Foreclosure consequences....

BurntBlood

BurntBlood

< 25 Posts
Hey Hornfans, I love this site because although I doubt many of you are better looking than me I am certain most of you are smarter. I have a bit of a quandary. I am seriously considering letting my home loan default. Besides the obvious hit my credit would take are there other consequences I haven't thought of. For instance, is it possible the lender could come after me for money. I've talked to a close friend that told me no. He says that the mortgage company would never come after me for money since I'm the one who defaulted on the loan.That made sense to me but what do I know?
Thoughts? Advice?

Hook 'em
 
I guess it's a financial decision but I can't remotely imagine getting myself into a situation where I'd let the bank foreclose on my house. I'd give up my left nut before letting that happen.

Have you tried a credit counseling service?
 
i'm not a title attorney so take this for what its worth, but i believe that once they get their collateral, that's all they are entitled to. there is a thing called deed in lieu, which basically means you give them the property instead of making them foreclose. Your credit shows foreclosure either way, but it lessens the attorney fees that they rack up and stick to you.

Please only do either of these things as a last resort after exploring all other possible options. but counseling services are mostly ******** companies that leave you worse off for using them, and bankruptcy is likely not beneficial now with the new laws.
 
this should be an absolute last resort because it will cause huge damage to your credit for a minimum of seven years

the mortgage company could come after you for the deficiency (ie the amount they realize from the sale subtracted from what you owe), but odds are that you are judgment proof (ie you do not have any assets that they could seize)

I strongly advise you to seek credit counseling at a bare minimum before allowing this to happen

you might also want to talk to a bankruptcy lawyer
 
Let me give a brief explaination.
When we bought our current house in 2000 it was perfect for us. We had rented a couple of houses before but it was the first house we bought. My daughter was 6 at the time and it was right next to her Elementary school. The house is old and has been steadily falling apart. I can't keep up. I'd say it needs 10,000 worth of fixin up to be right but even then it's a small house. The neighborhood has gone way downhill. I've had my truck broken into twice and my garage at least that many times. My now 13 year old daughter is embarassed to live there.
A friend called me the other day and told me he was buying a house right next to what will be my daughter's highschool. He's going to rent it out and wanted to ask me first. It's in a very nice neighborhood. It's over 700 square feet bigger than the hellpit in which we currently reside. I meet him at 7:00 tonight to look at the house.
This is about a new beginning, a fresh start.
I have a tough desicion to make but my heart is telling me to do this. Time is not on my side.
 
It doesn't really sound like you have thought this through. I can think of very few scenarios where the better option is to let the house go.

As far as your 13yo, she is going to be embarrassed by her parents until she's out of high school at least, so don't make such a life-altering decision based on not wanting to hurt her feelings. We lived in several less than nice places when I was growing up, including a rented trailer that had been repo'd, and my brother and I turned out OK.

This would actually be a great opportunity to teach your kids the importance of meeting your obligations. You made a promise to the lender to pay them back the money they loaned you, and you should do everything physically possible to keep that promise.

How many months behind on payments are you? The lender may let you back-end some of them.

Put the house on the market now, if you haven't already. As someone mentioned, look into a short-sell. Lenders don't want to be in the real-estate business, and most would rather have cash than your property.

Also, why would you ever want your friend to be your landlord, unless you want to kill the friendship, that is. What happens when **** breaks and he won't fix it, or at least not in a timely fashion? What happens if/when you miss a couple of payments?

What happens if he decides in 6 months to sell the rent house? With a foreclosure on your record, you may be sol when it comes to finding another place, esp in a decent neighborhood.

You, and quite possibly your wife, should get a second job. Have a garage sale. If your cars are paid for, sell one. If neither is paid for, sell the one closest to being paid for, or sell both and pay cash for a cheap one.

Check out Dave Ramsey for some good advice and encouraging success stories. I would bet you can get out of this without losing the house or your self-respect.
 
