The Manufactured Housing Forums

Hello, my husband and I are making a move and need some help with a question.

We are currently underwater with our mortgage and have decided to give the house back to the bank.

Our credit isn't good because we are behind on our mortgage payments.

My husband is losing his job after 12 years (closing a coal fired power plant due to EPA regs) and has an offer for a new job that is comparable with salary/benefits.

Since his current company will not allow a 401k hardship withdrawal, he will be resigning from his current job and accept the new position. When he does that, he will be withdrawing $100K for a modular we found in a park; rolling over the $100k balance to the new company's 401k.

Since we will be cash customers, we will not need financing for the new home.

My question is, with bad credit, is it possible that even though we will pay cash for the home which will only leave us with taxes and lot rent, could the park deny us for the bad credit/repossession?

Our plan was to also pay a year's worth of lot rent with the purchase to show good faith to the community up front.

The lot rent is $420 a month for rent, water, sewer, garbage. So we will be paying them $5040 to the community right off the front to cover a year's worth of lot rent.

Our income/debt ratio is as follows: Spouse/$64k, myself/$30k. We have a car loan of $345.00 per month and I have numerous little balance owed credit cards but my husband has none.

I guess my question also includes whether or not the community would be willing, if they won't approve us just based on credit, to ask for additional monies up front for the security.

Sorry for the rambling.

And yes, we are aware that by withdrawing a portion of our 401k that we pay penalties up front and have to add the withdraw as income for next year's taxes.

Any and all assistance would be greatly appreciated.

If you can stand the $ 10,000 penalty and about $35,000 in federal taxes and maybe more in state taxes, the plan sounds good. I would talk to the management about the approval before you withdraw and be sure this is workable. Most would want to apply part of your 4 K payment as deposit to ensure payment. Be sure to hire an attorney to close your deal to be sure the seller has proper clear title or that all liens have been properly executed and paid. Make your purchase offer contingent on a professional home inspection and have one done so you will be fully aware of any problems with the home. These few dollars of extra expense could well save you thousands in future trouble.

Sounds like you need substantial professional advise. You should invest in advise from a tax and bankruptcy specialist attorney so you can get advise on cleaning up your whole future to be sure this does not come back to bite you years down the line.

If it was me, I would be highly adverse to giving the government 40 to 50 % of the withdrawal. I would talk to a small local bank about a total roll over to an IRA and have them finance the home. They cannot use the IRA as extra collateral but the fact they hold it should go a long way to overcome fears of nonpayment. In this case any interest you pay would be fully deducible and the credit rating will help rebuild. In the future, you can always opt to cash out, pay the penalty and taxes and pay it off.

You guys were lucky you were smart enough to sacrifice to build up this nest egg. Be smart and protect it now.

GOOD LUCK

Thank you very much for your answer. Both my husband and I have a very high history of cancer in our families that takes everyone prior to age 60. I think the reason we are willing to sacrifice the taxes that we will have taken out by going this route is due to the fact that we both want to 'live' before we die. At the present we are merely existing.

Now, if this property is in a community, does the community have any information if there are liens against the title?

How do I go about finding an attorney to do the closing? Besides the attorney, are there 'closing fees' like with a house purchase since we aren't financing? Is it just the state tax applied to the total purchase price?

Where can I go to hire a professional to do the home inspection?

Thanks for your help. I appreciate your candor and advice.

Have it your way...

The park will know if there is back rent they are allowed to collect.You will be responsible for any rent the previous owner should have paid.

Most state title offices will inform you of any liens properly recorded on the title. They would only have info on unpaid loans and local tax liens and not federal or state tax liens.

You should find an attorney local to the house who does contracts and real estate
closings. They will help you structure your contract and help handle payment often from their escrow account. They should be able to help you checking for liens as well. I was a repo dealer in Florida some years ago. I repoed more than 1 home that someone had paid the previous owner cash for. In one case more than you are paying. I knew of others that the IRS auctioned off for previous owners back federal taxes. Over the years I have seen many with liens from unpaid state taxes as well. I have often seen homes were seller did not have proper legal title documents. Often these were from dead heirs or ex spouses. any of these problems can crop up years after you have paid and moved in.

You should be able to find home inspectors in your phone book or home inspector license listings in your state..

Good Luck

Thanks again. I appreciate the feedback.