Walking away from your house

[calypso*a*go-go]

First off, let me say I am very naive about how these things work...but how much would they be paying towards renting another place? What would happen if they stayed in the house but just paid what they could towards the mortgage? Do you think the bank would show them more leniency if they were paying something (even though it's not the full amount)? I'd think the bank would go after the homes first that had absolutely no payments made. You know, the whole "bigger fish to fry" thing.

 

[badblackpug]

First off, let me say I am very naive about how these things work...but how much would they be paying towards renting another place? What would happen if they stayed in the house but just paid what they could towards the mortgage? Do you think the bank would show them more leniency if they were paying something (even though it's not the full amount)? I'd think the bank would go after the homes first that had absolutely no payments made. You know, the whole "bigger fish to fry" thing.

Nope. This is what happened with my friend. He was making payments, but not full payments. He was, honestly, trying to work with the bank he wanted to keep his house, but because of different circumstances he was unable to make the full payment. He tried loan modification through the bank, they wouldn't budge. He tried loan modification through one of those government sponsored non-profit agencies, the bank still wouldn't budge. He hired an attorney, still nothing. Even though he was making partial payments the bank still sent notice of intent to foreclose. The thing is the house needs a lot of update and repair, so the bank, or my friend will never be able to sell it for what is owed on it. The rent on his 2 bedroom apartment is actually significantly less, and utilities (except for electric) are included.

 

[calypso*a*go-go]

Nope. This is what happened with my friend. He was making payments, but not full payments. He was, honestly, trying to work with the bank he wanted to keep his house, but because of different circumstances he was unable to make the full payment. He tried loan modification through the bank, they wouldn't budge. He tried loan modification through one of those government sponsored non-profit agencies, the bank still wouldn't budge. He hired an attorney, still nothing. Even though he was making partial payments the bank still sent notice of intent to foreclose. The thing is the house needs a lot of update and repair, so the bank, or my friend will never be able to sell it for what is owed on it. The rent on his 2 bedroom apartment is actually significantly less, and utilities (except for electric) are included.

That's what I was afraid of. It's such a shame that responsible people are being forced to do what could be considered irresponsible things.

 

[tzolkin]

Nope. This is what happened with my friend. He was making payments, but not full payments. He was, honestly, trying to work with the bank he wanted to keep his house, but because of different circumstances he was unable to make the full payment. He tried loan modification through the bank, they wouldn't budge. He tried loan modification through one of those government sponsored non-profit agencies, the bank still wouldn't budge. He hired an attorney, still nothing. Even though he was making partial payments the bank still sent notice of intent to foreclose.

I think my aunt and uncle are about to go down this road.

My uncle had been unemployed for a very long time and when he finally found a new job (last fall) he was severely injured his first week. He has yet to receive unemployment or compensation (that has been a nightmare with their attorney) and they applied for a modification of their home loan because they can't make the full payments any more. They qualified, but the bank won't approve the modification unless my uncle has a job.

So basically they can't afford their house because he doesn't have a job, but the bank will only lower their payment if he is employed.

 

[MomToOne]

If you walk away from the house then the house is going to be foreclosed upon anyway. The late or missed mortgage payments will go on your credit report anyway.[/url]

Yes it will, but my point was that many financial advisors are saying you need to find a place to rent BEFORE you start actually missing payments (but you know you will soon and have no hope of staying current in the future). Your credit report is still untouched at that point, so it is much easier to find someone who will rent to you. Once the late payments or foreclosure post to your credit report, many landlords won't deal with you. So if you wait until the bank throws you out, while you may have saved some money, you also may have a VERY difficult time finding a decent place to rent.

 

[seashoreCM]

My husband is a code enforcement officer/building/fire inspector. He gets calls all the time about yards that need cutting or are very unkept. He then calls the bank who holds the houses title (once the bank takes over and the foreclousure is done) and gets them to send someone out to cut it or he will hire someone to do it, then involve the judge and then someone from the bank headquarters (which is usually not located locally) will have to appear in front of the judge....so usually with the threat of my DH calling the lawyer for the bank, the grass/yard is tended to.

So my suggestion is to call your local code enforcement office. My husband LOVES dealing with the banks (not so much loves dealing with them, but moreso them having to do what every otehr homeowner is expected to!)

You mean the bank has to deal with frogs keeping people awake all night?

One place where I lived (a low rise condo complex) had a swamp next door (down a small hill) and there were plenty of noisy frogs there.

 

[m&m's mom]

That's what I was afraid of. It's such a shame that responsible people are being forced to do what could be considered irresponsible things.

