topic Re: Walking away from mortgage in Mortgage Loans

Walking away from mortgage

Becki318 — Mon, 10 Nov 2008 16:48:33 GMT

We have such a large mortgage payment that we are having a hard time affording ($2400/month). We bought our house a little over a year ago and just had a market analysis done on it and it came back $110,000 less than we purchased the house for (and we would be upside down $90,000). We can find rentals in our area for half of our mortgage payment. My question is, if we can't get our mortgage company to do a short-sell, what happens if we walk away from our mortgage and let it go into foreclosure? Do we owe any money to the mortgage company for the foreclosure? What does that do to our credit score (it's already in the mid-500's because of late payments).

Help!!!

Re: Walking away from mortgage

ShanetheMortgageMan — Mon, 10 Nov 2008 16:59:06 GMT

Sorry to hear about your situation, it's not very uncommon these days. If you walk away from your home/send your lender "jingle mail" then they will eventually foreclose, and could file a deficiency judgment against you for the difference between what was owed to them and what they could get when they sell your home. You also might be able to do a deed in lieu of foreclosure, where you hand over your home to your mortgage lender in trade for not going through the foreclosure process. I'd recommend you contact a real estate attorney so you can fully evaluate your options and not make a wrong decision you'd regret.

Re: Walking away from mortgage

Becki318 — Mon, 10 Nov 2008 17:08:02 GMT

How likely are mortgage companies to do a Deed in Lieu?

Re: Walking away from mortgage

ShanetheMortgageMan — Mon, 10 Nov 2008 17:15:39 GMT

I'm not too familiar with that process, and it's not as common as a short sale or loan modification, but banks are still doing them today.

If you want to hold onto the home I'd suggest contacting your lender today and asking them if there is anything you can agree to in order to make that happen. The first recommendation is a loan modification, where they'll modify your existing loan terms into something more affordable (could be $800/mo cheaper, could be $50/mo cheaper). You need to fill out paperwork with all of your income, assets, payment (utilities, cell phone, food, etc.) for this option, usually can take 60 days or so and normally requires that you are behind on your mortgage to some degree. Another option would be to do a short refinance (similar to a short sale). With a short refinance your existing lender agrees to accept less than what they are owed, so it has about the same chances as a short sale from your current mortgage lenders perspective. HUD just put out a new program called HOPE for Homeowners which allows homeowners to short refinance into a new FHA insured mortgage. You can get more detailed info about it at http://www.hud.gov/hopeforhomeowners/index.cfm & http://portal.hud.gov/portal/page?_pageid=73,7601299&_dad=portal&_schema=PORTAL.

Re: Walking away from mortgage

BrianB_The_Loan_Professor — Tue, 11 Nov 2008 01:59:41 GMT

Sorry to hear about your situation - all too common right now

Good luck

Shane offered some good advise

I would also suggest contacting a real estate Atty in your state since laws vary

In CA it is a non recourse state and they cant come after you just tank your credit

Brian

Re: Walking away from mortgage

Watchmann — Tue, 11 Nov 2008 04:58:38 GMT

Regardless of your personal situation.....$2400/mo is pretty reasonable for a mortgage. Think twice about just walking away from it. It might be better to stick with it. Just because you are (temporarily) upside down doesn't justify you walking away from the contract. It was your decision to get into it, so you have some personal responsibility to fulfill the contract. Just my opinion.

Message Edited by Watchmann on 11-10-2008 10:58 PM

Re: Walking away from mortgage

ShanetheMortgageMan — Tue, 11 Nov 2008 18:44:03 GMT

Watchmann wrote:
Regardless of your personal situation.....$2400/mo is pretty reasonable for a mortgage. Think twice about just walking away from it. It might be better to stick with it. Just because you are (temporarily) upside down doesn't justify you walking away from the contract. It was your decision to get into it, so you have some personal responsibility to fulfill the contract. Just my opinion.

But the other issue is that the payment has become unaffordable, not just upside down on the home. Sounds like it could be inevitable that the home goes into foreclosure.

Re: Walking away from mortgage

Myhearts — Tue, 11 Nov 2008 21:43:48 GMT

Hey all,

Hearts here!! You know it used to be a time when I loved coming to MYFico and reading the responses and the advice that has helped me so much over the last year. But lately, since the Wall Street mess and SubPrime mtg. crisis, I don't see the heart of compassion that we used to have before all of this happened. Seems like anyone who posts now with a problem concerning their mortgage, not being able to pay it or whatever, they get attacked! That is really sad as we are living in confusing times and hard times and just because maybe now you are able to afford to pay your mortgage and your bills, don't look down on a man/woman and kick them when they are down. Yes, you are entitled to your opinions but when someone is hurting and reaching out, don't make them regret reaching out to you with your high and mighty attitude, judging them because you may one day be in a position like that or something worse and when you reach out for help, who do you think will help you?

