Walking away from mortgage- please no flames here just advise or experiences

[Janet Hill]

It's most likely a recourse loan. Non-recourse loans are generally very hard to get. I know as my IRA invests in real estate and non-recourse loans are the only kind I can have without running afoul of the IRS.

I've been in your situation before and nearly had to file bankruptcy because of a divorce. However, my house wasn't upside down and I was barely able to hang on.

Personally, I would walk away and be closer to my family. It will be good for both you and your child. No matter how much we love our kids it's so nice to be able to relax while the kiddo spends quality time with the grandparents. Also, you will have someone to help out with those emergency situations. Yes plenty of people have done it all on their own, but it's nice to not have to.

Don't think that having your child support revisited will result in a significant change to the amount. Unless your ex makes a lot of money you will probably only get 2-4 hundred more, which will certainly not offset your income loss. Most states have the formula on which support if calculated on line you might want to check it out.

Tough decision and unfortuneately it's not just a financial one, but also involves lifestyle choices and these aren't quite as easy to quantify.

Good Luck.

 

[MrsPete]

I am thinking about not paying the mortgage anymore and walking away from the house.

It's an awful choice, but I'm not sure you have much of a better option.

One thing you might consider is offering it through a realtor as a "take up payments" deal. I had a relative who was in real estate and every now and then she'd have a person call up and say, "I'm going to lose my house next Tuesday -- I cannot avoid it. Do you know anyone who would buy it just for "take up payments" and save my credit?" A couple times she herself bought these houses, did some minimal fix-ups, and turned a fast profit -- of course, that was done in better times. Depending upon your specifics, you might find someone who'd be willing to JUST TAKE THE HOUSE under similar circumstances. Many people are convinced that we're on the edge of a break-through with the economy, and IF they're right, then a person who bought a couple houses like yours could -- in a few years -- make a massive profit. Some people are buying houses like that today. Whether they're wise or foolish won't be clear for several years.

Anyway, before you walk away from the house, it'd be worth it to TRY this. Make it clear to the real estate agent that you cannot put any money in, and you're willing to sacrafice all your equity. You can't do worse by talking to an agent.

She said her brother walked away from his house a few years ago and he's been able to get credit cards and a car loan. I doubt if that was right away and he probably paid a higher interest rate but life does go on...

Honestly, today ANYONE can get a credit card or a car loan. The question is whether a person with super-poor credit can get a reasonable rate on that credit card or whether he can get a car loan on the car he really wants. My brother, who is horrible-horrible-horrible with money, used to borrow money at 48% to pay his car insurance. (I only know that because I accidentally saw a bill once, and I tried to get him to understand . . . but he wouldn't listen.)

 

[Kellydelly]

I read this week in the paper that a short sale hurts your credit just as much as a foreclosure, so for that reason I would just walk away from the house. In my state you can live in your home for up to a year w/o paying the mortgage (while you are going through a foreclosure), I would look into the foreclosure laws in your state and see how long you can stay in your home. That may allow you to save some money and be able to move into another home. I'm sorry that you are in this position.

 

[SILLYANDI]

10 years ago my sister walked away from her home. She has been fully restored, credit wise, today. She lived in the house for over a year without making payments before they finally forclosed on her. She was able to get high interest credit cards and a car loan within months of the forclosure. Somewhere around the 5-6 year mark was when she noticed her credit rating was increasing and she started getting those darn offers in the mail for more credit cards.

I don't have any advise, I had an negative opinion about my sister's solution, but she did it simply to maintain her high standard of living (she had already found a much nicer house to lease before skipping out on the house she was upside down in) not because she had any of the problems you are dealing with. The funny thing is, if she had held onto it for 2 more years she would have been able to sell it for twice what she paid for it!

 

[puffkin]

I don't know if this would be an option, but could you rent out your home? I saw a real estate show once where a couple was upside down on a house and had to move across country for a job. There house wouldn't sell so they ended up renting it. I think when it was all said and done they still had to pay $200/month to cover the difference between the rent and the mortgage but it was better than the alternatives.

Another idea would be to take a roommate to help with the mortgage.

I know these aren't ideal solutions, but I am just trying to think of everything you possibly could do at this point.

 

[NHdisneylover]

I don't know if this would be an option, but could you rent out your home? I saw a real estate show once where a couple was upside down on a house and had to move across country for a job. There house wouldn't sell so they ended up renting it. I think when it was all said and done they still had to pay $200/month to cover the difference between the rent and the mortgage but it was better than the alternatives.

Another idea would be to take a roommate to help with the mortgage.

I know these aren't ideal solutions, but I am just trying to think of everything you possibly could do at this point.

This is what we are doing with our house in New hamphire. We have it rented for almost exactly what the mortgage payment is. Be careful who you rent to thoguh. Our first tenants had excellent references bnut rashed the house, quit paying rent and had to be evicted. We actaully just won in small claims court against them today for the $5700 in back rent and utilities and damages they caused (still don't know if we will ever see the money. . .). We finally have good tenants though and it is nice to know we can hang onto the hosue until the market has really recovered.