I don't mean to be ugly but it is not responsible to commit to paying a certain amount for a house that you choose- and then not fulfill that commitment.
Of course I do not mean "you exactly but someone in that situation.
I know everyone has a ton of reasons but if you make a commitment, you are obligated (morally and legally) to do it.

 

[cinderella'smommy]

Actually, that is not quite so. The mortgage you have with your bank is a contract. They have leant you money; they keep the property as collateral in the event that you stop paying. There is, technically, not really a moral element to it; it is a business arrangement. If you believe that you would be better off not paying the mortgage, you default, and the bank gets to keep the property. That's the contract. In normal economic times, the bank can then sell it off and recoup some of its investment in the outstanding mortgage.

Rich people and businesses do this sort of thing all the time (Donald Trump, anyone?), and rarely are there discussions of whether or not they have a 'moral responsibility' to keep paying their creditors.

I guess I just feel like the banks brought this all on themselves with shady loan processes. Sure, there were people who bought homes they couldn't afford, but in a saner time, they wouldn't have been given huge loans, they would have been shown the door. So, the banks won't budge (because they have actually outsourced the processing to a service, and don't have a financial interest in the actual mortgage anymore), the servicing unit has an interest in getting everything it can b/c it has an obligation to all the CDO investors; the govt HAMP program was an abject failure in trying to keep people in their homes. So, what are people supposed to do? When the people in power aren't really willing to help, what choice do we have really?

Off soapbox now---

 

[Colleen27]

Yeah, I think it is pretty common, and working with the bank... well, more often than not it doesn't work. We've seen more friends than I care to count go through it, with the conflicting advice and lost paperwork and impossible standards and finally rejection.

One family that we know well was told they had to requalify for the mortgage from scratch before a modification could be approved, but NO ONE could requalify for that loan because the foreclosure mess took the value of the house from 100K in 2005 to about 30K in 2008. So they couldn't get a modification because their LTV ratio was so terrible, and because they didn't have an acceptable work history (Duh, if they hadn't both lost their jobs they wouldn't have needed the modification in the first place!). It was a real shame too because they put everything they had into trying to hang onto that house, all their savings, their son's college fund, their 401k, and they lost it because even once they both found work they had no way to catch up the couple of months they were behind. So now they're both mid-30s, separated, and starting over from scratch with poor credit and the possibility of a deficiency judgement hanging over their heads (in our state, the bank has 5 years from the scheduled payoff of the loan to pursue it, so they won't be clear of that possibility until 2040).

How long the process takes will depend on state laws, the bank, and the local real estate market. Here a family can live in a home for about a year between stopping payment of the mortgage and actually being thrown out, and then it generally takes a couple of months for the bank to inventory and secure the property. As far as how long it takes to get to the market, that's anyone's guess - there are bank-owned homes in my community that aren't even listed because the bank isn't willing to sell for current values and there are others that hit the market within a month of the foreclosure becoming final. I suspect a lot of that has to do with the terms of the loan and whether there's a third party (PMI, FHA) that will absorb the loss.

 

[snarlingcoyote]

I know these people have a pool in the backyard and we can hear LOUD frogs. I dont even want to think of the mosquitos that it will attract uugh! Who can i call to report the pool and frogs???

This one I can help with!

The frogs will eat the mosquito larvae, so encourage the frogs and also use the old school method of keeping mosquitos out of standing water - go buy a bunch of feeder fish from the pet store, the cheapo minnows if they've got 'em, and sneak over to the neighbors and dump the fish into the pool. They'll eat all the larvae.

 

[mistysue]

Both of my next door neighbors have done this in the last two years.
Sadly, both families did it because they wanted bigger houses, not being of any financial trouble.

 

[momxx5]

Similar situations with a few friends.

One was almost 2 yrs behind on mtg payments before the bank sent a "notice to acclerate" the foreclosure process.

Then she was offered choices
1. modification
2 short sale
3 keys in lieu of deed (I think that's what it was called)

Being a single mom, we tried to help her make sense of all the options and paperwork. Her exDH was still listed on mtg so that made it more complications.

Anyway, the house needed lots of work....inside to be painted, some windows were showing signs of age(even some wood rot), she was going to need a new roof soon. I think the upstairs needed carpet too.
Her best option was to hand over the keys and rent a townhouse. She was able to stay in school district, had no outside maintenance and felt a lot safer...again single mom with 2 kids.

Her credit was trashed long before any threat of forclosure so she really had nothing to lose.

Until her situation, and had I not seen the bank paperwork/offer, I would not have believed it myself.

I really think it is happening a lot more than we know. Thus foreclosure numbers are down because people are just giving up the houses.

