Home Calling purrrfect pear....

[Miss Sparkly]

I was surfing these threads for info on foreclosures and saw that you have been through one. DH and I had a long talk and realized that one of the biggest strains in our marriage is our house. We owe $40,000 more than it's worth (we've lost that much value in two years!) and it was suppossed to be a starter home. We've both had to take time off without pay (which cut our income by 1/3rd between us), our daily commute is is 80 miles round trip (two cars, no we can't carpool and there are no busses). The cost of living plus less hours and no pay increases has meant that we are surviving, but are in no way happy about it. Anyway, we live in a no recourse state, Idaho, and have decided that it would be best to just walk away. Would you (or anybody else who knows about no recourse foreclosure) mind sharing your expierence and how the process works? I understand if you don't want to as it is a sensitive subject.

Thanks!

ETA: house was worth $155,000 (which WAS the median home price in my area) - now worth $110,000 if we're lucky

Oh, and our propety taxes went UP $300 even though our value went down.

Should we still make sure to pay property taxes? We're going to keep up with the homeowners insurance - we're in escrow. We are also seeking legal and finacial advice, never been late on a payment, ever, and we used to be able to pay a lot more then the min. (not anymore though

)

 

[hmr_mama]

I have no advice to give....but I just wanted to give you a big pat on the back for sitting your DH down and having a real

to

. Financial issues are the biggest strain on a marriage....I''m glad you found the root of the problem.

 

[Hudson_Hawk]

Have you discussed your situation with the bank or a non-profit agency dealing with foreclosures?

Last September DH and I walked away from our house, which was going into foreclosure. This is after two years of trying to work with the bank to get our mortgage modified. After the bank progressively raised our monthly payment by a total of $700/month ($200 here, $300 there) to cover "administrative fees" as a part of their program, we decided we'd had enough of the stress and fear let them take it. It was a very hard decision to make and one that we didn't make lightly. We had no other option. Short sale wasn't an option, the bank refused it. In the final months we started looking for a new place and used the money for the last month of the mortgage program to pay the security deposit on our new house.

As we were in a program, the bank started the foreclosure proceedings as soon as they logged the missed payment for that last month. We continued to pay our homeowners insurance until we knew the bank had taken possession of the house. As the true owner of the mortgage and the property, the bank became responsible for paying the property taxes when they took posession. We were up to date on our tax payments at the time of moving. So we didn't worry about those. Any liens that would have been placed on the house due to lack of payment of the property tax would have been paid when the bank took possession or the house was sold.

The only communication we've had with the bank since walking away was receiving our mortgage interest statements and our 1099 at tax time. If we hadn't stopped by the afternoon after moving to check the mail, we never would have known the bank took possession. We were SHOCKED by how quick they moved in, they should have gotten the payment on the 10th and we were out by noon on the 30th. They posted the notice in the afternoon of the 30th.

Our home was sold soon after the bank took possession. I think it was empty for 2-3 months at most. The last time I drove by the new owners were doing a lot of the maintenance/work we'd been wanting to do for ages but couldn't afford to do (paint, new roof, etc). I'm content knowing that it's now owned by someone who cares enough to take care of it.

This is just my story and I know every situation is different. If I were in your position I would try and exhaust all other options before walking away. I 100% acknowledge that we were very lucky in how things turned out. Our home was sold for only $30k less than the amount we owed on our mortgage so there was only a small affect on our federal taxes (you're taxed on the difference as income) and we didn't have to go to court. It could have been much much worse.

Good luck and feel free to ask any questions. I'll try and answer them the best I can.

 

[Miss Sparkly]

was it difficult to rent a house or condo after foreclosure?

eta: we don't really have any other options. The loan cannot be redone because of the type of loan through idaho housing and finance and we may not even qualify for a short sale. When I spoke to the agent she thought they they go off of gross income to determine if we can short sell - considering health insurace cost and that my husband has to make a mandatory contribution to his retirement plan out net is much less then our gross.

My main fear is that they will sue us for the difference. Though possible everybody we've talked to said it's not likely and that they have never seen it happen

 

[VRBeauty]

I honestly don''t know much about foreclosure, or whether this might apply in your case, but your question did bring to mind this recent article from my local paper:

http://www.sacbee.com/2010/03/18/2615879/years-after-loan-default-homeowners.html

(I''m sorry - technical incompatibilities between PS and my computer prevent me from posting a real hyperlink!)

