BubbaMarkTL

Yes the bank could seek a deficiency judgement...could....after spending weeks reading more and more about the process and peoples experiences, the likelihood of that, even in the face of available income to pay, seems unlikely and rare.

Again, if i could take out a loan to pay back the deficiency, i would. But the same bank that wants to slap a deficiency judgement on me will also not loan me the money or allow me to pay it back over time...what sense does that make? Deed-in-lieu and short sales definately do not hurt your credit as bad as full on foreclosure, i have seen proof of that. if you are not served with a deficiency judgement after a short sale, the ONLY repercussion of the whole thing is a 2-3 year 50-75 point drop on your credit....BIG DEAL...

svtmike

You already have one. It's called your mortgage. Pay extra principal into it.

BubbaMarkTL

you cannot possibly be that stupid to be missing the point here. you are a reasonably articulate person and cannot be this dumb....so i can only assume you make a post like this to be an asshole. that i can see. anyhow, just in case theres an off chance you ARE infact that dumb and have missed the point....

I want to move! i dont want to stay and pay the mortgage, i want to move the fuck out! It would take several years, even with an extra 1000 per month toward principle, to get out.

svtmike

I understand what you want. I want a lot of things I can't have because of other decisions I've made (like deciding to save for my kids' college educations). I want the 401(k) value back that I lost in the market crash. I want my stock options to be worth what they were. I want my house to be worth $85,000 more as it was appraised before the market dropped. That's all just my tough titties and in some cases my errors by not getting out of the investments when I should have.

I think you're an immature douche for seriously considering allowing everyone else to shoulder what is your debt, whether it's allowed or not. You are not entitled to what you want.

Pete2010

This.

I think there is one thing you're missing. You only lose money when you sell. When you go and get a loan they give you this handy amortization table, which essentially tells you how much in interest you're going to pay over the course of the loan. So you know in advance how much you're going to pay. If people made the 20% down payment, which is pretty much required now, they wouldn't be going anywhere. By the time you pay off your mortgage, your house will be worth more than the $$ you put into it.

You're thinking like houses are going to go down in price at the same rate we thought they were going to go up... That's just not true. If anything houses stay flat for a while, but eventually they'll turn around, you'll have paid off your house and now with own an asset with value. Here's some simple math that I don't think this would be as good as you think.

500,000 Home

500,000 30yr fixed mortgage @ 6% - Paid every month.
30 years later I will have paid a total of:
$1,079,190.00
for my $500,000 home.

That's is also if I don't try and pay it off early (you should make one extra payment a year, will cut many years of your mortgage).

So I walk away from my home, and lets say I still need a place to live (not counting the other problems I could have with that). We'll focus on purely financial.

I rent a place for cheaper than my mortgage $2000/mo
Pay that over the next 30 years (not counting increase in rent per year) I will have paid:
$720,000
And lets say I pocket my extra $1000/mo
I'll have $360,000 in "cash".

So at the end of 30 years, I can either have $350k in cash (probably more if invested).

Or I can have a paid off asset that would have to be worth less than ~1.4mil (if my math is right).

My bet is that if you bought that 500k home and at worst it dropped in price by half to 250k, in 30 years it would be worth well over ~1.4.

I think its one hell of a gamble and there is no high reward for the high risk, the reward is just too close to what you would get if you stayed and paid all the way through to the end.

I'm sure you could tweak the numbers back and forth, but walking away is too short term, these people have no idea what affect it will have until many years later.

Eventually the courts will clear up, and then what is there to stop them from suing you? Even if you win, you'll still have to pay big $$ for a lawyer...

The fact that these people who got themselves into this mess are the ones thinking it's a good idea is all I need to hear. Clearly they don't understand personal finance, and only think short term. I think you'll be much better off in 30 years paying to the end, than if you were to do this scheme.

BraveDemon

More and more banks are catching wind of people trying to abuse the system, and will seek deficiency judgments. The second they find out you are still working, make decent money and are still able to make payments, the will seek a deficiency judgment.

The general practice these days in CA (and I assume for alot of other states as well) is for banks to institute both Private foreclosure (Recording Notice of Default on the property) and Judicial foreclosure (filing a lawsuit in court) and pick one or the other down the line - they will have to eventually elect to pursue a single remedy. Trust me, during this time, they will be trying to figure out if its worth going through judicial foreclosure and getting a deficiency judgment.

