Going into foreclosure. PLEASE HELP!

[MaryLang]

We have a first mortgage, $98,000 (750 a month) and a second $12,000 (250 a month). A few years ago our house appraised for 120,000 and now its 45,000. About 8,000 in credit card debt. We live in Michigan. DH just lost his job 2 months ago. The first thing we did was call our lender, who informed us that there is nothing they can do, we were hoping to lower our payment, something! Nope. Called a HUD counselor, they suggested we live off of savings and unemployment and hopefully DH finds a job soon in the mean time get a loan mod. Well, we're still waiting on that, they said it'll take 12 wks. We don't want to drain our savings, DH may find a job out of state and we were hoping to rent this place out and rent another home for ourselves. But we refuse to drain the little bit we have, we'll need money to move right?
We've always been up on payments on everything.
This is the first month we are considering stopping payments on 1st and 2nd.
We don't care if we loose the house at this point.
DH has a very high credit score, but if we need to take a hit we will.
We're afraid that the bank will come after us for the difference on the house, thats what the HUD counselor said could happen.
I think we will contact an attorney in the morning.
What should we do?

[lrprn]

Contact 3-4 experienced bankruptcy lawyers in the morning to set up free initial consultations. Then use those consultations to find out what can be done in your situation.

Sounds like you are in too deep at this point to pull yourselves out while waiting for a loan modification that may never conme. Don't blow your savings now - instead find out what all your options are and pursue the best one you have as soon as possible.

[DeadManCrawling]

There are many facets to foreclosure. I will point out a few of them, so you have some additional viewpoints and thoughts to present your attorney.

Are you "just" looking to foreclose? Or will you file bankruptcy as well?

You are right. They can come after a deficiency. Whether they do or not depends on many factors. This will also trash your credit, either way. If you are facing foreclosure, you should probably resign yourself to seeing the credit score go to the dumpster.

Foreclosure does not mean you need to move out of your hosue immediately. You can live there for many months rent-free and save up your funds to start over. Some on this board have been in their home for years before action was taken.

Do you want to defend the foreeclosure? Filing a few legal documents can extend the process by a very long time. Giving you more time in the house rent-free.

During this time, many banks become more amenable to a modification. What if you are 8 months into it and the bank offers the deal of a lifetime? Is it worth it to you to take it? There are downsides to this as well.

Even if you leave the place, you are responsible for myriad fees until the bank officially takes the deed back. These include insurance, HOA fees, possibly taxes and others. If you abandon the home, you are not off the hook. Some people have unsuccessfully sued to force the bank to foreclose. There is no law that says they must foreclose, or that they must hurry when they do so.

It is unlikely equity will be growing rapidly any ime soon, as you note, and that sure is a factor as well, especially when considering any modification. Even a great mod cannot bring back lost equity.

Good luck with everything you're considering!

[MaryLang]

We are not really looking to BK right now. We feel like we can pay the CC's with unemployment. But I guess until we talk to an attorney we won't know whats best in that regard. We only have a little bit left in savings and have 4 kids 5 and under, so letting the couple grand we have to bottom out is the scariest thing in the world to us. We're aware that our credit will be $*it after this, we really feel pushed in a corner and accept that credit will tank. We have made huge sacrifices for years just to keep up the mortgage, and now that he lost his job, it seems impossible, I really don't see a way to pay this months bill. IF a mod comes through down the line, can we take the mod and rent it out?

[DeadManCrawling]

Your situation mirrors so many here, and I am sorry it is happening to you.

My understanding is that if you get a mod, you must live in the property as your home.

You may, however, be able to take a roommate. It's an idea I have not seen addressed anywhere.

Good luck

[MaryLang]

Thank you so much, its so nice to have a place to talk about this stuff. I do realize we are in the same boat as millions, it sure gives me a different perspective being in the middle of it.
Yeah, I was afraid that was the case with a mod, and a roommate would never work. We are 6 living in a 900 sqft house-no basement, so we are really out growing it ourselves let alone add another person. But the fact (or probable fact, I'll find out more) that staying in the house is a stipulation helps me to look at everything more clearly.

[CH33 Paralegal]

If your intention is to surrender the house, then potentially a 7 might be up your alley. You essentially get the opportunity to "walk away" from the house and you are discharged from the debts owed on the house.

Michigan has it's own foreclosure process, but you can work with an attorney to buy you enough time to be able to move properly.

This is all given that you are actually able to do a 7. A meeting with some attorneys to discuss all that is definitely in order. I hope you guys are a fit for a 7 though. It looks like it could give you the relief you need.

hang in there too. I'm from SW Michigan and I just couldn't stay any longer....I moved about two years ago. Sad to leave, but what can you do when you're in your 20's and the unemployment rate is just ridiculous. I always have love for the Michiganders and wish you luck.

[CH33 Paralegal]

and don't feel bad about the credit cards. They were charging you interest based off the assumption we had a healthy economy. The economy didn't live up to ITS end of the bargain, especially for Michigan, so in my opnion, they can get it how they live.