Anyhow, it''s about the possibility that a collection agency could come after you for unpaid home loans, even some time after a foreclosure.

 

[Hudson_Hawk]

Date: 3/24/2010 12:20:16 AM
Author: Sparkly Blonde
was it difficult to rent a house or condo after foreclosure?


eta: we don''t really have any other options. The loan cannot be redone because of the type of loan through idaho housing and finance and we may not even qualify for a short sale. When I spoke to the agent she thought they they go off of gross income to determine if we can short sell - considering health insurace cost and that my husband has to make a mandatory contribution to his retirement plan out net is much less then our gross.


My main fear is that they will sue us for the difference. Though possible everybody we''ve talked to said it''s not likely and that they have never seen it happen

Honestly, it was a lot easier than I thought it was going to be. Our landlords are very understanding and there are actually other tenants who are in the same position as us. And this is a very very nice town home community, not a project in a bad part of town. Other than the issue with the house, our credit was decent and we very clearly have well paying jobs that more than cover the rent.

In our experience they did not sue us for the difference, while I''m sure it does happen in some instances, I''ve never personally known anyone who''s had it done. Perhaps if the difference was substantial, but they''d probably pay more than the $30k difference to take us to court, so it''s better for them to cut their losses. Oh, and we had PMI which may have covered the difference, I''m not sure about that.

 

[Hudson_Hawk]

Date: 3/24/2010 1:38:15 AM
Author: VRBeauty
I honestly don''t know much about foreclosure, or whether this might apply in your case, but your question did bring to mind this recent article from my local paper:


http://www.sacbee.com/2010/03/18/2615879/years-after-loan-default-homeowners.html


(I''m sorry - technical incompatibilities between PS and my computer prevent me from posting a real hyperlink!)


Anyhow, it''s about the possibility that a collection agency could come after you for unpaid home loans, even some time after a foreclosure.

Scary thought, thanks for bringing it to my attention. I guess, at this point we''ll just have to play the waiting game and wait and see what happens.

 

[february2003bride]

Sparkly Blonde- Once of the best online resources for short sales/ forclosures and loan modifications is www.loansafe.org

Good luck!

 

[Miss Sparkly]

We too have PMI. Luckly we onlly have a first mortagage. In Idaho, the lender has 90 days after forecosure to come after us for the first. IF we had a second, they would have up to five years

Sadlly Idaho is one of the top states for foreclosure and Ada county is number 10 in the nation for falling home values. My husband also found out yesterday that he has more required furloughs that must be taken by the end of June.

We found a couple cute 1 br 1 bath homes in a historic part of town that's only 2 miles from our work so we'll try to look into renting those in the next couple months before summer hits and the good priced ones get snatched up quickly

http://idahobusinessreview.com/blog/2010/02/15/idaho-continues-in-top-ten-for-foreclosure-filings/

Idaho stats.

In a lot of ways, we don't want to deal with trying to go through a short sale and the only reason I'm considering it (my husband is quick to dismiss the idea) is because I feel that I have some moral obligation to do so. The only thing that I wish would have happened is that our lender had a required class for people our age that talked about the cost of living and how it effects you. We bought the house when I was 21, he was 23, fresh out of college with good jobs (and when we thought we'd hit the bottom of the market).

 

[Hudson_Hawk]

SB, if you have PMI you''ll be covered for the difference when you default. That''s what it''s for. This is one of those situations where I wouldn''t mention anything unless the LL wants to do some background/credit checking. Then I''d be upfront and honest with them about your situation. But have back-up evidence of your income and situation outside of the foreclosure.

 

[iheartscience]

Sparkly Blonde, I''m sure I''ll get flamed for this, but I don''t think you should feel morally bound to stay in your house. An article I read talks about this and I really agree with the professor who recommends walking away. http://articles.latimes.com/2009/nov/29/business/la-fi-harney29-2009nov29 And another article about a company who walked away from its mortgages on apartment complexes in NYC: http://www.huffingtonpost.com/2010/01/25/stuyvesant-town-turned-ov_n_434967.html

I''m a homeowner but just bought last year so the home values had already dropped by the time I bought. I don''t think they''ll drop much more in my area so hopefully I''ll never be in your shoes. Good luck to you no matter what you decide.

