We bought land with two parcel numbers, which is common in our area. When we got a permit for our house, we were told it was two parcels that could be sold separately, after all. So we built two houses and took out separate mortgages with separate banks. When we put the houses on the market separately, a county official called to tell us that we couldn’t sell them separately, after all. The main issue was that one well and one septic system serve both houses. (Everything was permitted, and there are deeded easements for well and septic.)

Now the market has collapsed. We probably owe less than the houses should sell for, but only very cheap houses are selling at all. Our payments are as low as they can possibly be since they are interest only loans, about 6%. But with property tax and insurance, our housing costs are $5,000 a month. My husband is only finding enough construction work for a few hundred dollars a month, and savings are disappearing fast. We are renting one of the houses, so that gives us about $1500 a month.

I’ve been trying to see what programs could help us, but nothing seems to fit. At this point, the two banks don’t know that the county won’t let us sell the parcels separately. We can’t refinance the one we’re renting because it’s not our primary residence. We can’t refinance the one we’re living in because a payment got lost, either in the mail or in the bank’s offices, so we were officially late on a payment. A short sale probably won’t work because of the two separate mortgages issue (we also have a HELOC on our residence).

The only answer I see is to pay as long as we can, then walk away…..Help!!!

Always communicate with your lender whenever you know or think that you are going to miss payment or pay late. The lender acknowledges this and may give you a chance to pay late or so. But this can hurt your credit score in the first instance.

Some times it is possible to negotiate the repayment plans with the lender. The repayment strategy will allow you to accumulate due payments and better pay them over a long period of time.

If some thing sounds fishy with the lender always check with HUD.gov to verify if the lender is approved to lend mortgages.

A short sale or selling the house at a lesser than market value will help. But it is the last resort that should be taken.

Always have a plan for growing your business so that you pay the mortgage on time and even better. Work hard, save money, invest in the market and have multiple streams of income to avoid accumulating debts. As always said prevention is better than cure.

If the loan is insured, i.e. VA, FHA, etc. the lender has absolutely NO incentive to cooperate with the borrower. They won’t own the house after the sale, the government will. Just check the HUD web page for foreclosed properties in your area and you’ll see what I mean.

Because I’ve personally helped many people out of foreclosure when I was a lender, I will say you should be phoning mortgage lenders who specialize in the sub prime, that’s the term for people who can’t pay, loans.

Despite the recent bad publicity, they still exists and are eager to help you out. In fact, with the market tanking like it is, I just may go back into the business.

Please don’t overlook this last piece of advice. It may just save your ***. Yes, it’ll cost you a few bucks but that’s better than what the alternative will cost you.

Consider renting out part of your house. Maybe you can convert your den or family room into an extra sleeping space and rent it out to a single person for so much per week, plus a deposit up front. This would be instant cash in your hand and it could be a short contract with the tenant to help you get caught up and also to alleviate any housing problems that your tenant may currently be having in his search for an apartment or house. This will save him money and add money to your budget at the same time.

You may also ask your church for assistance. They could make a special passing of the plate on you behalf.

Also, in searching for some side jobs, run classified ads in news papers, post your ads on the internet, and write up flyer to pin up on your local merchants’ free bulletin boards. It would help to include a little bit about your desperation to gain the sympathy of the people considering you for a job. Plus, if you are selling on eBay as mentioned in the earlier blog entry, put your call out for sympathy there as well. I remember a lady selling things on eBay so that she could get enough funds to put a fence around her property and keep her rescue dogs safe. She did well with her sales pitch in expressing her needs, I was compelled to make a purchase from this lady and contribute to her cause.

If you want to free up cash fast there is few better ways of doing it than E-bay. It may sound trite, but the amount of sellable rubbish in the average home is enormous.

Even junk sells on ebay, for parts or to a collector. Do not be afraid of selling the stuff you no longer want, or don’t want as much, even if it is on a “buyer collects, cash only” basis. You may find that you are parting with things that you’ve grown fond of, but you’re probably more fond of the house.

A couple of pieces of advice for ebay newbies. Find out how much it costs to post if your not going to insist on the buyer collecting. Secondly don’t set a reserve price. And last, forget how much you originally paid for it or how much it would get in a shop – this is about getting cash to stop a foreclosure not about setting up a dealership.