Reply
 
Thread Tools Display Modes
  #1  
Old 02-05-2019, 05:52 PM
diggerwam diggerwam is offline
Guest
 
Join Date: Jan 2007
Location: far NW chicago
Posts: 847
Need lowdown on walking away from mortgage or short sale

Looking for advice, preferably from people w/ recent experience. Recession experience will be helpful too, but I'm sure the environment has changed in the years since.

We are both pushing 50, good jobs, my wife has rheumatoid arthritis. Still owe 100K on mortgage, may be able to sell house for very low 80's. Lived here 12 years. We are simply tired of the house, we want simpler lives, less upkeep on the house, tired of 4k plus in taxes and other yard upkeep.

I want to walk away from the house. Questions we have....should we tell the bank of our plans or just skip a couple months and hand them back the keys? Other than a significant drop in credit rating, what else will the bank do to us? Will they pursue us for any add'l funds or can I walk away clean?

We also have a 2nd mortgage with a balance of 13K. The payments are low, so I'd like to keep paying that. Will I be allowed to keep making those monthly payments even if we are out of the house?

We don't want to take on add'l debt but we do make 100K combined per year, but we really cannot add to existing debt. We can afford a decent apartment if we walk away.

I'm sick to death we are at this point, but there is zero benefit and honestly quite a bit of missed opportunity costs by keeping up this house. We made mistake buying this house 18 months before housing market collapsed.

Are there any other options that I'm unaware of? Renting out a room or moving and renting the whole house is not something we have much interest in.
  #2  
Old 02-05-2019, 06:22 PM
Riemann's Avatar
Riemann Riemann is online now
Guest
 
Join Date: Nov 2015
Location: Santa Fe, NM, USA
Posts: 6,720
I know Illinois has some of the highest property taxes, but I thought they were around 2%. Are yours really pushing 5% of the value of your home?
  #3  
Old 02-05-2019, 06:28 PM
diggerwam diggerwam is offline
Guest
 
Join Date: Jan 2007
Location: far NW chicago
Posts: 847
I don't analyze the bill but my county is top ten highest property taxes in the country.
  #4  
Old 02-05-2019, 06:32 PM
zimaane zimaane is online now
Guest
 
Join Date: Jan 2003
Location: washington, dc
Posts: 719
I've been through something similar, and the only really sound advice is for you and your wife to talk to an attorney who specializes in these matters.
  #5  
Old 02-05-2019, 06:37 PM
Beckdawrek's Avatar
Beckdawrek Beckdawrek is offline
Member
 
Join Date: Aug 2017
Location: So.Ark ?
Posts: 12,859
Wow, that's a bummer. I don't think the bank will just forgive you for walking out. They can't sell the house for anymore than you can. You're looking at years of debt collectors, bad credit and lawsuits. Apartments check credit reports and employers do, also. What if you need a new auto? Don't do it, dude. Have you tried renegotiating with your mortgage holder?
  #6  
Old 02-05-2019, 06:39 PM
kanicbird kanicbird is offline
Guest
 
Join Date: May 1999
Posts: 19,145
One of many things to read https://www.bankrate.com/finance/mor...ge-debt-1.aspx

Depending on the state you still may be liable for the remaining balance, or not.
  #7  
Old 02-05-2019, 06:41 PM
diggerwam diggerwam is offline
Guest
 
Join Date: Jan 2007
Location: far NW chicago
Posts: 847
The issue is not that the mortgage payment is too high, it's just that it's absolutely banging my head against the wall. I'd like to stop this damn treadmill
  #8  
Old 02-05-2019, 07:01 PM
jasg jasg is online now
Charter Member
 
Join Date: Nov 2001
Location: Upper left hand corner
Posts: 5,766
Quote:
Originally Posted by diggerwam View Post
We also have a 2nd mortgage with a balance of 13K. The payments are low, so I'd like to keep paying that. Will I be allowed to keep making those monthly payments even if we are out of the house?
I don't understand why or if you can do that. My son walked away from a house some time ago - including a second. Credit rating destroyed by bank and eventually, the second was sold to some very persistent collectors.

Late advice from a realtor friend was that when son did the short sale with bank, he should have contacted the holder of the second and negotiated a pay off. Realtor said they would have taken as little as 10% - and done better than what they got from the collection agency.
  #9  
Old 02-05-2019, 07:11 PM
SpoilerVirgin SpoilerVirgin is offline
Charter Member
 
Join Date: May 2000
Location: An antique land
Posts: 6,953
My two biggest concerns would be:

1. Are you in a recourse or non-recourse state? In a recourse state, they could still come after you for the remaining balance.