 

[steph72276]

SB, just a few thoughts for you...

First of all I''m sorry you and your DH are going through this. Believe me, I know as I live in FL and have experienced a huge decline in our home value over the last 2 years. Pretty much our whole downpayment would be wiped out if we were to sell today. I could rent a house down the street from me for around $700 a month less than our mortgage is, so I know how tempting that is. That said, we''re not going anywhere because I do feel like the market will recover in time and I feel like it was our obligation to pay the mortgage when we signed the papers even though we weren''t guaranteed that the price would go up.

I would feel totally different about your situation if you said you guys couldn''t afford the mortgage, but you said you are still able to make the payments. I would think long and hard if you want to walk away, especially after you said you guys have never been late on a payment. Do you want to have to rent for a long time until this is off your credit report? There are SO many people in America right now that are in your same shoes, but choose to stick it out and wait on the market to recover. It is because so many people that can pay walk away that it is taking longer for the market to recover. Now I am not saying that foreclosing is not what you should do, only you and your husband can decide on that, but I am saying that if we all do that the market will never recover. I would say at the very least, you should try all you can do to do a short sale because you are right, you and your DH made an obligation when you signed the papers. I wish you lots of luck in whatever you two decide to do.

 

[lulu]

Date: 3/24/2010 9:51:19 AM
Author: FL Steph
SB, just a few thoughts for you...

First of all I''m sorry you and your DH are going through this. Believe me, I know as I live in FL and have experienced a huge decline in our home value over the last 2 years. Pretty much our whole downpayment would be wiped out if we were to sell today. I could rent a house down the street from me for around $700 a month less than our mortgage is, so I know how tempting that is. That said, we''re not going anywhere because I do feel like the market will recover in time and I feel like it was our obligation to pay the mortgage when we signed the papers even though we weren''t guaranteed that the price would go up.

I would feel totally different about your situation if you said you guys couldn''t afford the mortgage, but you said you are still able to make the payments. I would think long and hard if you want to walk away, especially after you said you guys have never been late on a payment. Do you want to have to rent for a long time until this is off your credit report? There are SO many people in America right now that are in your same shoes, but choose to stick it out and wait on the market to recover. It is because so many people that can pay walk away that it is taking longer for the market to recover. Now I am not saying that foreclosing is not what you should do, only you and your husband can decide on that, but I am saying that if we all do that the market will never recover. I would say at the very least, you should try all you can do to do a short sale because you are right, you and your DH made an obligation when you signed the papers. I wish you lots of luck in whatever you two decide to do.

Ditto.

 

[Loves Vintage]

SB - I may have missed something in your post, but you do not have new jobs, correct? So, the 80 mile round trip commute was always the case, right? I don't see how that is relevant now. Have you looked into how much you could rent your house for? Would it cover or nearly cover the cost of the mortgage and taxes? This may be a good option for you, or at least something to look into. Then you could move to a place closer to your places of employment.

Thing - I won't flame you for posting that article, but I do not agree with it. To me, it's just some guy who said something that some people want to hear. It doesn't make it right. Fact of the matter is that money changed hands, and it's the lender who put that money up-front. Why should the lender have to pay because the market went down? After all, the seller received the 40k at issue, that came from the bank.

Consider the following 2 scenarios:

A buys house for 100k, puts 40k down, house is now worth 70k.

B buys house for 100k, puts 5k down, house is now worth 70k.

Would anyone tell party A to walk away because their house declined in value? No, so I don't see how party B's situation is so different. They will still pay the 25k difference, just over a longer period of time.

****

I am personally underwater on two homes and would not consider walking away from either, unless of course, I had a dramatic decline in income and could not make payments as a result. The first house is rented. The rent nearly covers mortgage, taxes and expenses. House is worth a good 65k less than when I purchased it at the height of the market. This was my first house and is in my name only. A friend suggested that I walk away from it since only I would take the hit on my credit, and my husband could easily get financing for any big purchases in the future. Laughable advice, in my opinion. As if my personal credit history is meaningless, and I am merely the wife of my husband. As if.

We bought the house we live in now after the market started to tumble, and its value declined by at least 60k since we purchased it. This is our home. Why would I walk away from it? The market will recover eventually, and until then, we will continue to pay the bank back the money that they loaned to us to finance the purchase.