Our world is in an uproar right now. If anything we need to be praying to God almighty for a change and quickly... Let us not beat up each other whether physically, mentally, verbally or emotionally because trust me, someone else already has and when we log onto MYFico, we are in search of hope and answers and someone to trust. I myself and my family are in the same situation as Becki and I don't care what others think of me because they don't know me, they don't know my struggle or my situation and in the beginning, we could handle the mortgage but one crisis after another happened and now, we can't, so what? People are killing themselves and their families because they can't make the bills, make the mortgage payment and they come here looking for a comforting word or someone to say, I hear you and I understand, maybe its nothing I can do but pray or encourage you to do what is best for your family. We don't want to be the straw that broke the camel's back and cause undue duress on someone.

Just needed to vent because there is so much bashing going on on this site lately...

Hearts

Re: Walking away from mortgage

1111mel — Wed, 12 Nov 2008 03:12:57 GMT

Yes some of us are being harsh....but there are posters who want to walk away because of the benefits they would receive and then those who actually have real issues and matters that dramatically affect a person's ability to pay.

Walking away is not an option unless circumstances change dramatically......buying a house and losing $100K equity when the payment has not changed in my book is not one of them.

Message Edited by 1111mel on 11-11-2008 09:12 PM

Re: Walking away from mortgage

ByrdMan — Wed, 12 Nov 2008 04:43:34 GMT

This is just a friendly public reminder that we are to be friendly and supportive to all in our community. There are a lot of people "jumping the gun" and posting angrily. Thank you all for making our community a safe place for all.

Re: Walking away from mortgage

1111mel — Wed, 12 Nov 2008 05:46:00 GMT

We relocated to Colorado because of my husband's job and it took me 3 months to find a job. We went from a state with no state tax to a state with tax and our credit cards climbed. We are going through Consumer Credit Counseling for those debts and have been paying those on time for a year. My husband had a second job that brought in $500 - $700 extra a month, but that job has ended.

_____________________________________

I appreciate your moderation...but I held my tongue on the last same post........I now feel the need to reiterate. I won't go into particulars......but as a tax payer I refuse to bailout those who don't properly prepare. I am a non-homeowner who refuses to compromise my future....Bring on the flack, but without 6 months reserves I won't purchase.

...my negativity was probably born from my reminder from the original post.

Hard economic times are what they are.......but there are those who were dupped and those others.

Re: Walking away from mortgage

borg_cube — Wed, 12 Nov 2008 11:50:45 GMT

Hearts,

As nicely as I can put it...enough with the proselytizing, ok? Let's stick to issues of credit and finance and leave the religious stuff for EDITED TO REMOVE LINK

Deal?

You will be assimilated, resistance is futile. -Locutis of Borg (isn't that cutesy)

Message Edited by llecs on 11-12-2008 06:50 AM

Re: Walking away from mortgage

Plainsneech — Wed, 12 Nov 2008 11:34:03 GMT

Hearts,

Your kind words and encouragement are a blessing to everyone who needs it in these tough economic times. Hang in there and God Bless.:smileytongue:

Re: Walking away from mortgage

llecs — Wed, 12 Nov 2008 11:52:10 GMT

Last warning: Be friendly and supportive.

Re: Walking away from mortgage

Becki318 — Wed, 12 Nov 2008 14:43:24 GMT

I truly appreciate all of the comments and the support. I think what I needed to hear was the honest opinion of others and to hear that we signed the contract on the house to purchase and that is our responsibility. Sometimes that is hard to hear but VERY true. We are now working with our lender on options and are we going to catch up our late payment and continue on from there. I think I emailed in a moment of great frustration but now that I take a look back on it, it is my responsibility to cure this problem and I will, without walking away from the mortgage.

Again, I apprecaite all the comments, support and total honesty!!!

Re: Walking away from mortgage

Myhearts — Wed, 12 Nov 2008 15:02:58 GMT

Thank you for your support, Plainsneech!!!! We all need to be supported.

