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Default - What Should I Expect Next?

2138 Views 11 Replies 6 Participants Last post by  AJAX
I've been in the business for almost 20 years (carpenter, superintendent, etc) but just got my general contractors license in '06. I went in business with a partner who had the financial backing I needed (I thought) and started my first spec house just before the market crashed. Of course no bank would give us a construction loan unless we both personally guaranteed it, so we did. After the crash, homes are sitting all around us. Values have fallen. We have not been able to sell it ($300,000 - huge discount, good price for the area), but did a lease purchase for a year. Now the lease is up and the tenants are leaving. My partner has no money left. I have enough equity in my personal home to make the payments for about a year, but of course don't want to go that route. We are about to go into default.

What should I expect next? And what would you do in this situation?
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If you go to the intro section and say a little something about yourself and fill in your profile (where you live, etc) people here really appreciate that.
Sorry. Just took care of that.
1) Get a real estimate of value for that home. Even if you take a loss - and sell for less than you have in it you might be better off than trying to hold for a couple of years. Get a realistic number - get a straight talking realtor to evaluate ( not an appraiser )
I am an appraiser. What's wrong with appraisers? ;) I know what you mean though. As long as you get someone with experience who's realistic, either is fine. There were way too many appraisers pushing the numbers a few years ago, but there are a lot of people looking over our shoulders right now.

Thanks for all the suggestions. We were already in a lease option, but the lease is up and the buyers want out. We both have other businesses that suffered too much to provide any of the payment on a refinance. I like the idea of trading. Could you explain a little more, or give an example? If the bank would agree to reduce the principle, I might be willing to match them with some carry back financing if my personal assets are already at risk anyway. The home was valued at $360k and we've already dropped it to $299k. We will most likely drop it further to $285k, but that's as far as we can go.

My biggest unknown is this: How likely is the bank to come after my personal assets, and how might that play out?
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