What ever happened to personal responsibility?

 

[Girlrocks]

Date: 3/24/2010 9:51:19 AM
Author: FL Steph
SB, just a few thoughts for you...

First of all I''m sorry you and your DH are going through this. Believe me, I know as I live in FL and have experienced a huge decline in our home value over the last 2 years. Pretty much our whole downpayment would be wiped out if we were to sell today. I could rent a house down the street from me for around $700 a month less than our mortgage is, so I know how tempting that is. That said, we''re not going anywhere because I do feel like the market will recover in time and I feel like it was our obligation to pay the mortgage when we signed the papers even though we weren''t guaranteed that the price would go up.

I would feel totally different about your situation if you said you guys couldn''t afford the mortgage, but you said you are still able to make the payments. I would think long and hard if you want to walk away, especially after you said you guys have never been late on a payment. Do you want to have to rent for a long time until this is off your credit report? There are SO many people in America right now that are in your same shoes, but choose to stick it out and wait on the market to recover. It is because so many people that can pay walk away that it is taking longer for the market to recover. Now I am not saying that foreclosing is not what you should do, only you and your husband can decide on that, but I am saying that if we all do that the market will never recover. I would say at the very least, you should try all you can do to do a short sale because you are right, you and your DH made an obligation when you signed the papers. I wish you lots of luck in whatever you two decide to do.

Exactly!

You stated that you are surviving, but in no way happy about it-welcome to the real world! This is part of the reason why the economy is the way it is. You have an obligation and as someone else stated...what happened to taking resposibility for your actions? That''s part of being a grown up. Sorry. I did more than an 80 mile commute daily for 6 years with 2 small kids at home that I barely saw during the week but you know what, I had no other choice. Had to. Period.

 

[lilyfoot]

I think it''s wrong to walk away from any obligation which you still have the ability to satisfy.

Foreclosure/short sales/etc. are not for people who choose to give up their homes, they''re for people who are unable to pay their bills. IMO, it''s practically hand-in-hand with someone who abuses the welfare, or food stamp system. Can you get away with it? Sure. But that doesn''t make it right.

You said you can afford to pay your mortgage, so why would you walk away?

The drop is property value is what (almost) every single homeowner in America is experiencing right now. It''s part of the gamble of making an investment.

 

[MichelleCarmen]

Date: 3/24/2010 12:20:16 AM
Author: Sparkly Blonde
was it difficult to rent a house or condo after foreclosure?

eta: we don't really have any other options. The loan cannot be redone because of the type of loan through idaho housing and finance and we may not even qualify for a short sale. When I spoke to the agent she thought they they go off of gross income to determine if we can short sell - considering health insurace cost and that my husband has to make a mandatory contribution to his retirement plan out net is much less then our gross.

My main fear is that they will sue us for the difference. Though possible everybody we've talked to said it's not likely and that they have never seen it happen

If you have bad credit (from your foreclosure), normally the only way you can rent is if you have first, last, and a large deposit. Around where I live, even with good credit, owners expect that because of all the financial problems people are having. Even with 700 credit score, all the houses around my area ask $5-6,000K up front. We had to pay $5,400 to move into our rental.

 

[Miss Sparkly]

A couple things - My version of surviving is not being late on payments. We have had to use credit cards to pay for food and gas because of reqired time of without pay. The round trip is a new thing for us. My husband was transferred to an office that was an extra 12 miles away and I had to take a job in an office downtown (6 miles to 22 miles away) to be able to get full time again. So all those changes are very new to us. Our cost of living is going up so quckly and we're having to take required time off without pay. We maxed out a credit card that was set up as overdraft protection for our checking accounts. This isn't a, "I just want to walk away situation." It's a, let me walk away before I can't make the payments on my car and credit cards, because I KNOW it's coming. We have NO extra money at all at the end of the month. One set back of any kind and we're done. There were so many things that we didn't understand and we trusted those around us that said we would gain value and that pay rises with cost of living. I'm not trying to make an excuse, just saying that I have learned so much from all of this. Both my husband and I have tried for the past year and a half to get part time jobs but have had no luck. I wish we could carpool, but we can't. There are no bus systems in my area (just downtown 20 miles away). I would much rather have only one item, the loss of a house, on my credit then have a slew of late payments BEFORE foreclosure.