Borg_cubes- --- Sorry you are offended by my need to include God in my responses but that is who I am and that is who I rely on. No, this board is not about church and prayer, but there are people who need the prayer or a comforting word and if that is what I can offer them, please don't read my posts. It will save you a lot of grief. If the Mods tell me to stop, then I will stop because I may have gone overboard but I don't think in my post I did and I cannot help that I care about people and their lives and their situations. This is the way I have posted for over a year and no one was offended. If you are, I am very sorry because that is never my intent.

The one's to be angry with are the one's who are being bailed out with our $700B and taking luxury vacations and messing up the money.

Hearts

Re: Walking away from mortgage

Wonderin — Thu, 13 Nov 2008 16:08:00 GMT

Hearts, Darlin', personally, I would have been offended ('cause you know .... I'm Southern and have such delicate sensibilities) by your post IF you had begun screaming about how it's {insert politician's, media group's, minority or religious group here} fault and how is going to H-E-Double-toothpick because of {insert politician's, media group's, minority or religious group here}.

But you didn't. Not even close. Mayhap I'm in a "tolerant mood" this morning (I *have* had my ration of caffeine, so ....?), but in MHO, being supportive, even if it involves a little personal belief sprinkled in, isn't offensive -- it's being supportive the way you know best. And IMHO, being supportive the way you know best is oodles more effective than the average method of just tsk-tsking and going along with your day. Doing what you know best is (whether it be praying or wearing your lucky undies) is a clear demonstration of support and encouragement.

IOW, you're Good People in my book. You were being supportive and describing your own methods of dealing with the problems in your life. I wouldn't worry about it, if I were you. Heck, I'd probably have said the same thing. :)

FTR, we're all in this together. Last I checked, we're all feeling a bite -- whether it's the likelihood of being denied for a loan or CC because of the current situation, having a hard time keeping up with bills and whatnot, or having to make hard, heart-breaking choices (since I don't REALLY think anyone WANTS to lose their home) -- so I'm going to echo Ilecs here and ask that we all remember that we're a community!!

We're ALL in this together. 'Nuff said.

Re: Walking away from mortgage

Wonderin — Thu, 13 Nov 2008 16:22:56 GMT

1111mel wrote:
I appreciate your moderation...but I held my tongue on the last same post........I now feel the need to reiterate. I won't go into particulars......but as a tax payer I refuse to bailout those who don't properly prepare. I am a non-homeowner who refuses to compromise my future....Bring on the flack, but without 6 months reserves I won't purchase.

...my negativity was probably born from my reminder from the original post.

Hard economic times are what they are.......but there are those who were dupped and those others.

Mel, usually, I durn nigh break my neck nodding in agreement with you. But I think in a situation like this, you can't be so sure of the causes. You don't necessarily know that it was simply a case of being unprepared. It very well could have been that they WERE prepared for the "average" emergency. Something totally off the radar could have popped up and smacked them in the behind.

I wrote about this before -- and I'll tell you, if ANYTHING ever taught me that life is full of surprises, THIS did -- Had a friend who had $60K in savings, nice home, $80K/year job, file BK
about five years ago. Wife had cancer and their insurance just didn't
cover it all. Add to that serious chemo out of state, his having to
take time off, etc ... it really whacked their savings and WAY
over-extended their credit. Add to that, because he had to take
so much time off, his company realized that they didn't need him as
much and let him go. Approximately 2 years after his wife was
diagnosed, they HAD to file BK.

That friend's situation taught
me that financial crises can happen to ANYONE -- even those that firmly believe that they're best prepared. I ought to mention that when they filed, he had zipped right through their savings, sold their home (right before they faced foreclosure), depleted his 401(k), and was about $50K in CC debt.

So, as they say, "Sh*t happens." Sometimes you can be prepared for it. Not always, though. That's why it's called a "crisis."

Re: Walking away from mortgage

Wonderin — Thu, 13 Nov 2008 16:31:17 GMT

Watchmann wrote:
Regardless of your personal situation.....$2400/mo is pretty reasonable for a mortgage.

How in the world is $2400 "reasonable" for a mortgage??? With our income, we could afford a home for over $300K -- and that still wouldn't be a $2400/month mortgage!!

I don't know how much you pull down a year (and don't want to know, either), but to us, DH pulling down roughly $100K after taxes, that's HIGH.

And 'sides, I don't know how you can decide what's "reasonable" and what's not since it's not your finances we're talking about. While they may have been able to afford it when they purchased the home, fortunes often reverse. And I do believe that they mentioned that $2400 is unaffordable now.

Remember, they still have to eat. :(

Re: Walking away from mortgage

Myhearts — Thu, 13 Nov 2008 16:57:40 GMT

Wonderin,

Well said.

Hearts