Housing Woes.....

Guess it's time for a house update. As you know, we ended up doing a short sale on the condo about 5 months ago. We were SO happy to get rid of it, but it has caused a new problem for us....one of financing. We seller financed this home. The market hadn't crashed when we moved here and we thought the condo would sell fast. As it was, the condo didn't sell fast and we ended up with the short sale option. We heard from numerous sources that banks would not look at us for short sale unless we were behind on payments, so we stopped paying. This is the cause of our problems. A short sale in and of its self does not cause for refinancing problems, but delinquency does :( We thought it was one in the same, but it's not and we are not allowed to refinance this home for 2 1/2 more years. SO to complicate matters further, the sellers (who carry the mortgage) are in bankruptcy, which means the house is currently sitting in a bankruptcy trust. We have counseled with a lawyer who has helped us discover many little things that are of great importance and concern. First, even though we have never missed a payment on this home, they can foreclose it at any time because of the bankruptcy. Second, we are currently on no list to receive any information if the house is foreclosed on. Third, we will owe a lot of money in Oct. when our contract is up unless we settle now with the court. A lot to digest. So, here's the direction we are taking. We will not be strangling anyone. We did consider that option but felt it would be better if our children grew up with parents who were not in jail. Instead, we are trying to settle with the bankruptcy court on the amount we would owe the sellers (the equity they have in the house). Once that is taken care of, we have to work with the bank in convincing them to let us assume the loan. If they foreclosed the home, we wouldn't be hurt financially by that and our credit would still be fine, but we would lose the house and all the money we have put into it. The bank would then have to sell the home at a much lower price then the current mortgage. A lose- lose situation. If the bank lets us assume the loan, we keep the house, the bank loses no money. A win-win situation. Banks are known to be ruthless at times, and we are just hoping they will cooperate. If not, we will be walking away from this home, the money we have invested, and the area that we really enjoy living in. One positive- we can move into a place closer to our jobs and the kids school. We won't own again for at least 5 yrs. So, that's the ugly of it all and we are just praying a lot right now that things will work out. I was very upset about the whole thing and didn't want to even address it, but when we met with the laywer and started finding out little underhaded things that had been done by others leading up to this, I suddenly felt ok about it all. It's just money, right? I still get to keep my kids, my husband, and my life. We can start over and do it with a whole lot more education this time around. I don't know how it will go. Right now things aren't set to play in our favor and I am mentally preparing for a move, but if things do go our way, I will be so very grateful. We'll shall see.