2. How much will your credit rating affect your ability to rent a decent apartment?
  #10  
Old 02-05-2019, 07:14 PM
diggerwam diggerwam is offline
Guest
 
Join Date: Jan 2007
Location: far NW chicago
Posts: 847
In theory, we'd have an apartment rented before house is in foreclosure.
  #11  
Old 02-05-2019, 07:23 PM
Sunny Daze's Avatar
Sunny Daze Sunny Daze is offline
Member
 
Join Date: Feb 2014
Location: Bay Area Urban Sprawl
Posts: 11,615
I don't see an upside for you other than the immediate satisfaction you might feel about no longer owning a house. Your credit will be crushed (you might not even be able to rent). If I were you, I'd look into strategies for paying it off sooner, so you can reduce the amount owed and not be upside down. If the HARP program is still around, you might look into that.

Quote:
Originally Posted by diggerwam View Post
In theory, we'd have an apartment rented before house is in foreclosure.
Any guarantee you can keep it for 10 years until your credit is repaired?

Last edited by Sunny Daze; 02-05-2019 at 07:24 PM.
  #12  
Old 02-05-2019, 08:44 PM
betterlifethroughchemistry betterlifethroughchemistry is offline
Guest
 
Join Date: Aug 2012
Posts: 528
IANAL, but I have paid off a second mortgage. By definition, it's tied to the house, so unless you can pay that off before the foreclosure process ends, it will have to be addressed as soon as the title of the home changes hands, i.e., to a new owner or the bank. Our 2nd was nice in that it allowed interest-only payments (they are more than happy for that) which was good when the kids were younger and money was a lot tighter.

My brother went through a horrible divorce about 8 years ago, worked with a lawyer (which cost money), got the bank to agree to a short sale, and was able to sell the house at the agreed-upon price. However, his state laws require he covered the difference, so part of the agreement with the bank was that he signed loan papers at closing and is still paying the negative balance down today. That MAY be an option for you, get them to agree to a short sale and get them to agree to a loan to cover the balances...

It is not without pain - my brother's credit was destroyed for years and only after making consistent payments for years has it come back, but not all the way. IMHO, walking away would be the worst thing you could possibly do, and as suggested by another poster, please talk to a lawyer...you may be able to negotiate your way out, but it will not be without pain...and you should do it with legal counsel...
  #13  
Old 02-05-2019, 08:51 PM
Riemann's Avatar
Riemann Riemann is online now
Guest
 
Join Date: Nov 2015
Location: Santa Fe, NM, USA
Posts: 6,720
Quote:
Originally Posted by betterlifethroughchemistry View Post
...It is not without pain - my brother's credit was destroyed for years and only after making consistent payments for years has it come back, but not all the way...
Was he already in arrears on mortgage payments by the time he sorted out the short sale? If not, it seems a bit rough that they would trash his credit if he went through the process of dealing with the problem as appropriately and honestly as he could via a short sale and a payment plan to make good on the shortfall.

Last edited by Riemann; 02-05-2019 at 08:51 PM.
  #14  
Old 02-05-2019, 08:53 PM
UCBearcats UCBearcats is offline
Guest
 
Join Date: Nov 2015
Posts: 594
Quote:
Originally Posted by diggerwam View Post
Looking for advice, preferably from people w/ recent experience. Recession experience will be helpful too, but I'm sure the environment has changed in the years since.

We are both pushing 50, good jobs, my wife has rheumatoid arthritis. Still owe 100K on mortgage, may be able to sell house for very low 80's. Lived here 12 years. We are simply tired of the house, we want simpler lives, less upkeep on the house, tired of 4k plus in taxes and other yard upkeep.

I want to walk away from the house. Questions we have....should we tell the bank of our plans or just skip a couple months and hand them back the keys? Other than a significant drop in credit rating, what else will the bank do to us? Will they pursue us for any add'l funds or can I walk away clean?

We also have a 2nd mortgage with a balance of 13K. The payments are low, so I'd like to keep paying that. Will I be allowed to keep making those monthly payments even if we are out of the house?

We don't want to take on add'l debt but we do make 100K combined per year, but we really cannot add to existing debt. We can afford a decent apartment if we walk away.