 

[Vickibean]

You won't be issued a 1099 if it is your primary residence that is foreclosed on.

Is you ex still on the mortgage? He could have recourse against you for not paying the court ordered payment, as it will damage his credit.

 

[Purseval]

Forget about hugs, why don't you all just chip in and send the OP a few thousand dollars? Basically you're doing that anyway, why not really dig down? Who do you think is paying for the bailouts when people walk away from their homes, the Martians?

 

[Blue.Fairy2]

I am not sure that your 401K can be considered when looking at a short sale, due to that this not money that is readily available. Before you do anything, you really need to get some good financial and legal advice.

I agree and as someone else pointed out if the bank sends you a 1099 on what they eat you WILL have to pay taxes on that.

Short sales do not hurt your credit as much as a foreclosure.

http://www.mortgagereliefformula.com/06/20/how-bad-does-a-short-sale-hurt-your-credit/

on what ever you decide to do, you must do what is best for you and your family.

 

[punkin]

It's most likely a recourse loan. Non-recourse loans are generally very hard to get. I know as my IRA invests in real estate and non-recourse loans are the only kind I can have without running afoul of the IRS.

Mortgages are different. In quite a few states a first mortgage on your primary residence is a non-recourse loan.

What that means (for another poster) is that the bank has a security interest in your house and can foreclose, but cannot come after you for a deficiency.

 

[Planogirl]

Forget about hugs, why don't you all just chip in and send the OP a few thousand dollars? Basically you're doing that anyway, why not really dig down? Who do you think is paying for the bailouts when people walk away from their homes, the Martians?

So what would you suggest?

 

[C.Ann]

Forget about hugs, why don't you all just chip in and send the OP a few thousand dollars? Basically you're doing that anyway, why not really dig down? Who do you think is paying for the bailouts when people walk away from their homes, the Martians?

Was this really necessary?

Rather than kick someone when they are already down, I prefer to sit here and thank God that I'm not in the OP's situation right now.. Hopefully you won't ever find yourself in that position either.. Remember: "Life is what happens to you when you're busy making other plans.."

TO THE OP: Best of luck with whatever you decide to do.. As long as you have your health, your child, and your family, all of the rest is just "window dressing"..

 

[a1tinkfans]

Good Luck OP!
A very difficult situation to be in.

Good Luck with your decision as to how to handle this in the best way you can.

 

[Mom2Ben02]

OP, I am so sorry you are in this situation. I work for Bank of America, and we have people coming in all the time to turn over keys - to houses, cars, etc etc. You are not alone.

I believe that when this crisis/recession is over, and we are in the recovery period, credit scores will have to be re-evaluated. There are so many people who have declared BK, gotten foreclosed on, had short sales or evictions....it is a new world, credit-wise.

 

[Liberty Belle]

Forget about hugs, why don't you all just chip in and send the OP a few thousand dollars? Basically you're doing that anyway, why not really dig down? Who do you think is paying for the bailouts when people walk away from their homes, the Martians?

No, the Saturnians and they're loaded; they can afford it.


OP, don't give this poster a second thought. All you have to do is read his history to see he loves to spout negative crap.

I'm sorry you're going through this. There but for the grace of God, go I.

 

[pixiewings71]

Mortgages are different. In quite a few states a first mortgage on your primary residence is a non-recourse loan.

What that means (for another poster) is that the bank has a security interest in your house and can foreclose, but cannot come after you for a deficiency.

Thank You

 

[fakereadhed]

Some advice from our lawyer friend- many people move out the minute they are asked to vacate. Check to see what the legal process is in your state, but in ours it takes 3-6 months to legally remove you from your home. If you are truly down on your luck, those extra months in your home could make a big difference in your life. Best of luck to you!

 

[Hannathy]

OP, I am so sorry you are in this situation. I work for Bank of America, and we have people coming in all the time to turn over keys - to houses, cars, etc etc. You are not alone.

I believe that when this crisis/recession is over, and we are in the recovery period, credit scores will have to be re-evaluated. There are so many people who have declared BK, gotten foreclosed on, had short sales or evictions....it is a new world, credit-wise.

I certainly hope not!. There are many many people out there who didn't over-extend themselves and live beyond their means who have sacrificed while dealing with loss of jobs and income during this economy to have those that didn't get a free ride.

 

[3happydancers]

was this really necessary?

Rather than kick someone when they are already down, i prefer to sit here and thank god that i'm not in the op's situation right now.. Hopefully you won't ever find yourself in that position either.. Remember: "life is what happens to you when you're busy making other plans.."

to the op: Best of luck with whatever you decide to do.. As long as you have your health, your child, and your family, all of the rest is just "window dressing"..

ditto!!!!!!!!!!!!!!!!!!!!!

 

[Purseval]

So what would you suggest?

Take in roommates. Dip into that 401k. Go back to court, say that the situation has changed drastically and ask for an adjustment. This isn't some disaster like a sudden illness this is someone looking to bail as a financial option. That should be a desperate last resort not a result of financial planning.