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New Member
Becki318
Posts: 8
Registered: ‎11-06-2008
0

Walking away from mortgage

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!!!

Super Contributor
ShanetheMortgageMan
Posts: 8,254
Registered: ‎09-28-2007
0

Re: Walking away from mortgage

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.
New Member
Becki318
Posts: 8
Registered: ‎11-06-2008
0

Re: Walking away from mortgage

How likely are mortgage companies to do a Deed in Lieu?
Super Contributor
ShanetheMortgageMan
Posts: 8,254
Registered: ‎09-28-2007

Re: Walking away from mortgage

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.

Valued Contributor
BrianB_The_Loan_Professor
Posts: 1,381
Registered: ‎07-29-2008
0

Re: Walking away from mortgage

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

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Brian B The Loan Professor
Mortgage Banker Lending in all 50 states -
Established Contributor
Watchmann
Posts: 989
Registered: ‎05-14-2008

Re: Walking away from mortgage

[ Edited ]
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
Super Contributor
ShanetheMortgageMan
Posts: 8,254
Registered: ‎09-28-2007

Re: Walking away from mortgage


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.

Frequent Contributor
Myhearts
Posts: 276
Registered: ‎07-18-2007

Re: Walking away from mortgage

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

I can and will be a part of the 700 club this year, because I can do all things through Christ.
Valued Contributor
1111mel
Posts: 1,060
Registered: ‎02-13-2008

Re: Walking away from mortgage

[ Edited ]

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
Mortgage Lenders Mid-Score 778 I AM A HOMEOWNER!!!!! 30 Year 5% Fixed Rate, closed on 3/18/09
Moderator Emeritus
ByrdMan
Posts: 7,970
Registered: ‎12-19-2007

Re: Walking away from mortgage

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.
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