I'm sick to death we are at this point, but there is zero benefit and honestly quite a bit of missed opportunity costs by keeping up this house. We made mistake buying this house 18 months before housing market collapsed.

Are there any other options that I'm unaware of? Renting out a room or moving and renting the whole house is not something we have much interest in.
So you are a loser who wants to screw the bank because you are tired of the house?? Nice!!
  #15  
Old 02-05-2019, 09:25 PM
engineer_comp_geek's Avatar
engineer_comp_geek engineer_comp_geek is online now
Robot Mod in Beta Testing
Moderator
 
Join Date: Mar 2001
Location: Pennsylvania
Posts: 23,107
Moderator Note

Quote:
Originally Posted by UCBearcats View Post
So you are a loser who wants to screw the bank because you are tired of the house?? Nice!!
Insults are not permitted outside of the Pit.

There are ways of making your point without calling the OP a loser. Do not do this again.
  #16  
Old 02-05-2019, 09:40 PM
UCBearcats UCBearcats is offline
Guest
 
Join Date: Nov 2015
Posts: 594
Quote:
Originally Posted by engineer_comp_geek View Post
moderator note



insults are not permitted outside of the pit.

There are ways of making your point without calling the op a loser. Do not do this again.
🙄🙄🙄
  #17  
Old 02-05-2019, 09:43 PM
UCBearcats UCBearcats is offline
Guest
 
Join Date: Nov 2015
Posts: 594
Sorry that the OP doesn't want to live up to their end of the contract and stick a bank with a loss for no other reason than they are "tired" of the house.
  #18  
Old 02-05-2019, 10:07 PM
Littleman Littleman is online now
Guest
 
Join Date: Jan 2019
Posts: 765
Quote:
Originally Posted by UCBearcats View Post
Sorry that the OP doesn't want to live up to their end of the contract and stick a bank with a loss for no other reason than they are "tired" of the house.
That's why banks make money, investment is a risk, a calculated risk,

If he's paid for 12 years and we're looking at a 100k to 80k difference..... The bank didn't lose squat, and probably still made money , probably quite a bit actually.


In any case with these numbers, I'd imagine the loan holders would be willing to negotiate it for maybe no more than you can sell it for.
  #19  
Old 02-05-2019, 11:56 PM
friedo's Avatar
friedo friedo is offline
Guest
 
Join Date: May 2000
Location: Brooklyn
Posts: 24,187
Quote:
Originally Posted by UCBearcats View Post
Sorry that the OP doesn't want to live up to their end of the contract and stick a bank with a loss for no other reason than they are "tired" of the house.
Every business on earth has made calculated decisions to breach contracts from time to time. Sometimes the cost of the breach is less than the alternative, and doing so can be rational and justified. There's no reason why an individual shouldn't make a similar analysis for their own circumstances.

Contracts provide a legal framework for resolving disputes. They shouldn't be thought of as moral obligations.
  #20  
Old 02-06-2019, 12:25 AM
Isosleepy Isosleepy is offline
Friend of Cecil
 
Join Date: Jul 1999
Location: Pittsburgh
Posts: 1,362
I don’t get the math: between your first and second mortgage your monthly payments should be around 500 bucks, if not you should at least refinance. Add 330 for your taxes, and (ignoring any possible tax benefit if you itemize) your monthly nut is around 800 bucks. Are there decent apartments near you available for less?
In other words, ignoring that you aren’t building positive equity for some time, is looking at it like your renting the place still making you feel like you’re banging your head?
  #21  
Old 02-06-2019, 12:58 AM
Beckdawrek's Avatar
Beckdawrek Beckdawrek is offline
Member
 
Join Date: Aug 2017
Location: So.Ark ?
Posts: 12,859
A lot of people who rent feel just that. That they are on an endless treadmill. At least if you're paying a mortgage you're getting closer to the end game every month. We paid our mortgage off a few years ago. Happiest day ever. We thought about 2nd mortgages a few times when our finances were tight but we never took the plunge. It just seemed like spinning your wheels.
  #22  
Old 02-06-2019, 04:14 AM
Hilarity N. Suze Hilarity N. Suze is offline
Guest
 
Join Date: Mar 2003
Location: Denver
Posts: 7,782
Not recent experience. The husband of a friend of mine did this. It hosed his credit rating so badly that they waited five years to get married so her credit rating wouldn't also suffer. Then there were a couple of years of austerity when they couldn't get any credit, at all. They had to rent a place in her name and pretend he didn't exist. This happened years ago, he was one of the air traffic controllers Reagan fired. So that's the time frame. I don't remember if there was a recession around there or not. He took another lowpaying job because he stubbornly believed he would be rehired. Didn't happen.

