Chapter 7 and short sale when 1st has equity

[bksteve]

We are probably going to file a chapter 7 soon. Our 1st mortgage holder (Citimortgage) filed an NOD in early July. The balance with arrears (we have been playing with them over a loan mod for over a year) is about $225k. The value of the house is around $300k, but we have a 2nd (also from Citi) for $170k.
We would be happy to stay here without payments (last pmts were in June) for as long as possible. Is it possible/would it be beneficial for us to try and do a short sale after the BK? We have heard that this can often take 4 to 6 months to complete.

[tcreegan]

cash for keys

Hi bksteve,

Some folks here on the forum have contacted the mortgage lender and were offered/asked for a "cash for keys" incentive. Basically they vacated the house, left it ready for market, and signed the deed over to the lender. (deed in lieu of foreclosure I think it is called)

Some folks say they got a heft chunk of change.

My lender (GMAC morgage) told me.....what? We don't do that.

But hey, its worth asking about....

Tom in Colo

[sidhesadie]

My understanding is that second mortgages pretty much preclude you from doing 'cash for keys' or any type of deed in lieu, however, since your 1st and 2nd are with the same lender, you might have a shot.