rent. The rent you receive and the rules are the same.
Selling with equity in two to three years is an optimistic view. Without any disrespect, I hope that you are right, but the truth of the matter is that no one really knows how long it will take before the market picks up. A word of advice: If, in the future there comes a time when you can no longer make your mortgage payments because of financial distress caused by circumstances beyond your control, consider a short-sale option first and never contemplate just walking away.
Dear Michael: I have been notified to vacate my home by next week. I am not sure if I’ll be able to have all my things out of the house. Is one allowed to returns for items after the home has been foreclosed upon?
Answer: You should have had plenty of warning time when you received the notice of default to get your belongings out of the home as time for eviction was nearing.
In some cases you are allowed to get your items. Once foreclosed upon, you no longer have ownership interest, regardless of possession. Typically, you will get a knock on the door after the sale date, asking for your immediate vacancy and cooperation in departing the premises. If you cooperate with the new owner, that person may likely allow you a limited amount of time to remove your possessions. It’s a case-by-case situation subject to the circumstances surrounding your occupancy and the desires of the new owner. It is better to be prepared and gone because you don’t want to have to wonder about this at the last minute.
Dear Michael: I want to put my condo up for sale. I am not doing a short sale. Can I ask the buyer to pay part of my closing costs? I will be losing money when I sell, as the value of my home has decreased from the time I purchased it.
Answer: I am sorry to hear that you are in this unfortunate predicament. Generally, sellers don’t pay for buyers’ closing costs. You would be better off asking for a higher sale price for your home in order to recuperate the amount you are seeking rather than to ask the buyer to pay your closing costs. Sellers’ closing costs usually run at about 6.5% – 7% of the selling price, including commission.
Asking for more then what your property is worth to recuperate the decreased value is irrelevant with regard to the current market value of your home. Buyers will not submit any offers on an overpriced home and, additionally, your home may not appraise. My suggestion is that if you must sell, price your home correctly at fair market value and attract the buyers that are out there.
Michael Kayem is a Realtor with Re/max/Execs serving Culver City and the Westside since 2001. Contact him at (310) 390-3337 or email: homes@agentmichael.com.