I think actually he did something that gave the house back to the bank, or turned it over, but I'm not positive. He had a second and he had to pay that off, but it wasn't really that significant. I'm thinking around $5000.

Nearly 20 years later, 2000 or thereabouts, when he went to buy another house, he still had to put on his mortgage application that he'd had a foreclosure or relinquishment. I have no idea how much this affected his interest rate. He was pretty bitter that he had to put this on there like it's his permanent record. He thought it was going to be seven years and gone.

You might want to check with a lawyer. This is probably not something you want on your permanent record. Bad credit gives you higher auto insurance rates, makes it harder to rent, and might affect your employment success in certain careers.
  #23  
Old 02-06-2019, 05:25 AM
pullin pullin is offline
Charter Member
 
Join Date: Dec 2003
Location: N Texas
Posts: 2,863
Quote:
Originally Posted by diggerwam View Post
Are there any other options that I'm unaware of? Renting out a room or moving and renting the whole house is not something we have much interest in.
Why not? I'm curious why this option won't work. If you're moving to a (presumably) smaller and cheaper apartment, getting most of the mortgage covered by renters seems like the best option. I don't know the specifics in your case, but once you move into the apartment and allow the bank to take a flamethrower to your credit rating(s), you'll be stuck. This will affect your ability to get another apartment, negotiate another lease, and could prevent you from changing jobs. ISTM the trapped feeling you have under the house now might be better than the trapped feeling of living under a destroyed credit rating.

Again, I'm guessing without a lot of fact here, so this might not be accurate. Best of luck to you though.
  #24  
Old 02-06-2019, 06:14 AM
diggerwam diggerwam is offline
Guest
 
Join Date: Jan 2007
Location: far NW chicago
Posts: 847
Both mortgages plus property tax is $1075. I can get apartment 950-1000. I suppose I could rent this place out, but I'm still on the hook for upkeep. To be clear, we just get nothing out of owning the house. No enjoyment, no flexibility, it's just a drag on us. We could be here for another decade and principal owed will still be greater than amount we can sell it for. There was a time in our life where owning a house made sense, but those days are gone. We simply don't need this, and we want to move on.
  #25  
Old 02-06-2019, 07:28 AM
kanicbird kanicbird is offline
Guest
 
Join Date: May 1999
Posts: 19,145
Quote:
Originally Posted by UCBearcats View Post
Sorry that the OP doesn't want to live up to their end of the contract and stick a bank with a loss for no other reason than they are "tired" of the house.
The OP is asking about playing by the rules of the game. There is no personal honor at stake, that was replaced by a contract which already accounts for such contingency, risk assumed by the lender. If it was a gentleman's agreement then there would be such concerns. So 'not living up to the contract' is allowed in the contract, thus they are living up to the contract. All and all fair dinkum.
  #26  
Old 02-06-2019, 07:37 AM
diggerwam diggerwam is offline
Guest
 
Join Date: Jan 2007
Location: far NW chicago
Posts: 847
I'm wondering if a professional letter to the bank wouldn't be helpful. 20 yrs of mortgages accross 2 homes. 95% of our payment went to interest. We've improved the house, new furnace, a/c and roof. Just see what they say. Worst result is they tell us to suck it.
  #27  
Old 02-06-2019, 07:41 AM
Isosleepy Isosleepy is offline
Friend of Cecil
 
Join Date: Jul 1999
Location: Pittsburgh
Posts: 1,362
If you can refinance at 4%, your payments and tax would be about 900. It would at least help a little. You may not be able to because of the LTV ratio, but it is worth a try.

You are not getting what is commonly expected out of homeownership: building equity. But if you abandon the house and rent, you won’t get that either. And since your house was at one point worth enough to secure that mortgage, it may be again at some point. So while you don’t see equity building now, it is not a zero probability in the longer run.

Without building equity, you are in effect in a situation similar to renting your house from the bank at a cost of payment +tax, with the onus of maintenance on you. So the equation for you is: does not having to do the maintenance, and living in an apartment you like better, outweigh the consequences of foreclosure?