And you have to remember that for short sales, the lenders have to agree to it (good luck with that if they find out you're not under some financial duress) and approve potential buyers.

The whole foreclosure system was meant for people who have zero ability to pay (i.e. you lose your job, divorce, other judgments/debts). Not for people who have the ability to pay, but choose not to because "their investment has turned belly up."

That is the kind of attitude that many people have these days, and banks are catching wind of it and trust me, if you make decent money, they will go after you like Lawrence Tayler on minors (... is it too soon to joke about that? )

Anachostic

It sucks that it has to come to this.









This thread is past its shelf life. Stop talking and just do it. Report back in 6 months with your new credit rating and success at life.

svtmike

I almost laughed out loud on my conference call.

hornyleprechaun

Bubba you do realize that a house is a long-term investment.. not something you purchase to live in for a couple of years... that is why it is a 30-year mortgage. I realize you want to move, but you have to weigh that urge in BEFORE you purchase a house.

I hope if you do walk away that you get sued and they take everything from you for being a selfish bitch.

NSXNEXT

iTrader: (2)

I wish he would just do it already.

Bubba what are you waiting for? You've made such compelling arguments it's a wonder why everyone doesn't just default.

Ooh I know, how about everyone just walk away from their homes and we'll just start over, ya know like a mulligan. I mean what bad could possibly come from that?

Or maybe we just put all the homes in a hat and we can just pick which one we want. And then you can just call a mortgage company and tell them what you think is a good monthly payment.

LaCostaRacer

Anyway just because lots of people are doing strategic defaults and it's heavily publicized does not make it right. That is akin to stealing and isn't very honorable. But like others are writing: go ahead and do it because you seem to have all the answers and you don't need us to bounce ideas anymore. It would have been nice if you had a poll to see how this community weighs in, but it appears like you're in the minority in your opinion.

Remember Bubba, you can't take all the money that you will theoretically be saving with you when you die, but you might have some regrets on your death bed for doing slimy things like this. You certainly wouldn't be renting the house that I rent out either so you'll need to find some other sucker landlord to pay your rent to. Any smart landlord will do a credit check and it will show your event and guess what? You'll be living in a less than ideal place.

gatrhumpy

iTrader: (1)

LaCostaRacer

Here's a link on defaults: http://www.calculatedriskblog.com/20...ties-with.html

Looks like it takes a 25% equity hit on being underwater with a mortgage to tempt many people to default this way. For strategic defaults, it would not surprise me that in the future banks will require these defaulters to post a 25% or greater down payment the next time they want a loan.

Bubba, you might want to factor these potential down payment requirements into your calculations and see how this swings things. It could take a long time saving up that much to get back into the game again and by that time your current house may have actually recovered more in value.

BubbaMarkTL

[QUOTE=LaCostaRacer;12010736]

Remember Bubba, you can't take all the money that you will theoretically be saving with you when you die, but you might have some regrets on your death bed for doing slimy things like this. [QUOTE]

True, you cant take the money with you, but honestly, this is not about the money for me, its about being trapped...locked into a living situation i want out of. yes, as a result of numbers on a peice of paper, but as ive said, if someone will loan me the 20-30k i need to get out from under my place, i would gladly pay a loan back for that amount. But my lenders are not interested.

You cant take the money with you, yes, but you also cant get back the TIME of your life wasted being unhappy and in a less than ideal living situation and being forced into a holding pattern on your life because your residence has already killed a potential job relocation, is putting a hold on starting a family, and god knows what other bad things are going to come of this. again, its not about the money, its about the desire to live and enjoy my life, of which this mortgage and this condo is causing a great deal of greif. I am not trying to be greedy or slimey, i want my life back, i want my freedom. The only regret i will die with is the regret of not following an amazing job opportunity because of a stupid condo. or waiting too long to have children and being dead before i see grandkids because the condo i shared with my wife was way too small to have a child in.

Does any of that make sense?

gatrhumpy

iTrader: (1)

Yes, but by you doing this you screw over the rest of us honest, hardworking people that are working to pay down their mortgages and are working hard to pay it off rather than just walking away from it. Can you imagine the problems the entire economic system would have if there were more people like you?

BubbaMarkTL

There are more people doing this...statistics are staggering...31% last year of mortgage foreclosures were strategic "walk-aways". This year is sure to be more...evidence is already pointing to that.

