Damaged house -->Short sale, foreclosure, bankruptcy..answers needed (insurance, real estate)

[xanthia]

Hi! I am a lurker with a first time post so bear with me, I know my question might have been answered partially before but not fully.

We are owning a house in VA. The house's 1/3 has been damaged due to massive flooding. (that went on continuously for years.) The previous owner hid the problems and fixed it up fast, we bought it and then realized what a mess we got ourselves into. The insurance company did not offer flooding insurance as we're not flood areas..and the excessive damage was not covered by them (they came out several times and denied covering it.)
So the entire lower level of the house is unliveable, not fit for a family with young children. We were up to date on payments but it was literally choking us. We had no money to fix it up ourselves. Then I got sick and my husband needed to be off of work on family medical leave without getting paid. We tried to rip out the moldy dry walls and get rid of the health hazard for our children but that's as far as our money went.

We tried to sell the house, of course it's worth a lot less than what we owe. We started the short sale process which is still in process and it's over 8 months now since we started it. The bank is dragging its feet, several times they came out to assess the value of the house, they did not take pictures on the damaged lower level, just to say later that there is nothing wrong with the house, and then assess it at county assesment level...(we owe about 130 000 for the house, the county assesment is 160 000, and on the current market in the current condition the best offer we could get for it was 90 000).
Several times the bank tried to close the case saying they refuse to let us do the short sale since according to them the house is worth more than 130 000 (at some point they even tried to tell us they want the county assesment's value for it, which is 160 000 - all this without accepting that the 1/3 of the house is unliveable, moldy and ripped apart..)
Finally we got through and someone viewed our pictures of the house which made them come out again and re-assess its value. Now they dropped the value to 120 000 or so but they still don't want to let the short sale happen.

In the meantime hubby got a job on the west coast which we needed to take up on since it promised better payment which we needed with my medical bills, etc. We decided to let the house go to foreclosure as our last option..of couse the short sale process is still not done and we're not paying the mortgage anymore.

So basically the question is: do you think they'll get a court order to come after us and try garnish wages? My husband is the head of the household, we have his income only as I am a stay at home mom. What states laws apply to us when looking up the laws and regulations, the state where our house is or where we currently live?

We don't like the idea of foreclosure, we like the idea of bankruptcy even less but we just don't know what we can do if the short sale falls through. In the meantime the values dropped even more and houses sell for even less in our area back in VA...I don't understand why the bank is dragging itself when it's clear they're losing money badly this way.
We won't buy anything ever again if we can help it..and try to buy a car from cash too the next time so badly though but we'll survive with a bad credit..our current landlord didn't even check our credit because there are not enough tenants these days, people are moving away from here too..

Sorry for the long rambling and thanks for any help or insight!

[runrgirl]

What about the previous owner covering up the mold problem. They may be legally liable for that. If your credit is bad anyway and you qualify for chapter 7 bankruptcy (depending upon what your other bills are and you say you had medical bills). Bankruptcy may not be a bad option for you and your hubby to get a fresh start. If you surrender the house the bank cannot come after you for any money they lose on it. I would seek a consultation with an attorney regarding your options and possible liability of the previous owner and/or real estate agent that sold you that house in the first place. It's not fair you got screwed like that and were lied to about the condition of the house.

[HappyTexan]

How good of an inspection did you get when you bought the house ?

[texdav]

I'd see a attorney about the foirst owners not disclosing the flood damage and mold.The part i don't undertand tho is you say it has been going on for years but not in a flood zone;very strange.

[sharainy]

I have the same problem , only mine was a cover up of an animal collector . The previous owners got this house at an auction for $10,000 after an animal collector was evicted from this house . There were chickens and rabbits in cages in the living room ,46 cats , 17 dogs . The neighbors told me everything after 5 years of fighting this mess . The Carpet was soaked in urine so bad that tracks were made in the concrete outside by a work crew that came in to remove the rotted carpet with hay hooks and they vomited the whole time . The bath tubs and all of the sinks were full of soiled kitty litter to the brims . The smell was so bad that neighbors had to close their windows . People would walk by the house and vomit . The former owners that got this place at auction ...had 100 gallons of bleach dumped on the floors in the entire house and then covered up the rotted floors with new carpet . The urine soaked walls and fly doo doo were covered with paint . They used a lot of air freshner . When my husband and I looked at the home it looked emaculate and there was no odors except for the air freshner . We bought the place . First thing that was a problem after a month , is that everytime there was a breeze ...the odors coming up through the vents was so bad ...we had to leave the house . I had to have 25 feet of duct work installed " the work men were vomiting from being under the house . Then I pulled out the kitchen drawers and find mouse droppings 2" thick ...every spot was covered . The odors continued so I called in a crew to go under the house , they were vomiting and removed dead animal carcuses and said it was a giant litter box under there and it was impossible to clean and the insulation was rottin and full of mouse and cat feces . So I am paying an ( ARM ) Morgage for a house that should have been red tagged and destroyed as it is a severe health hazard and the floors are rotting out . Then I find out that the pipes under the house are a code violation in the state of California since 1986 and my home was built in 92 . So far I have done well into $ 8,000 in repairs . I did not bargain for this and the bank just wants their money . Why do people get away with this stuff on auction houses ? I am paying a lot of morgage for a house that is worthless and unbearable to live in .

[sharainy]

I also wanted to add that this is a 2000 sq ft Mobile Mansion on a half ac on a permenant foundation . Insurance value is $178,000 . I am elderly and on a fixed income to boot .

[chicagojlo]

Where were the inspectors on these purchases?!

[sharainy]

The inspector , the appraiser , the real estate brokers , the previouse owners ...had to be all in on this deal as none of them ever said a word about the animal collector . They never went under the house or it would have been condemed on the spot as the code violations were there . It should be a " Felony " in all states , for anyone that dilibrately covers up an existing condition and fails to disclose anything that could cause a hazard or serious financial stress on down the road , in order to make a fast buck . To invest a small fortune into a property that was to be our American Dream and then find out that all of these major problems exist and that we were swindled... here's a remedy ...I think a Felony charge is in order with no statute of limitations and payment of 1/2 of the principal on the property should be paid back by the previous owners to the mortgage company is fair. This should be the law of the land in all states . No one should be able to just walk away with our money and leave us holding the bag ...everything needs to be disclosed...no matter what . If we get stuck ...then so does everyone involved in the original transaction .

[Stacie30]

Originally Posted by sharainy

The inspector , the appraiser , the real estate brokers , the previouse owners ...had to be all in on this deal as none of them ever said a word about the animal collector . They never went under the house or it would have been condemed on the spot as the code violations were there . It should be a " Felony " in all states , for anyone that dilibrately covers up an existing condition and fails to disclose anything that could cause a hazard or serious financial stress on down the road , in order to make a fast buck . To invest a small fortune into a property that was to be our American Dream and then find out that all of these major problems exist and that we were swindled... here's a remedy ...I think a Felony charge is in order with no statute of limitations and payment of 1/2 of the principal on the property should be paid back by the previous owners to the mortgage company is fair. This should be the law of the land in all states . No one should be able to just walk away with our money and leave us holding the bag ...everything needs to be disclosed...no matter what . If we get stuck ...then so does everyone involved in the original transaction .

You had a home inspection done before you closed on your home, and the inspector didn't tell you about the condition underneath? Our home inspector gave us pictures of the crawlspace in the home we purchased, and lots of other things. You should consult an attorney.

[nzone]

I know , morally, it's bad thing to do but...if your state is not a 'recourse' state...mail in the keys.