Those consequences vary greatly by location and can vary by individual situation, meaning it is important to get knowledgeable advice specific to you: like a lawyer specializing in foreclosure.

The consequences are not zero. There is no magic do-over, unfortunately. As to the second mortgage, if you want to continue paying that after the foreclosure, I’m sure they will be happy to talk to you about changing it to unsecured credit once it is clear what you plan to do/have abandoned the house. The question is why? Not defaulting on the 2nd mortgage is not going to appreciably lessen the massive ding from foreclosure.
  #28  
Old 02-06-2019, 07:41 AM
Eva Luna Eva Luna is offline
Charter Member
 
Join Date: Oct 2001
Location: Chicago-ish, IL
Posts: 10,635
Quote:
Originally Posted by diggerwam View Post
I don't analyze the bill but my county is top ten highest property taxes in the country.
If your house is worth 80k and your property taxes are that high, why don't you appeal your tax assessment?
  #29  
Old 02-06-2019, 08:05 AM
SamuelA SamuelA is offline
Guest
 
Join Date: Feb 2017
Posts: 2,899
Quote:
Originally Posted by Hilarity N. Suze View Post
Nearly 20 years later, 2000 or thereabouts, when he went to buy another house, he still had to put on his mortgage application that he'd had a foreclosure or relinquishment. I have no idea how much this affected his interest rate. He was pretty bitter that he had to put this on there like it's his permanent record. He thought it was going to be seven years and gone.

You might want to check with a lawyer. This is probably not something you want on your permanent record. Bad credit gives you higher auto insurance rates, makes it harder to rent, and might affect your employment success in certain careers.
If the information is removed from any file the mortgage underwriter can legally access in 7 years, I'm not sure how they can force you to answer this question in this way.
  #30  
Old 02-06-2019, 08:08 AM
Cheesesteak's Avatar
Cheesesteak Cheesesteak is online now
Charter Member
 
Join Date: Jan 2001
Location: Lovely Montclair, NJ
Posts: 13,033
Quote:
Originally Posted by UCBearcats View Post
Sorry that the OP doesn't want to live up to their end of the contract and stick a bank with a loss for no other reason than they are "tired" of the house.
It's not the OPs job to prevent the bank from taking a loss. The OP has also been paying the bank interest for 12 years, and they potentially stand to lose 20 grand when they walk away. Shit, they probably paid the bank over $100,000 in interest payments already. I'm thinking this loan, as a whole, is not a loss.

I'll also point out that the bank openly and willingly approved a loan secured by an inadequate asset. If they actually have to eat a loss as a result, it's their own damn fault.

For the OP, it should be known that Illinois looks to be a "recourse state" where the lender can sue you for the remaining balance of the loan. It's going to be best to work out your disentanglement with the lender. If you walk away and dump it on them, chances are they'll fuck up the house, sell it for $40k, and sue you for the remaining 60.
  #31  
Old 02-06-2019, 10:05 AM
kanicbird kanicbird is offline
Guest
 
Join Date: May 1999
Posts: 19,145
Quote:
Originally Posted by Cheesesteak View Post
...

For the OP, it should be known that Illinois looks to be a "recourse state" where the lender can sue you for the remaining balance of the loan. It's going to be best to work out your disentanglement with the lender. If you walk away and dump it on them, chances are they'll fuck up the house, sell it for $40k, and sue you for the remaining 60.
Yes if the bank gets control over the house, after fees and having it vacant, you can expect them not to get much, and be looking for more from you. If the lender will come after you, it would be in general better for you to sell it then for the bank to sell it as foreclosed or auction, a lot of value is lost when sold that way.
  #32  
Old 02-06-2019, 10:38 AM
Really Not All That Bright Really Not All That Bright is offline
Guest
 
Join Date: May 2003
Location: Florida
Posts: 67,922
Talk to a lawyer. Walking away from your mortgages will have consequences which are much worse than continuing to pay on the house (even as a rental). First, in most states (not sure about yours) you'll owe the balance of the mortgage less whatever the bank recovers in the foreclosure sale. You may also owe the balance of the second mortgage (in some states, the foreclosure sale buyer takes the home subject to the second mortgage, but not all). If the mortgage balances are forgiven, it will count as taxable income to you for that tax year.
  #33  
Old 02-06-2019, 11:02 AM
wguy123 wguy123 is offline
Guest
 
