Should I allow my home to foreclose?
admin | Mar 12, 2010 | Comments 4
I live in Las Vegas and purchased a home at the worst possible time. I was single and the mortgage is in my own name. When I got married my husband and I purchased another home together and found a renter for my old house with plans to sell as soon as the market turned around. Well, the market has tanked. I bought it for 275k (100% financing – dumb) and it is now worth 150k. Rent is cheap now and I can’t get anyone to pay more than 1000/mos and my payment is 2200. The lender will not give me a loan mod (already tried) and I can’t refi since I have negative equity. So, after my share of the payment , the HOA fees and maintenance I’m paying 17k a year on a house that I can’t short sale, I can’t sell, I can’t do anything…. My husband thinks I should allow it to foreclose because it is such a huge financial burden. Will it effect his credit (I bought when single)? I know I would need at least 2 years to get my credit back on track, but I don’t want any other surprises. Can they take any other assets? I’ve read that some financial analysts recommend that you walk away when you’ve lost more than 20%, which most would find counter-intuitive. I don’t think I’ll be able to turn this thing around as is and the pressure on our finances is more than either of us can handle….
Filed Under: House for Sale
sounds like you need another job. well you know your credit takes 7 years to get back on track.
If you bought the house before you got married and your husband isn’t on the mortgage paperwork…. then his credit should be safe.
But since I don’t want you to make major financial decisions on my advise I would suggest that you have a talk with your tax consultant.
It shouldn’t cost you an arm and a leg but it is better to have your ducks in a row before you end up ruining your husbands credit.
As to the house that you want to foreclose on
Make sure that you don’t “own” any other assets that could be liquidated to pay for the shortfall when the bank forecloses on your property and sells it for less than what you owe on it.
Yes, they could come after you for their “shortfall” and if your name
is on the house that you and your husband acquired together then that means that you have assets that they could put liens on.
This is why you need to get some real good financial advise before you turn the keys in to the bank and tell them to take back the house that you can’t afford anymore.
There are ways to prevent that… but only a real good expert can get you prepared and keep your other assets save.
Talk to a tax dude and find out the ramifications. Also, check out what the government is offering. There might be something in the 700 billion bail out for you…doubtful, but you never know. Good Luck.
Why won’t they do a short sale? I would find this out first. I do short sales for a living and could talk to them for you if you would like. I always negotiate for full and final satisfaction. They do not always give it, but it is worth trying. Mainly depends on which bank you have.
If the short is a definite no, then I would talk to your bank to see if they will file a 1099 or go after you for the deficiency. They only have those two choices. They will have to take you to court and get a judgement in a deficiency. Get something in writing if they tell you they will only send a 1099.
If the mortgage is in your name, his credit should not be touched. This is in Colorado, other states may differ. There are a couple states that can go after your other assets in a foreclosure. Find a Real Estate attorney, not just any attorney or accountant to answer these questions, talk to realtors or investors in your state who work only with short sales. Talk to at least 3, realtors have a tendency to be taught different things, and might give you conflicting information.
If the bank is going to go after you for a deficiency no matter what, walk away. It will take decades for the house to be worth what you paid for it. If you go to my site mygnhi.com, and read what I blogged about last night, you will be shocked at what some of these banks are doing. You will not feel bad about walking away!
Remember, in your agreement in your mortgage, it basically states that if you pay your mortgage you get to keep your house. If you do not pay your mortgage, the bank gets it back. You are in compliance with what they agreed, if you decide not to pay. Some folks feel very guilty or ashamed they are not “keeping their word” when in foreclosure. They are keeping in line with the contract. Banks walk away from their bad assets every day!
Good luck, feel free to call me if you have any questions 303-400-4357