 

[starann]

You mean the bank has to deal with frogs keeping people awake all night?

One place where I lived (a low rise condo complex) had a swamp next door (down a small hill) and there were plenty of noisy frogs there.

No, not the frogs, but the pool and the unkept yard...the pool is a health issues, esp if there are bugs in abundance, and a safety concern for drowning for the local kids. The grass is also a problem if not cut.

 

[snarlingcoyote]

I think banks are offering modifications - to people who can already afford their home! I and many people I know at my work have been offered and have taken offers on modifications. Not because we couldn't afford our homes, but because the banks offered such great deals.

They offered this great deal to me, but won't offer to make the same exact deal to keep a family in their home. That is just. And the banks are sitting on piles of cash right now that were supposed to help America.

 

[dfchelbay]

Both of my next door neighbors have done this in the last two years.
Sadly, both families did it because they wanted bigger houses, not being of any financial trouble.

I know someone that did this as well. She was not in any financial difficulties. Had a good paying job, and good credit. She just didn't want to live in her house anymore. She wanted a better house. So, she just walked away. It's people like her that enrage me. They choose to do it. Not because they have to do it. It was her greed, and utter selfishness, and nothing else that made her do this. Her actual words were, that she didn't want to live in that house anymore, and found something bigger and better...She lives alone. How much more than 3000 sq ft. does she thinks she needs.

She quit her job, filled out her hardship paperwork and her mortgage company is going to let her out of most of the debt...wth. I saw the letter, she won't have to pay the majority of her $300,000.00 mortgage. She put her new home in her boyfriends name...I guess to continue the hardship thing, so the bank won't know she bought a house priced nearly double the one she walked away from. It's people like her that do this that make me sick.

 

[Mommy Of 3]

Yes, I know people who've done it, too. All while going on vacation, etc. And it does make me because I'm still paying for my house regardless of "what it's worth". As long as I can make the payments I AM MORALLY RESPONSIBLE to do so.

It's NOT just a business contract. It's an obligation to pay for what you buy. When people walk away from their houses, it amy seem that the bank eats it, but in reality the taxpayers pay for it in the long run.

 

[Mommy Of 3]

I meant "may", not "amy". Duh

 

[kaywoody]

My next door neighbors walked away too. They brought a truck and told us that they decided to sell and they wanted to move the big stuff out before they cleaned it up. Well, that was the last day they were there. They left what they didn't want and it was a mess. Vandals broke in eventually, and took fixtures and general damage. The back fence fell down in a storm, so we called the city and they came out and drained the pool and fixed the fence back up. It was winter so we didn't have the mosquito problem at that point.

My co-worker's next door neighbor has a pool that they don't keep up at all. It slowly evaporates- it's probably down to 1/3 full right now and dark green. He throws mosquito dunks over the fence into the pool which kill the mosquito larvae. You can get them at a feed store, or even on Amazon. They aren't too expensive, and they help out a lot.

 

[dreamin_disney]

This one I can help with!

The frogs will eat the mosquito larvae, so encourage the frogs and also use the old school method of keeping mosquitos out of standing water - go buy a bunch of feeder fish from the pet store, the cheapo minnows if they've got 'em, and sneak over to the neighbors and dump the fish into the pool. They'll eat all the larvae.

I dont live next door. I could jump the fence then my luck get arrested for trespassing-lol!

Both of my next door neighbors have done this in the last two years.
Sadly, both families did it because they wanted bigger houses, not being of any financial trouble.

my neighbors both have very good jobs and have an adult son that also lives with them., He also has a very good job. They just walked away and got a better home for cheaper

No, not the frogs, but the pool and the unkept yard...the pool is a health issues, esp if there are bugs in abundance, and a safety concern for drowning for the local kids. The grass is also a problem if not cut.

The front of the house looks horrible so I can only imagine what the back looks like. The grass is overgrown, grass, flowers, plats look all dead. White fence is all rusted, looks bad since the rest of us keep up our houses and yards. The other day a family member uncle went over and took some stuff out so dont know.Dh said the owners were probably to ashamed to come get stuff themselves.

It's one thing if people lost their homes due to illness, losing their jobs but to many people are walking away to get a bigger cheaper home. I know 2 people that did that. Yet these same people have $$ for nice cars, vacations, timeshare owners etc. Makes me mad since dh and I dont make a whole lot of money but we are responsible. Plus i dont like what it does to the value of our home.

I'm going to look into code enforcement or health department to see what can be done

 

[msylvester01]

A lot of the banks are doing a program called "Cash for keys". Some of the programs can help the homeowner move out of the house, find a new place to live and offer a set amount of $$ for the keys.

Hope that helps.