Join Date: Apr 2007
Posts: 1,590
Is the Chicago housing market doing that poorly? In the NW, the houses have far rebounded above the pre-2008 crash prices. Of course, I'm also shocked at the thought of a house for $80,000. That gets you a double-wide around these parts.
  #34  
Old 02-06-2019, 11:03 AM
enalzi enalzi is online now
Guest
 
Join Date: Apr 2008
Location: Chicago, IL
Posts: 7,421
Quote:
Originally Posted by Hilarity N. Suze View Post

Nearly 20 years later, 2000 or thereabouts, when he went to buy another house, he still had to put on his mortgage application that he'd had a foreclosure or relinquishment. I have no idea how much this affected his interest rate. He was pretty bitter that he had to put this on there like it's his permanent record. He thought it was going to be seven years and gone.
Quote:
Originally Posted by SamuelA View Post
If the information is removed from any file the mortgage underwriter can legally access in 7 years, I'm not sure how they can force you to answer this question in this way.
Not sure if it's changed since 2000 or he read it wrong, but the Uniform Mortgage Loan Application now only asks if you've had a foreclosure in the last 7 years. And it's pretty much an approved/denied situation. Outside of the impact to your credit score, the foreclosure won't have any separate impact on your interest rate.
  #35  
Old 02-06-2019, 11:07 AM
enalzi enalzi is online now
Guest
 
Join Date: Apr 2008
Location: Chicago, IL
Posts: 7,421
Quote:
Originally Posted by wguy123 View Post
Is the Chicago housing market doing that poorly? In the NW, the houses have far rebounded above the pre-2008 crash prices. Of course, I'm also shocked at the thought of a house for $80,000. That gets you a double-wide around these parts.
Curious about this too. I checked out Zillow. Assuming, it's a house and not condo, you aren't getting a house for 80K anywhere on the north side.
  #36  
Old 02-06-2019, 11:10 AM
Really Not All That Bright Really Not All That Bright is offline
Guest
 
Join Date: May 2003
Location: Florida
Posts: 67,922
Quote:
Originally Posted by wguy123 View Post
Is the Chicago housing market doing that poorly? In the NW, the houses have far rebounded above the pre-2008 crash prices. Of course, I'm also shocked at the thought of a house for $80,000. That gets you a double-wide around these parts.
I wondered about that as well. Our house in the Florida 'burbs went from ~$180K in 2008 (when we bought, after the market started dropping but before the crash) to ~$120K (at the bottom of the Great Recession) and is now somewhere in the low 200s.
  #37  
Old 02-06-2019, 11:13 AM
Dewey Finn Dewey Finn is offline
Charter Member
 
Join Date: Apr 2003
Posts: 27,200
Quote:
Originally Posted by diggerwam View Post
Both mortgages plus property tax is $1075. I can get apartment 950-1000. I suppose I could rent this place out, but I'm still on the hook for upkeep. To be clear, we just get nothing out of owning the house. No enjoyment, no flexibility, it's just a drag on us. We could be here for another decade and principal owed will still be greater than amount we can sell it for. There was a time in our life where owning a house made sense, but those days are gone. We simply don't need this, and we want to move on.
I'm a renter because I live in a really high-cost area and buying a house isn't in my budget, but in your circumstances, I would reconsider. The rents may be similar now, but they will increase over time. Meanwhile, your mortgage is fixed (or perhaps might even go down, if you refinance or seek assistance with it). And as suggested, talk to the town about a property tax reduction, if possible. The rational choice might be to stay where you are.

Edited to add, that the mortgage plus property tax might be $1,075, but the interest and tax are deductible. So what is the net cost?

Last edited by Dewey Finn; 02-06-2019 at 11:16 AM.
  #38  
Old 02-06-2019, 11:22 AM
Dewey Finn Dewey Finn is offline
Charter Member
 
Join Date: Apr 2003
Posts: 27,200
Also, moving is going to cost something, perhaps thousands? And breaking the mortgage might require you to hire an attorney.
  #39  
Old 02-06-2019, 11:43 AM
diggerwam diggerwam is offline
Guest
 
Join Date: Jan 2007
Location: far NW chicago
Posts: 847
Rockford, IL, not Chicago. I appreciate the advice. Rethinking walking away, but still might talk to lender about short sale and some kind of forgiveness of the difference. We've had almost 20 yrs of mortgage payments thru this lender. I agree, they have already made a bundle off of us.
  #40  
Old 02-06-2019, 12:03 PM
drachillix drachillix is offline
Guest
 
Join Date: Jun 2000
Location: 192.168.0.1
Posts: 9,888
My only input is, watch for tax implications.