To my next question....it was suggested to us that we move to an inexpensive place in town FIRST then defult on our mortgage so that our credit is in tact when we rent. Yes, I know this sounds horrible, but I have to look out for myself on this.

Honestly, I'm scared out of my mind. How do I tell this to an employer if I have to get a new job? How does my husband, who is an accountant, explain that he doesn't even understand how to run everyday finances? I don't know if we should try to get a place to rent FIRST then stop paying the mortgage or try for a short sale first. Should we just dart straight for foreclosure to make this not as emotionally draining? It is so difficult to live each day in fear knowing that one small thing will break you and that you put yourself in this situation. *big breaths and big sighs*

 

[D&T]

SB- I have a real estate background plus finance and I just wanted to give you my thoughts though I don't do residential anymore for years now some things may have changed. First just wanted to let you know that I'm thinking about you and my heart goes out to you. I know how scary this can be, also please take a deep breath. *Hugs*

Before walking away if that is what you end up doing in the end, is really think about other options or alternative.

- Can you rent out your house even if you take a slight loss but you end up netting more a month while you rent? Pros: tax benefits
- If you cannot do the above, please consider a short sale first, as you have a financial obligation to the bank, and if it sold under the short sale you will feel better about the whole situation. Because you have only one mortgage, it will be easier to short sale since there is no second to approve a short sale, your PMI will help make up with part of the difficiency to the bank.
- I would not consider any modification of loan attempt as this has not helped any of my friend's clients and just delays foreclosure proceedings (personal opinion)
- Unfortunately foreclosure is not just having only one item on your credit report, it is actually a slew of late mortgage payments as you mentioned and it takes time for the process to start to finish when the bank actually takes possession.
- Depends on how things goes, some people have stayed in their homes while the foreclosure process starts until they get notice of auction. During this time, some have saved up what they would have paid on their mortgage for another place. Others have just let the house go to find another place asap. If you have city codes, you will still be liable for problems in and around the house such as in Arizona, there are weed control (I don't remember what the exact term) and you will get noticed for corrective actions or face fines.

I strongly urge to try and short sale first. If the banks dont accept any good offers or mess up and just pulls you along delaying any closing (I had a house go into foreclosure as they didn't accept any of my three offers

which was more than what the house auctioned for

) this was three years ago right when people started to look into short sales, then you will have tried your best to help the situation and I would not fee guilty about it if you end up foreclosing due to the bank being at fault, at least you have tried.

 

[Miss Sparkly]

Thanks D&T

We cannot rent out our house - that is set in our contract as we went with a program for first time homebuyers - which is also why *GULP* we had 100% financing. We didn't have to pay a dime to get into our house

Renting it out, if we are caught, would result in high fines and foreclosure as our loan would have to be immediately refinanced into a regular 80/20 loan. With 150% LTV there's a snowball's chance in hell that would happen

We're talking to a Realtor tomorrow about a short sale, but like I said we have to qualify. About one third of the homes in my subdivision are sitting empty, we've watched all of them change Realtor's sevral times over the course of a couple years only to finally up and leave. One thing that really hurts us is that you get companies like Corey Barton or Hubble building MASSIVE, low priced homes. Most people pick size and for our house price you can get a 1,600 sq foot Hubble.

On the application for short sale they also want personal references...huh

Only two people who are close to me and could point to me on the street know about this. I'm not sharing it with anybody else.

Anyway, I'll find out what the realtor says and go from there. My work also offers me 25% off all legal services and I can choose from a list of participating lawyers - we should have our first meeting with them next week.

Should I expect any mean or threating calls from my lender, or will it be more of the attitude of, "this sucks, let's just get it over with?"

ETA: I'm thinking I'll continue my little saga here as I hope that my experiences could help somebody else

 

[D&T]

Date: 3/24/2010 11:55:27 PM
Author: Sparkly Blonde
Thanks D&T

We cannot rent out our house - that is set in our contract as we went with a program for first time homebuyers - which is also why *GULP* we had 100% financing. We didn't have to pay a dime to get into our house

Renting it out, if we are caught, would result in high fines and foreclosure as our loan would have to be immediately refinanced into a regular 80/20 loan. With 150% LTV there's a snowball's chance in hell that would happen

We're talking to a Realtor tomorrow about a short sale, but like I said we have to qualify. About one third of the homes in my subdivision are sitting empty, we've watched all of them change Realtor's sevral times over the course of a couple years only to finally up and leave. One thing that really hurts us is that you get companies like Corey Barton or Hubble building MASSIVE, low priced homes. Most people pick size and for our house price you can get a 1,600 sq foot Hubble.

