Is walking away from our house a good idea?

[mom2three09]

We are actually surrendering our home in our Chapter 7, (unless the bank just forecloses instead). We put it out there for the bank to accept or not. However, we are 250K underwater purely because of economy. We bought our home before the big boom in the housing market and are now suffering the loss because of short sales and foreclosures in our neighborhood. We were never late on payments until we filed for BK because we were still struggling with the idea of giving up homeownership... crazy right?

Not really... walking away from your home is a BIG decision. The only advice I can give is to take away all emotions and look at it from a business standpoint. If this were a business, would it be smarter to cut your loss or keep it? Plain and simple... and it really is that simple.

We are 250K under... ours was extremely simple. 30K under? Not so sure. That really depends on where you live and how much you make. Is this where you planned to be 30 years from now? Was this your ultimate retirement home? Or did you plan on moving in 5 to 10 years into a different neighborhood? Is your mortgage payment comparable to what you would be paying for rent? Is it actually lower? Those are the kinds of questions you need to ask.

Definitely way your options? My decision still wasn't easy, even though we are 250K under, but it was definitely clear. We would be stupid not to walk away. It's still not easy. Now it's just a waiting game on the lender and whatever they decide. We could be moving 3 months from now or a year from now, it all depends on them now.

For all those that think it's a no brainer, you're right, however there are always other factors to look at. And like I said before, it may be clear what to do, but that doesn't mean it's easy.

Good luck whatever you decide and yes from previous replies... I will agree, whatever you do, DON'T reaffirm.

In our first meeting with our attorney he asked us these questions. Basically said, if you don't see yourself in your home for any length of time then it's probably best to walk way (stay til they kick us out). We have no plans to stay here even another 3 years so we chose to not reaffirm (actually BofA doesn't reaffirm anyway so it really didn't matter). But for now we are staying in our home and making payments every month. If something happens where we can no longer afford it (before we sell in about a year) then we can walk away. We aren't upside down tho, so the decision as to whether or not to just go ahead and walk away or to stick it out and try and sell eventually, has been a hard one.

I agree with what others have already said ... either walk away or just do NOT sign reaffirmation papers.

[PoorGrammyinBK7]

We had a 1st and 2nd mtg & did not reaffirm. At the time of our BK, we were breaking even as far as the value of the condo - we owed about what it was worth. So, we kept paying on both. But finally, this year, after seeing the value drop another $30K (at least), we decided to walk.

Stopped paying 2nd in February and 1st in April. Have heard nothing from 2nd. Got a letter after missing 2 payments from CU about the 1st. But did not really seem like a NOD (but I've never see one, so I don't know). Was more of a "let us help you work it out" letter. Then this week after missing payment #3, our account has been restricted.

Note: we had 2 car loans (not reaffirmed) at the Cu and we managed to pay both of them off over the last couple of years. Plus we have a zero balance credit card that had survived (until this week) - I am assuming its gone now too - but now it has a big balance due (which we are trying to pay off with at least double the required payment or more).

We have already moved out and decided we don't want it even if they offer to work it out - which I feel like they won't. Anyway, now its more than just the money. It has a mold problem and other issues - not healthy for us.

Anyway, we want them (1st) to take it over as soon as they can - just wondering how long it takes, as we have still to pay the condo fee. And I am pretty sure they will have to file a foreclosure lawsuit - what do we have to do? (in Florida)

Are we going to have to get a lawyer because it will go into FC? We just want them to hurry up and take it. Hopefully they can sell it and get most of the money we owed on it. 2nd mtg lender will likely get nothing.

Are we looking at months or years here?

[lolie]

PoorGrammyinBK7,
You don't need a lawyer in a foreclosure, especially after incl. your home in the BK. You said you did not reaffirm and if that is the case, you can walk away, however, until the deed is taken over by the lender or new owner, you are still responsible for having insurance on the property.

Unfortunately, at the rate that the lenders are going with foreclosures these days, it could be quite some time before they take over the property. At best you can contact your lender and tell them your intentions and send it to them in writing to the proper department. Not sure this will even help. We have an attorney and sent a letter to our lender and they are well aware of our intentions, but we are still in our BK and only 2 months late. They would have to get the automatic stay lifted in order to send us a NOD.

I do know that all lenders have to abide by their states foreclosure laws and follow a timeline. You may want to check it out for your state. Out here in CA we have about 3 months past receiving an NOD before possibly getting a three day notice. And most lenders wait until you are 2-5 months behind on payments.

I don't know if any of this helps, but good luck to you.

[bladerunner]

RE: Brazzy....sorry no regrets. My husband and I are over 150% underwater in our primary residence and an investment property. We will walk away and declare Chapter 7 if we qualify.( We live in Las Vegas) We've owned both properties over ten years. The houses in our neighborhood are now selling at 1955 prices(before I was born)..I will not feel shame, remorse, guilt or fear...Those negative vibes are the result of misinformation about foreclosures effects proclaimed by the government, lenders and the media. Do what is best for you and your family, because, I can guarantee, the bailed out banks will survive with a little less of our money...

P.S.
thank you everybody on this forum for all of your generous and sincere comments.

[bakergrl]

Has anyone been able to get a new loan 5 or so years down the road for a "2nd home" and then let the first go? Our house is about $70,000 under at this point between the 1st and second but we do not want to walk away right now because the rental places are more than what we pay for our mortgage.

We may to get a bigger house some years from now and my be moving to another state at some point and I do not know how to get out of this mortgage and still be able to have a home.

[PoorGrammyinBK7]

Hindsight...

If I would have known that our home value would go down so much more -- and so quickly, we would have stopped paying many months ago and lived free there for a good long while!!! But you just never know.