I had a foreclosure about 10 years ago. The house sold for significantly less than what was owed on the mortgage.

The discharge of that balance was counted as income to me. So instead of 40k to the bank I got hit for about 8k by the IRS by the time it all settled.
__________________
Rumor has it, I fix computers. Sometimes it even works after I fix it...
  #41  
Old 02-06-2019, 12:12 PM
wguy123 wguy123 is offline
Guest
 
Join Date: Apr 2007
Posts: 1,590
Quote:
Originally Posted by diggerwam View Post
Rockford, IL, not Chicago. I appreciate the advice. Rethinking walking away, but still might talk to lender about short sale and some kind of forgiveness of the difference. We've had almost 20 yrs of mortgage payments thru this lender. I agree, they have already made a bundle off of us.
Holy shit...houses are cheap there!!! And yes, I looked at the price history of several and it does seem they are still a bit below the 2008 drop.

I could sell my little house and live like a king there!
  #42  
Old 02-06-2019, 12:22 PM
spifflog spifflog is offline
Guest
 
Join Date: Jan 2003
Location: Washington, DC
Posts: 2,317
Quote:
Originally Posted by Cheesesteak View Post
It's not the OPs job to prevent the bank from taking a loss. The OP has also been paying the bank interest for 12 years, and they potentially stand to lose 20 grand when they walk away. Shit, they probably paid the bank over $100,000 in interest payments already. I'm thinking this loan, as a whole, is not a loss.

I'll also point out that the bank openly and willingly approved a loan secured by an inadequate asset. If they actually have to eat a loss as a result, it's their own damn fault.

For the OP, it should be known that Illinois looks to be a "recourse state" where the lender can sue you for the remaining balance of the loan. It's going to be best to work out your disentanglement with the lender. If you walk away and dump it on them, chances are they'll fuck up the house, sell it for $40k, and sue you for the remaining 60.
It's sad, but probably telling, that so many people here are approving of the OP just walking away from a contract, and from the house, basically because he just doesn't feel like living up to the responsibility he agreed to. If the bank had a similar provision to screw the guy, we'd be on the proverbial streets with pitchforks looking for the bank.
  #43  
Old 02-06-2019, 12:25 PM
Dewey Finn Dewey Finn is offline
Charter Member
 
Join Date: Apr 2003
Posts: 27,200
Quote:
Originally Posted by diggerwam View Post
Rockford, IL, not Chicago. I appreciate the advice. Rethinking walking away, but still might talk to lender about short sale and some kind of forgiveness of the difference. We've had almost 20 yrs of mortgage payments thru this lender. I agree, they have already made a bundle off of us.
OK, Rockford is a decaying Rust Belt city so I can understand that you're not going to get much in the way of increase in the value of your house.
  #44  
Old 02-06-2019, 12:42 PM
robby's Avatar
robby robby is offline
Charter Member
 
Join Date: Dec 2000
Location: Connecticut, USA
Posts: 5,290
Quote:
Originally Posted by diggerwam View Post
Both mortgages plus property tax is $1075. I can get apartment 950-1000. I suppose I could rent this place out, but I'm still on the hook for upkeep. To be clear, we just get nothing out of owning the house. No enjoyment, no flexibility, it's just a drag on us. We could be here for another decade and principal owed will still be greater than amount we can sell it for. There was a time in our life where owning a house made sense, but those days are gone. We simply don't need this, and we want to move on.
This is not enough of a savings to justify destroying your credit, IMHO. Also, rents are more volatile than property taxes. The latter typically go up by a few percent every year (or even decrease, if your house's assessed value decreases). Rents can increase much faster, and with a terrible credit rating, you'd have little flexibility to move if your rent goes up dramatically.

Not to mention the likelihood of the lender coming after you for the difference, and other consequences of a destroyed credit rating (like the inability to get a decent car loan if your vehicle needs to be replaced in the next 7 years, or a dramatic increase in your credit card interest rate, etc.).

In short, I think the worst thing you could do is to walk away from your mortgage. You say you have "no enjoyment" and that you "get nothing out of owning the house." I disagree. You are getting a roof over your head. Would you prefer homelessness? If you are not getting any enjoyment out of your house, look for fulfillment elsewhere in your life.

