My husband is 60, and I am about to turn 50. We moved to Phoenix, Arizona from Colorado two years ago for adventure and better weather. We bought a new construction home in Maricopa, southwest of Phoenix, hoping to cash in on the (then) booming Phoenix housing market. Having no cash to put down, we obtained a 100% VA loan through Wells Fargo Bank. We are not behind on our payments, but my husband is working a second job to make ends meet and we cannot afford to take trips to see our children and grandchildren in other states, nor can we afford to contribute any significant amounts to our small retirement accounts. With the failing housing market in this area, we estimate that we have a negative equity in the home of $50,000 at this point - no way could we sell it now or in the foreseeable future. This is definitely NOT where we wanted to be at our ages, and at this point in our lives we've got to make a serious decision on how to get out of this predicament without getting hung out to dry financially. Does anyone know how reasonable or ruthless the VA will be? We'd even be willing to deed the house to them and rent it back for a short length of time to keep it maintained until they could sell it.

First, I would call the VA and expain your situation. See if you can pay Interest only for a while... I doubt they will do anything, but it doesn't hurt to try.

Secondly, VA mortgages are assumable. I don't know your interest rate, but if its low that would be a selling point. New buyers could get in with no down payment and assume your mortgage. You would not come out with cash, but you would get this mortgage off your back. You may want to ask the VA for the particulars on that as well. Good luck to you.