Now, I think with the oil spill - even though we are not "on the beach" or yet effected in the Tampa bay area - its gonna cause real estate prices around here to plummet even more.

[ssmdem]

If I would have known that our home value would go down so much more -- and so quickly, we would have stopped paying many months ago and lived free there for a good long while!!! But you just never know.

Now, I think with the oil spill - even though we are not "on the beach" or yet effected in the Tampa bay area - its gonna cause real estate prices around here to plummet even more.

Ditto!!! We're in the panhandle - oil is just showing up this weekend - I hate to think about what my already underwater $65K house is going to do now.

[ssmdem]

Has anyone been able to get a new loan 5 or so years down the road for a "2nd home" and then let the first go? Our house is about $70,000 under at this point between the 1st and second but we do not want to walk away right now because the rental places are more than what we pay for our mortgage.

We may to get a bigger house some years from now and my be moving to another state at some point and I do not know how to get out of this mortgage and still be able to have a home.

That's basically what we're planning to do. We own two homes - surrendering our house and moving back into our rental property. But we're not reaffirming either mortgage. As soon as we're able to get into another mortgage - have heard 3 years - we'll move and depending on the market at that time, may turn this back into a rental property again or let it foreclose at that point. It's about $35K underwater now - just all depends on what the market looks like then.

[bakergrl]

I'm just wondering if 5 years from now we can get a loan for another home while "trying" to sell the first and then once in the second stop paying on it. It sounds a bit crappy that we want to dump the 1st one like that, but there is no way we are going to come close to selling it for what is owed and the lender on mortgage 1 and 2 are jerks. I do not want to be stuck in this house forever but it does not make sense to walk away and rent at this point.

That's basically what we're planning to do. We own two homes - surrendering our house and moving back into our rental property. But we're not reaffirming either mortgage. As soon as we're able to get into another mortgage - have heard 3 years - we'll move and depending on the market at that time, may turn this back into a rental property again or let it foreclose at that point. It's about $35K underwater now - just all depends on what the market looks like then.

[ssmdem]

I'm just wondering if 5 years from now we can get a loan for another home while "trying" to sell the first and then once in the second stop paying on it. It sounds a bit crappy that we want to dump the 1st one like that, but there is no way we are going to come close to selling it for what is owed and the lender on mortgage 1 and 2 are jerks. I do not want to be stuck in this house forever but it does not make sense to walk away and rent at this point.

I don't see why not - again, that's what we're going to do, although I'm hoping I can do it in about 3 years and not 5. We won't have reaffirmed this mortgage, so if we can't sell it or don't want to deal with renting it out again - we're going to walk - AFTER we get our new mortgage. I will say this -- when we were buying this house, we had to have a signed lease on that house before they would approve us for this house we're in now. So, you may have to do that. The bank told me this -- I kid you not -- "You need to have that signed lease in the paperwork. I don't care if they ever actually move in or not. And make sure it's for at least the amount of the mortgage." i.e. get Joe Blow to sign a lease and tear it up after that fact. We actually did have someone who wanted to rent it - so that wasn't an issue for us. Although that was then - this is now - banks are probably being more cautious about those situations.

[newbie2]

I don't see why not - again, that's what we're going to do, although I'm hoping I can do it in about 3 years and not 5. We won't have reaffirmed this mortgage, so if we can't sell it or don't want to deal with renting it out again - we're going to walk - AFTER we get our new mortgage. I will say this -- when we were buying this house, we had to have a signed lease on that house before they would approve us for this house we're in now. So, you may have to do that. The bank told me this -- I kid you not -- "You need to have that signed lease in the paperwork. I don't care if they ever actually move in or not. And make sure it's for at least the amount of the mortgage." i.e. get Joe Blow to sign a lease and tear it up after that fact. We actually did have someone who wanted to rent it - so that wasn't an issue for us. Although that was then - this is now - banks are probably being more cautious about those situations.

The banks ARE being more cautious about this "buy and bail" type of thing. Now, the borrower has to qualify for both mortgages, the lease has to be validated (copies of cancelled security deposit checks, etc) and only 80% of the rental income can be used as income to the landlord to help offset the debt / income ratio.

[tmoschetto]

PoorGrammyinBK7,
You don't need a lawyer in a foreclosure, especially after incl. your home in the BK. You said you did not reaffirm and if that is the case, you can walk away, however, until the deed is taken over by the lender or new owner, you are still responsible for having insurance on the property.

This is the 1st I have ever read about needing to keep insurance on the property until the foreclosure is complete. I'm in SW FL, so I'm aware of the need for keeping my condo assessments up to date, but I wasn't even considering covering the property insurance. Wells Fargo will never foreclose if the condo fees are current and the place is insured. Why would they??

[PoorGrammyinBK7]

I agree - I am not sure that insurance is a requirement. However, if someone should get hurt on your property while you still "own" it technically - I guess it would be your liability if they sue you?

Anyone have any ideas on how to speed up the foreclosure process?

[nc73]

This is the 1st I have ever read about needing to keep insurance on the property until the foreclosure is complete. I'm in SW FL, so I'm aware of the need for keeping my condo assessments up to date, but I wasn't even considering covering the property insurance. Wells Fargo will never foreclose if the condo fees are current and the place is insured. Why would they??

Yup you need a fire and dwelling insurance or something to that affect your agent will know. It is still YOUR property.

[tmoschetto]

I'm in a condo, so for someone to get hurt while on "my" property, they would need to be physically inside the unit. I'm pretty sure I'm going to let my condo owner's policy lapse (even though I will need to keep paying the condo master insurance policy that all of unit owners pay for the common areas)