I don't think your situation actually sounds all that bad. You have sufficient income to cover your mortgage, taxes, and insurance. Your housing costs are less than 15% of your income. Your only issue is that your house's value is less than what you owe on it (which is irrelevant until you sell it), and that you're no longer enjoying owning it. These don't seem like good reasons to walk away, IMHO. If it were me, I'd suck it up and stay put. If you are determined to leave, at least wait until the value of the house is no longer underwater, and then sell it yourself.
  #45  
Old 02-06-2019, 12:48 PM
monstro monstro is online now
Guest
 
Join Date: Mar 2002
Location: Richmond, VA
Posts: 19,981
Hire a property manager to handle upkeep if you decide to rent the house out.

Sent from my SPH-L710 using Tapatalk
__________________
What the hell is a signature?
  #46  
Old 02-06-2019, 12:59 PM
Sunny Daze's Avatar
Sunny Daze Sunny Daze is offline
Member
 
Join Date: Feb 2014
Location: Bay Area Urban Sprawl
Posts: 11,615
I have rented a house out for years. I have a good property manager and don't have to worry about the details of upkeep (although I do periodically check on the home). Pluses - someone else is paying for it, and someday I will own it. I am also not tied to living in it myself. Also, in some circumstances, you may be able to deduct some items on a rental from your taxes. Negatives - you can't always deduct, and some tenants may trash the place. I've never had a tenant trash my place(s) and I've been doing this for a long time.

If the rent will cover the mortgage and taxes (sounds like it will?), why not try it? You're able to move around where you'd like and your credit is not destroyed.
  #47  
Old 02-06-2019, 01:00 PM
Barkis is Willin' Barkis is Willin' is offline
Guest
 
Join Date: Jan 2010
Posts: 6,293
I was incredulous that you could owe over 100k after 12 years and only fetch 80k now, but checking Zillow I believe it. Wow, the house you can get for 300k there! Anyway, I'd say do what you can to pay as much off so you can at least break even on a sale. How long you think that would take if you make it a priority?
  #48  
Old 02-06-2019, 01:07 PM
Cheesesteak's Avatar
Cheesesteak Cheesesteak is online now
Charter Member
 
Join Date: Jan 2001
Location: Lovely Montclair, NJ
Posts: 13,033
Quote:
Originally Posted by spifflog View Post
If the bank had a similar provision to screw the guy, we'd be on the proverbial streets with pitchforks looking for the bank.
The bank is going to do what is best for the bank. If exiting a contract is better for the bank, that's exactly what they're going to do. We have books full of banking laws to prevent bankers from screwing over their customers, so let's not pretend that they feel some burden of responsibility to act in good faith.
  #49  
Old 02-06-2019, 01:10 PM
Cheesesteak's Avatar
Cheesesteak Cheesesteak is online now
Charter Member
 
Join Date: Jan 2001
Location: Lovely Montclair, NJ
Posts: 13,033
For the OP, my mom wound up in a situation similar to yours, real estate values cratered and her house wasn't worth enough to make selling a preferable choice. She is renting it out, it covers her expenses, maybe she makes a bit of profit, and maybe her renter will be interested in buying down the road. If that's an option for you, it at least keeps your finances intact, you don't have to incur expenses to sell, you don't have to renegotiate an exit to the mortgage and you don't foul up your credit rating.
  #50  
Old 02-06-2019, 01:23 PM
Manda JO Manda JO is offline
Charter Member
 
Join Date: Jul 1999
Posts: 10,867
I think a property manager and renting the house out makes the most sense: if it covers it's own expenses, that's enough.

Alternatively, just be indulgent. It's going to cost thousands to walk away--thousands buys you a lot of housecleaning and yard mowing and handyman visits.
Reply

Bookmarks

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is Off
HTML code is Off

Forum Jump


All times are GMT -5. The time now is 06:24 PM.

Powered by vBulletin® Version 3.8.7
Copyright ©2000 - 2019, vBulletin Solutions, Inc.

Send questions for Cecil Adams to: cecil@straightdope.com

Send comments about this website to: webmaster@straightdope.com

Terms of Use / Privacy Policy

Advertise on the Straight Dope!
(Your direct line to thousands of the smartest, hippest people on the planet, plus a few total dipsticks.)

Copyright 2018 STM Reader, LLC.

 
Copyright © 2017