And don't ignore any letters you get from your bank. They don't want to foreclose becase of the costs involved, but they will if they never hear from you.
 
Bookman - If my house is appraised at 110,000 and 90,000 is left on the loan why would they come to me for any money? Even if 10,000 is needed to make the house marketable they'd still come out ahead, would they not?

BTW - I am currently not behind on my mortgage at all.
 
If you owe 90K on a 110K house and you just want to move in a hurry, you might be able to sell the house for 90K and not have to worry about it.

I'd talk to the "we buy ugly houses" people before just turning in the keys on a house I didn't want but wasn't behind on.
 
So you are current on your payments and have maybe $20K in equity in the house depending on how patient you are in selling it.

What was the original question?
 
burnt, it is pretty obvious that your friend's rent house coming available in a highly desirable location for you is one of the main things that is driving you.... since you aren't behind on your mortgage to date.

you must resist the horrible idea that your mind is telling you is a good one.

even if your house has depreciated and you won't make any money, in time you will find a buyer. don't be stupid man.

I know you don't have the money to fix the house, but that is no reason to walk away.
 
listen to notreally bro.

you'll find other houses in the same neighborhood.

don't walk away from $20,000 -- wait a few months (however long it takes to sell), give the realtor 3% to 6% -- and walk away with over $10,000 equity.

then either buy or rent another house in a better neighborhood.
 
Pick up the phone. Call a Realtor. Let the Realtor come to house and determine the value. Just because your truck and garage were burgularized a few times doesn't mean the house hasn't gone up in value. There's crime everywhere.

How much will your house rent for? I'm sure there are lots of other people who would love to live right next door to an elementary school. Maybe you can rent it out to cover your exisiting mortgage payment.

It sounds to me like you want to move, but you're too tired or lazy or scared to sell your house. Man up, Dude. Take care of your business. Don't just walk away and ruin your credit for the next decade. Things like this can end up costing you big time $$$ down the road.

Bernard
 
wtf? you have equity in your house and you want to be foreclosed upon? have you even tried to sell it? get someone to put a new coat of paint on it and stick it on the market. seriously, i'm not even sure how to respond to this. some people obviously buy houses that seem to have no idea how the whole thing works.

seriously, if you're that ambivalent about it then post the details on here, i'm sure you could probably find someone to buy it for your loan amount pretty quickly if we could turn it around and sell it for a profit.
 
I'm glad you're a face jock b/c rationalization like this is crazy.

There'll be other houses to rent in nice neighborhoods, hell the supply will probably only get better over the next few months. Your 13 yo daugther won't die from embarrassment.

Another thing to think about is your daughter's education. She's 5 years away from college and you might want access to loans for her education. Good luck w/ a foreclosure on your credit.
 
Other things to consider....

Why don't you rent your house if you are dead set on moving?

In regards to a possible short sale deal, keep in mind that you can be taxed on this "phantom" income by the IRS for the forgiven debt (unless this law has changed).
 
This thread gets negative 5 stars for shear stupidity.

I'm joining in with everyone who is confused. You're on the plus side with your mortgage in a house that will most likely sell for AT LEAST the amount you owe..if not more, and yet you want to take a 7yr credit hit so you can live in your buddy's rental house? With a FAMILY?

Ok...let's see what other options there are:

Eh..selling the house...at least breaking even...and moving in somewhere else then?

Eh...paint the house, rent it out..make some cash.move on.

Either way..my vote would be to be a man and take care of your responsibilities.
 
I'll jump on the wagon... this is a bad bad idea. There are ways around your situation - what you propose is definitely not one of them.
 
Loco is right

you can be 1099'ed on the difference.

ex. owe 100K short sale for 90K

you will get a 1099 for 10K.



hookem.gif
 
You must log in or register to reply here.

Weekly Prediction Contest

* Predict HORNS-AGGIES *
Sat, Nov 30 • 6:30 PM on ABC

Recent Threads

Prediction Results Threads

2024 Schedules

Back
Top