Walking away from house

[jennv77]

We were discharged 4 years ago. Never signed a reaffirmation agreement with our 1st or 2nd mortgages, but have continued paying. I recently found out that since we never signed anything, we can still walk away from our house without consequences. Am I understanding this correctly? An opportunity came up for a rent-to-own in a nice town with great school systems for our kids (unlike where we live now) and we are planning on moving in a month. What steps should we take at this point? Do we need to call the mortgage company and let them know? Any help would be greatly appreciated!!!! Thanx!

[drowning123]

Yes, you can walk away, but your name will still be on the title. The house will have to be foreclosed and sold at auction for you to be free and clear of the title. Having your name on the title means that it's best to keep insurance in case anyone gets hurt on the property. You're also stuck with the utility bills. The good thing is that you can stop paying the mortgage and save up that money to make your move. If you had known, you would have had a fat bank account right now with all the money you would have saved on not paying the mortgage. Maybe the bank is willing to work something out with you with regards to getting your name off the title like the cash for key thing. I don't even know if that really works.

[last2cents]

Honestly, at this point, I would call your 1st mortgage lender, and ask to speak to the Loss Mitigation or Foreclosure Department, and explain to them that you would like to give the house up at this point, and offer a deed in lieu of foreclosure.

The advantage to this is that the lender doesn't have to go through the expense of a court filing, and your name gets off the title quicker.

You can extend the same courtesy to your 2nd lienholder - just don't mention deed in lieu (they're obviously going to get bupkis)

My advice is not to do this until your new deal on the rent to own is completely solid.

As well, as far as utilities are concerned, once you're ready to bolt, turn them all off and just maintain the homeowner's insurance on the property - it may take some time for the whole process to suss out.