With that in mind, what is your plan for your future with your family? If you plan to stay put for 10-20 years, fine, youre good to go, ride it out. But if you have any idea of moving anytime soon, things are looking to get worse before the get better, and what do you think youll do, when push comes to shove. Its a very personal thing that each individual will have to answer for themselves but at some point, we all have a breaking point. If you ended up 70% upside down on your mortgage would that be enough? If your neighborhood became a ghost town and only 10% of homes were occupied would that be enough? I dont know, every one has their breaking point.

hornyleprechaun

[QUOTE=BubbaMarkTL;12022137][QUOTE=LaCostaRacer;12010736]

Remember Bubba, you can't take all the money that you will theoretically be saving with you when you die, but you might have some regrets on your death bed for doing slimy things like this. Why did you purchase a house if you didn't like your current job?
Why did you purchase your house if it wasn't acceptable for your future family life?

gatrhumpy

iTrader: (1)

Sure, everyone has their breaking point. If I were in the situation, I would have the new seller roll that amount into the new home loan if I didn't have the money. I have heard of people doing that. Sure, you would be upside down on the new loan, but from that point forward, the new loan becomes the priority to pay off. No going out, nothing, and every last spare cent I have goes to paying off the second mortgage.

BubbaMarkTL

Already looked into that...it is VERY rare because that would mean the new place would have to APPRAISE high enough to pull tens of thousands out at closing by rolling into the new mortgage. Every mortgage broker i have spoken with in the last year has said its pretty much impossible now that appraisers are handled by the banks, not independently. And obviously values are so low, there isnt much wiggle room.

BubbaMarkTL

[QUOTE=hornyleprechaun;12022313][QUOTE=BubbaMarkTL;12022137]
its not a house, its a condo, and i do like my current job, the offer was an internal transfer to an office in a much more desireable part of the country.

I purchased the place for the same reason everyone else was buying places in 4 years ago...it was easy to buy, the economy was still strong, it was easy to flip for quick profits (or at LEAST break even), it wasnt ever a consideration that i would be trapped in a few years. Much like the millions of others who didnt consider they would be trapped. I never planned to live in my condo more than 3-5 years. Why rent when you can get the tax benefit of the interest write-off and property tax write off? this isnt anything out of the ordinary and its certainly not rocket science. Not everyone buys a place and plans to stay put for decades.

Look, hindsight is always 20/20 and if you had some sort of crystal ball in 2006, congrats to you. i, along with millions of others, did not foresee the collapse and as such are now stuck and have to weigh options on what the next step will be. Im done looking back, its a waste of time, its time to look forward, evaluate the studies of where the market is now, where its going, etc, and make a decision accordingly.

gatrhumpy

iTrader: (1)

So just do it and let us know how it goes.

hornyleprechaun

So you wanted the benefits of living in the condo for the first 3-5 years, but when shit hits the fan you don't want any of the loss that comes with it?

gatrhumpy

iTrader: (1)

I am probably $19K under my mortgage. I have no plans to move or get a better job just because the housing market is in the crapper. I can afford my mortgage payment now and in the future.

Bubba, did you do fixed or variable?

hornyleprechaun

Bubba probably put 0% down and got a variable rate

BubbaMarkTL

exactly correct.

BubbaMarkTL

lol, no, i do not have a sub-prime mortgage and the rate is not variable...BUT by todays rates, it is high...

and of course you cant get a refiance these days now without major equity which is out of the question at this point

svtmike

I refied down to 4.75% in December. On a 15 year I could have gone 4.375% but I didn't want my cash flow tightened up that much when I'm still stashing money away for kids' college.

gatrhumpy

iTrader: (1)

I'm kind of in your situation. Bought house in middle of housing downturn at 6.625%. Yes that rate is high, but we can't do anything about it. I'm not about to go walking away from my mortgage and being fiscally irresponsible just because I'm $20K upside down. I was smart in knowing what amount of house I could afford on one salary had my wife wanted to get out of the military. Lo and behold, she wanted to get out to have kids. We had one kid on one income, and now she's back working PRN one day a week. We count her income as extra income and live on my income.

We're not about to walk away from this commitment.

LaCostaRacer

You already said you can afford the loan, but simply choose not to want to pay your obligation. This is akin to a gambler that refuses to pay off his debt because things didn't work out his way. Again, just because lots of people are doing this does not make it right.