On the application for short sale they also want personal references...huh

Only two people who are close to me and could point to me on the street know about this. I'm not sharing it with anybody else.

Anyway, I'll find out what the realtor says and go from there. My work also offers me 25% off all legal services and I can choose from a list of participating lawyers - we should have our first meeting with them next week.

Should I expect any mean or threating calls from my lender, or will it be more of the attitude of, 'this sucks, let's just get it over with?'

ETA: I'm thinking I'll continue my little saga here as I hope that my experiences could help somebody else

Please make sure they are a real estate attorney and not just any lawyers, its a specialize field. Make sure you list every little expenses that you have on your short sale application. Expect monthly calls (at least) from your lender once you go delinquent about how you are going to pay your mortgage

anyhow I'm not sure what the fine print says on your mortgage paperwork, but seems like you have some sort of contingency so glad you are going to seek legal advice. Good Luck!

 

[movie zombie]

um, have you paused to think that if you walk away from this house you won''t ever own again? the days of no down payment are probably gone for a very very very long time....i certainly hope so. the criteria for getting a loan is going to be higher credit scores, more $ down, more $ in savings, etc. are you and your husband going to be ok with the possibility that you will not qualify for a loan in the future?

just fuel for the fire to think about.....

mz

 

[PumpkinPie]

I don''t know anything about foreclosure - I live in Canada and so far we''ve avoided the intensity of the financial problems that are happening down there - I just wanted to give you some support and encouragement!

 

[MichelleCarmen]

Date: 3/24/2010 9:20:15 PM
Author: Sparkly Blonde
To my next question....it was suggested to us that we move to an inexpensive place in town FIRST then defult on our mortgage so that our credit is in tact when we rent. Yes, I know this sounds horrible, but I have to look out for myself on this.

When a rental agency/landlord does a credit check on you, aren't they going to see you have a mortgage? Either you're going to have to explain to them how you're going to pay rent on your new place AND your mortgage on your old place (while you tell them what, you're trying to sell it?) or just explain you're walking away. The second would be better b/c you're not lying. You can just try and save up a first/last/damage and someone may rent regardless of your credit score.

 

[Miss Sparkly]

Date: 3/25/2010 11:22:58 AM
Author: movie zombie
um, have you paused to think that if you walk away from this house you won''t ever own again? the days of no down payment are probably gone for a very very very long time....i certainly hope so. the criteria for getting a loan is going to be higher credit scores, more $ down, more $ in savings, etc. are you and your husband going to be ok with the possibility that you will not qualify for a loan in the future?

just fuel for the fire to think about.....

mz

Disagree with this. We can own again, and we will NEVER do 0% down, EVER. Our credit will be hurt, yes, but it''s not even close to the end of the world. With the amount we will save moving into town and renting we can have all of our debts paid off, including our two car loans in 5 years. It''s like touching a hot stove - you only do that once! In five years, I''ll only be 28, hell that''s young! There are a lot of people in their 40''s and older in the same situation as us. My heart truly aches for them

We also have decided to do a short sale. Our Realtor is convinced we qualify and the average time on the market before an offer is accepted on short sales in our area is 15 days

I couldn''t believe that myself until he showed me the market analysis. House goes on the market Monday so I''m crossing my fingers!

 

[Hera]

It might be that fast to get an offer but it'll be much longer for your bank to accept the offer *if* they accept it at all. You might want to google your bank and see what other people's experiences are.

I actually think that $40k is not a huge amount of money to lose (considering I'm in California where people are hundreds of thousands underwater). The most important part is that you haven't actually even lost the money considering that you haven't sold yet. Seriously, I would wait it out and seek other options like selling your car and buying one you don't have to pay a car payment on or even getting a roommate.

I would be especially be concerned about your husband's future employment. If he ever needs to get another job and has a credit check performed (which I believe most places do for an Accountant) it can be near impossible to secure employment. That would be way too risky in my opinion.

