DEAR BENNY: We’re badly underwater in our house. Our business is hurting and we are struggling to make the house payment. We owe $340,000 on a house that would maybe sell in today’s market for $200,000. We think the only way it makes sense to stay in our house would be if our mortgage holder would take a significant principal write-down, which they won’t do.

Is it legal for us to let our house fall into foreclosure and have a friend of ours buy it for us at the foreclosure price? Then he sells it back to us using a private mortgage via Virgin Money or similar organization. We pay him a premium over the rate he is currently earning on his $200,000 so that he even makes a little money and we maybe "keep" our house. We realize that there is no guarantee our friend would be able to buy the house; someone else might beat him to it or the bank might set an unreasonable price, but we don’t see any other choice except walking away completely. –Cathy

Show Comments Hide Comments


Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
Thank you for subscribing to Morning Headlines.
Back to top