Walk away from home? Promotion opportunity....

[Leesa926]

I posted just the other day about options with car and maybe house. Low and behold I have been offered another position at my job that I would need to move about 2-2.5 hours away. This is a great opportunity with a pay increase of about $25K per year. This is very new so I do not know all of the details yet.

I am underwater in my home as far as I can tell. That or just break even but that is going by zillow nothing concrete. I planned to possibly look for a new home in 2-3 years but now that this opportunity came about I am thinking what are my options. I will talk to my lawyer tomorrow but wanted to see if anyone had any thoughts or anything to share.

I have not signed a reaffirmation agreement. I am in Florida so I believe I would have some time before I would have to leave my home if I stopped paying. Not sure how long or if this is actually true. This could give me time to rent at the new location and take my time actually moving (if I can even rent with my bankruptcy! - I haven't told my mother I filed but if I have to I will and I am sure she would help me). As far as I know the company does not offer relocation assistance but I will ask.

My discharge should be coming next week (60 days). My scores have actually went up from mid 600's to around 725. Not sure if once discharge that will change.

Just wondering if this may be a blessing in disguise and if the bankruptcy may actually help me in this situation.... I am very nervous about all of this.

[LadyInTheRed]

Congratulations on the job offer!

Since you didn't reaffirm your mortgage, your bankruptcy does give you more freedom in this situation. If you can't sell the home for what you owe, you can walk away without any personal liability for the mortgage.

Renting will be more difficult with some landlords. But if you have stayed current on your mortgage, that should help. In any case, you will be able to find someone who will rent to you.

Could you rent your home out for enough to cover the mortgage and expenses? If I were you, I would start meeting with real estate agents and property managers to see what your options are.

[leonel9]

If I were you, I would start meeting with real estate agents and property managers to see what your options are.

Definitely meet with someone in real estate. For my own rental home, Zillow estimated it at $430k, but it was actually appraised at $310k, a difference of $120k. If you're trying to determine the value, either look at recent sales or get input from an agent.

If you're too far upside down, you may want to consider if renting out your home makes any sense.

Consider the risks involved in becoming a landlord. A family mother has a rental that just incurred $15k in damage because a water pipe flooded the house. Her obligation is not only to the mortgage company (she didn't file BK), but also to the tenant. In additional to insurance deductibles, there's also the question of the cost of the tenant's temporary living arrangements. I'm all for being a landlord, but just don't walk into it blindly.

You won't be able to get a traditional mortgage for 2 years (and even then it will be an FHA loan), so that may be factor in deciding to keep the home, especially if you may end up moving back.

[Leesa926]

Thanks. Definitely talking to lawyer and realtor. In order to rent we would have to make some repairs which I don't know if it's worth it. The key thing I think is I don't have to make a decision on what to do with the house just yet. Honestly I think doing a short sale or walking away makes most sense but hubby wants to explore possible rent scenario. We only have a 2.5% mortgage and it's only $978 so we could rent....

We are upside down. Zillow has it even but I believe it's valued less...

I don't think we could pass up the pay increase. As far as renting my mom would help if I needed co signer same with mortgage but I'd want to wait anyway to buy again.

It's only 2 hours away so depending how long foreclosure takes that could be an option. Currently in Jacksonville new place is Orlando. Cost slightly higher but not much as far as I can tell.

thanks!

[LadyInTheRed]

My understanding is that there is no advantage to you to do a short sale and it can be a real pain. Better to just walk away if there is no equity. In fact, it is possible that once you default, you could convince the mortgage company to pay you to sign a deed in lieu of foreclosure so they don't have to go through the foreclosure process.

[Leesa926]

I tried to call the attorney who really didn't give me any answers all she said was it's discharged in your bankruptcy so you can just give it up surrender it.

Is that the same thing as foreclosure can I decide later and pay for a little while and then maybe just stop paying if I can't rent it out or sell it, will that hurt me.

Ideally I don't want to make any rash decisions and am okay with paying for both properties in the short-term. Just wondering with no reaffirmation does that really mean that is down the line I decide to walk away I can clean. Would it still be the same foreclosure process that would buy me a couple of months.

She mentioned a short sale would be bad why is that? Just feel my attorney wasn't giving me too much information I'm looking for advice.

[leonel9]

Is that the same thing as foreclosure can I decide later and pay for a little while and then maybe just stop paying if I can't rent it out or sell it, will that hurt me.

If you don't reaffirm the loan, you are no longer obligated to pay it. If you don't pay your mortgage, or make other arrangements (such as a deed in lieu of foreclosure), your lender will foreclose on the property. This usually takes some time, so it is possible to live rent-free while it happens. Whether that is moral or not is another question.

If you didn't reaffirm the loan, the foreclosure will not be reported to your credit report -- because it will continue to listed as "included in bankruptcy" with a $0 balance. LadyInTheRed suggested that if you didn't reaffirm and became delinquent, the lender may offer you cash to leave the property, and transfer the deed to them so they don't have to go through the foreclosure process.

Just wondering with no reaffirmation does that really mean that is down the line I decide to walk away I can clean. Would it still
be the same foreclosure process that would buy me a couple of months.

If you reaffirm the loan, you basically continue to agree to be held responsible for the mortgage. All future payments (or missed payments) will be reported to your credit report. If you become past due, you could face collection activity.

If instead you DIDN'T reaffirm, and you kept paying a loan that was included in bankruptcy, then you generally will have no problems -- you get the title once the mortgage is paid off. The only real difference is that your credit report will show a $0 balance, and your payments won't be reported to your credit report -- they'll still be processed by the lender, however. If you stopped paying a loan that wasn't reaffirmed included in bankruptcy, the lender would likely start foreclosure after the loan was too-delinquent. But other than needing to move, you aren't really impacted.

She mentioned a short sale would be bad why is that? Just feel my attorney wasn't giving me too much information I'm looking for advice.

A short sale would only really apply if you reaffirmed the loan. It's a horrible idea to reaffirm the mortgage. If for some reason you did that and weren't able to pay, the post-petition payments (including late payments) would be reported to your credit report. In a short sale, the lender agrees to sell the home to someone else for less than what you owe. The loss they take is called a deficiency balance. If you reaffirmed the mortgage in bankruptcy, the late payments and (possibly) deficiency balance may be collected on, and reported to your credit report, negatively impacting your credit AFTER bankruptcy. Why would you want to do that?

[Leesa926]

Thankso. I didn't reaffirm. I think it's just overwhelming as with this job offer and moving it's alot to take in.

Ideally we will see if we can rent it or sell (don't think value is there). I will continue to make payments but also have to pay for new apartment where the new job is so eventually if we cannot sell or rent in would have to give it up.

I guess I'm curious of that process. Do you contact the lender or stop paying and wait for them to contact you? Hoping to avoid that but wondering.

thanks for the help!

[leonel9]

I don't know any "best practices" for walking away from a home after abandoning it in bankruptcy. I'm replying to/bumping this thread, in case someone else does. It is possible you could negotiate "cash for keys" whereby you assign the property rights to the bank, the bank pays you, and you move out. I imagine the bank is not likely to offer cash if you voluntarily approach them and schedule the turnover from the property. But again, I have no experience here.