Posted on: 22nd May, 2009 09:24 pm
My husband and I got married last year. We each had condos and he moved into my condo after we got married. Unfortunately, he purchased his condo at the peak of the market and is now upside down by over $200K (he owes $470K and the comps are now going for $220 - $250K). The mortgage was an 80/20 interest-only first with a HELOC second.
Before the crash, we had planned to rent it out for a couple of years then sell it when we retired in two or three years (we are not young people). Now it appears we will be working for another 7-10 years because our retirement accounts have taken severe losses. Doing the math, we cannot break even on his place no matter what we do. Technically, we can afford the payments, but there is no equity, no hope of equity any time soon, and not enough time to 'wait it out'.
We are thinking about simply stopping the payments and let the bank take it. At this point, bad credit seems a small price to pay to allow us to retire without this bottomless pit draining us dry every month. What are the legal ramifications if we just let it go?
Before the crash, we had planned to rent it out for a couple of years then sell it when we retired in two or three years (we are not young people). Now it appears we will be working for another 7-10 years because our retirement accounts have taken severe losses. Doing the math, we cannot break even on his place no matter what we do. Technically, we can afford the payments, but there is no equity, no hope of equity any time soon, and not enough time to 'wait it out'.
We are thinking about simply stopping the payments and let the bank take it. At this point, bad credit seems a small price to pay to allow us to retire without this bottomless pit draining us dry every month. What are the legal ramifications if we just let it go?
Hi EMK,
You can contact your lender and apply for a deed in lieu of foreclosure. This is a better option than walking away from the property. If the lender accepts your offer, you'll be able to sell off the property and you won't be liable for the deficient amount. However, a deed in lieu will lower your credit score by 250 points.
Thanks
You can contact your lender and apply for a deed in lieu of foreclosure. This is a better option than walking away from the property. If the lender accepts your offer, you'll be able to sell off the property and you won't be liable for the deficient amount. However, a deed in lieu will lower your credit score by 250 points.
Thanks
Your options include the following:
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EMK sorry that you are in this situatio and that to due to the mistakes by big banks.
You have couple of options one would be Short sale and the other would be deed in lieu. both will affect your credit score but may not be as bad as the a forclosure.
On the HELCO, I suspect if it is a secodn lender then they will send it to a collection agency after a short sale or you give a deed in lieu.
But deed in lieu may be little difficult since one the lender accepts the deed in lieu, they wll be responsible for the second loan.
Also have called the bank and asked for loan modification and if this helps you to reduce some principal or reduce interest so it covers your rent, if you can rent.
You have couple of options one would be Short sale and the other would be deed in lieu. both will affect your credit score but may not be as bad as the a forclosure.
On the HELCO, I suspect if it is a secodn lender then they will send it to a collection agency after a short sale or you give a deed in lieu.
But deed in lieu may be little difficult since one the lender accepts the deed in lieu, they wll be responsible for the second loan.
Also have called the bank and asked for loan modification and if this helps you to reduce some principal or reduce interest so it covers your rent, if you can rent.
Thanks to all who replied. We talked to an accountant and the best we could hope for would be to lose $1000 each month, every month. We talked to a real estate attorney and after looking through all the loan docs, he told us to give it back to the bank as a Deed in Lieu. The second (HELOC) was purchase money so the bank has no recourse and both loans are held with the same lender. We drafted a Deed in Lieu offer to the bank and sent it off.
Good luck
Feel free to ask and share any thing new
Feel free to ask and share any thing new