Two years on market, no offers: Time to take action

Q: We purchased a single-family residence for investment with another couple in California in early 2005. Our intent was to hold the property short term, then sell it. We took out a standard adjustable-rate mortgage (ARM) to purchase the property, and we are all co-borrowers on the loan.


Unfortunately, we purchased this home at the peak of the market and now we can't sell it. It's been two years since we've started to sell it and we've lowered the price of the home below what we paid for it. Meanwhile, it's costing us each about $1,000 a month.


Our loan will convert to a variable-rate loan at the end of 2009.


Both couples are hurting for money, but our partners are in worse condition than we are. If they became unable to make their portion of the mortgage payments, would we have any recourse with the lender? We can handle our portion of the payments for now, but we couldn't cover theirs too for any length of time.


In a situation such as this, are lenders ever willing to work with the borrowers? We have excellent credit and I'd hate to see us lose so much because of this one mistake. Your counsel in this matter is greatly appreciated.


A: Unfortunately, your situation isn't unique. Many people became real estate investors the last several years until the market forces changed. It didn't occur to them, as it didn't occur to you, that the good times wouldn't last forever. Without planning for a worst-case scenario (which you're experiencing now), many of these people should never have become real estate investors.

source: lodinews.com