Have you ever considered taking your dream job, renting out your current house, and eating any negative cash flow until things turn better? You'll get some additional tax breaks that you currently won't have- notably depreciation which is great for a Condo because there is little land value against the structure which depreciates. Yes you might have to wait longer to buy the next place but it sounds like you're not a good candidate for owning property anyway because you seem to have a rather short-term perspective of real estate hold periods- RE was should never be intended to trade like a stock.

This way your credit rating is spared, and you're doing and something honorable. Nobody ever says doing the right thing is easy.

LaCostaRacer

Hey gatrhumpy, I applaud your efforts! Someday, you'll look back and see that what you did was not only the right thing, but also that your house will have appreciated. I was about 50k underwater for a while in the mid-90's so I know how it feels. Now our house is double what we paid even in a slumping market so things should go up. The important thing is if the house still fits your needs and you still like the house- that makes all the difference in the world.

hornyleprechaun

Greedy and irresponsible.

What if you borrowed $100k to go gamble in Vegas. You saw everyone betting and winning on Black, but when you started to play you couldn't win. It's not your fault though and you simply just want to walk away...

gatrhumpy

iTrader: (1)

Yep. Thank you.

Our total mortgage payment has actually been going down since 2006 when we bought the house because of lower assessed taxes. We're putting that "extra" money on the principle each month. It doesn't make a huge difference, but I guess every little bit helps. If I ever get a promotion, I'll take a percentage of that and put it towards the house. Being upside down sucks, but it's a long-term deal.

Like I always at people my age trying to "play" the stock market. Invest smart and let it ride.

blazingbamma

Fortunately for me , the loan I qualified for wasn't enough to buy anything halfway decent during the housing bubble. I bought a foreclosed home in September and its already worth more than i paid for it. I don't plan on selling it in the next five years unless my fiance pops out triplets. Bubba, how far underwater are you on your condo in Chicago? Where is it location anyway?

BubbaMarkTL

Probably 20-25k underwater.

Its on lakefront, north side. (montrose Ave)

Do you know anyone looking for a place???

gatrhumpy

iTrader: (1)

That's it? I'm in the same boat then.

thunder04

iTrader: (1)

What are the specs of your condo? Like..bedrooms, square footage, etc.?

blazingbamma

No, I dont. you made it sound like you were 20-25% underwater. You can always rent it out. If not, I would wait it out a year or two. You can have a baby in a condo. just put the crib in the master bedroom. I wouldn't feel comfortable having my baby in another room in the first year. I your problem is that you are a lil too rash. I noticed that thread started back in late 2008 and here we are in 2010. Its clear that you are not going to walk away from loan by now. I'm not sure if its common sense, decency, or the fact that nobody on this site thinks that walking away from a mortgage that you can clearly afford is a good idea. My suggestion is to wait it out a couple of more years. By that time, the market will either adjust 20-25k for your condo or the economy will completely collapse upon itself. Either way two years of waiting or 5-10 years of shitting credit and other complications that arise from it. Thats how i would weigh it out. Its not like Chicago is Detroit or Cleveland.

LaCostaRacer

^Good thoughts. That this thread progressed, it sounded like Bubba was in a slum with a 50% loss. Now we hear it's 20-25K and lives in a decent part of Chicago I imagine but I'm not familiar with Chicago. While significant, 20-25K is not a bunch to tarnish one's credit for or even lose sleep over. If you want to let this ruin your ,the ball is in your court but I wouldn't if I were you. People make mistakes- the important thing is learning from them.

Like I said earlier, I was close to 40K down in 1994 and things worked out fine- it's like a distant dream now. Real estate is a long term investment so you probably shouldn't buy a place if you think you'll be moving in less than 10 years- just a commission will set you back 3-6% in some parts of the country before the bubble burst- now I'm sure it's cheaper.

Will Y.

Let us know when you have a significant amount of negative equity.

Pete2010

25K? Wow. A friend of mine had an offer to either go to San Fran for a job or lose his job during an aquisition, he was (and still is) 150k underwater on his mortgage, so he's not going anywhere. But 25K? So what you're telling us is that you put 0 down? I'm happy all this shit happened, forces people to actually make the 20% down payment. Force everyone to make 20% and you'll see a lot less of this strategic default crap.

But yea, go ahead and ruin your credit and actually end up worse off for 25k. You'd be better to rent that out and hold on to it over the next 10 years that walk away.