 

[Mara]

hera... ITA re the 40k being a drop in the bucket here in CA..!

and re: credit from a foreclosure...i have a few friends who are looking into foreclosure and have each consulted with lawyers and they were told that the credit will take a hit for ~2 years. i was surprised it was so short.

 

[Miss Sparkly]

There aren''t any other options - really - we have tried to get extra jobs, and we''ve sold what we can. This has been a concern for over a year for us. $40,000 (actually we found out it''s closer to $55,000) may not be a lot in CA, but it is here in Idaho. A "bank" did not finance our loan. It''s a company dedicated to first time homebuyers, and from what I''ve heard from personal stories (and what I''ve seen) they are amazing to work with and have very quick turnaround. I also spoke with them about my credit concerns and they stated that with a short sell, through them, any missed payments will be reported, HOWEVER, when the house is sold it will go on our report only as a closed loan.

We tried selling our SUV - nobody wants to buy an SUV. We tried selling back my car and buying a smaller used one - the small used ones are in such high demand that they can, and are, sold for $3,000 to $4,000 over blue book. I refuse to pay for that when I bought my car at wholesale.

Average time is 15 days for an accepted offer - our finance company sets a bottom line price, the second that price is met, they run with it.

 

[cara]

Sparkly, I''d read PP''s thread start to finish if I were you. There are some nuggets of information in there.

OK, first off, at least here in CA as a potential buyer, the word on the street was that houses offered for short sale in which the buyer has PMI would almost never go through, as the bank generally would stand to gain more by foreclosing, collecting PMI, and then reselling. My understanding was they didn''t collect a payout from the PMI unless they foreclosed so they would draw out the short sale process as long as possible, eeking more mortgage payments out of the desperate owners, dallying dallying with any offers, but ultimately deny all short sale offers and eventually proceed with foreclosure. IF you are going to pursue a short sale make SURE SURE SURE your real estate agent is experienced in actually closing short sales as they are a whole different ball of wax from regular sales. I''d love for someone more knowledgeable to contradict me on the PMI issue I have it wrong. Also, I *believe* that a short sale will also cause a substantial hit to your credit score. It is not that much better than a foreclosure IIRC.

Second, PPear had done her research about what hit her credit score would take, and was also confident she didn''t need a good credit score in the near future *for her situation*. She entirely stopped paying the mortgage a good 6 months or so before they foreclosed on her, living rent free during that time and saving her mortgage payment so that she could offer large cash sums upfront to a future landlord. Cash talks! and she had other savings, so she wasn''t worried about where to live or, say, a car emergency that would require her to try to buy a new car on credit. She also is older than you and your DH and gave the impression that she was secure in her job and didn''t need to worry about a potential future employer running a credit check.

Last, in that thread, PP emphasized that as the owner she was legally liable for the home until the bank took possession. Which they didn''t do immediately when she stopped paying - it took months and months even though she declined all offers for negotiation and loan mods. So I don''t think you want to move out until you have legally transferred possession to someone else.

If you are going to consider walking away, make sure you go through everything with a fine tooth comb and consider all the ramifications. Credit score, savings cushion, need for credit for other things (like emergencies, future laid-off periods, rentals, jobs, etc), potential tax hit, recourse the bank might be able to come after you. You just don''t want to be surprised by some of those consequences.

Good luck!

 

[VRBeauty]

Date: 3/26/2010 12:23:02 AM
Author: cara
Sparkly, I''d read PP''s thread start to finish if I were you. There are some nuggets of information in ther


Second, PPear had done her research about what hit her credit score would take, and was also confident she didn''t need a good credit score in the near future *for her situation*. She entirely stopped paying the mortgage a good 6 months or so before they foreclosed on her, living rent free during that time and saving her mortgage payment so that she could offer large cash sums upfront to a future landlord. Cash talks! and she had other savings, so she wasn''t worried about where to live or, say, a car emergency that would require her to try to buy a new car on credit. She also is older than you and your DH and gave the impression that she was secure in her job and didn''t need to worry about a potential future employer running a credit check.

That''s my recollection also... PP chose this option because it made economic sense to her, not because she was in desperate financial straits. So the consequences could look very different from her perspective than it might from yours.

One option I read about somewhere is to contact the insurance company that holds your PMI. They''re the ones who stand to lose if your mortgage holder has to collect on that PMI, so they might be motivated to negotiate with the bank on your behalf.