"Walking away" from a house??

Has anyone here done that or know somebody that has? Here in Michigan it seems just up and leaving a nice house because there's no work (in this state, thanks Jenny) is about as common as bouncing a check for some folks. Anyway, I can't find a freaking job in this god-forsakes state and have a strong prospect in Denver. The problem is I just bought this house less than 3 years ago and despite the improvements I've made it's worth less now than it was then so selling it ain't gonna happen. Should I just let the house go? Sure I'll try to sell it but there are an incredible number of houses for sale in my area. Renting prob wont work either. Anyone who can afford rent can afford to buy a house in this market. Assuming the house doesn't sell and I can't rent it what are my options?

Jewish lightning? otherwise known as insurance fraud.

In Michigan, you aren't liable for the difference between the house's value and what you owe on it if you walk away. Keep in mind your credit will be ruined for 7 years after you do this. The bank won't take it forcefully from you for a year or so. Take the job in Denver, buy a house, contact a real estate lawyer in Michigan and have them work it out with the mortgage company. A short sale might also be a possbility.

Do you owe more on the mortgage than the house is worth or is it just worth less than you paid for it?

^^^^ acutally sounds reasonable

Make sure you've settled on your Denver house before you let them pop your Michigan house. It's hard to get approved on a mortgage with a foreclosure on your credit.

and make sure non of the above creditors know about this web site.

The biggest problem is that a reposession is going to be doubleplusungood on your credit report. Stumpmj's suggestion of a short sale is a good possibility: What you do there is put the house on the market for what you can get for it, even if that's less than what you owe on it. Then get someone to make an offer. Then you take that offer to the bank and say, "Look, here's the best I can sell this house for. I have no extra money to pay the loan off with. Can you accept this as payment in full for the loan?" This isn't as bad for your credit. Worst they can do is say no, at which point you reply, "OK, time for plan B, I walk away and you get stuck trying to sell the house."

Credit with a value of above $50,000 doesn't drop off after 7 years as do lesser offenses.

Or let me say they don't have to drop off as sometimes they do.

Plus there is a mortgage database that lists all the foreclosures. You can get all the way up to closing and have them rescind your loan approval.

This is definitely not something to enter into lightly.

Working out a voluntary foreclosure with an agreement not to charge you for losses is the best way

stumpmj wrote: Do you owe more on the mortgage than the house is worth or is it just worth less than you paid for it?

Like many of us other Michiganders (god, I hate calling myself that), our house values have decreased in the past two or three years. From the late '90's to 2006, home values skyrocketed, then they plunged.

Hopefully one of my two upcoming interviews will work out, so I can afford to make my mortgage payments until the market comes around again. Then I'm selling and moving far, far away.

In Columbus, Ohio, there was a t-shirt that said "BERKELEY MICHIGAN". Of course, the law prevented bad words from being displayed in such a fashion. They reprinted the shirt to now say "BERKELEY".

I would not buy another house until you sell the first one.

I agree on a short sale.

I would sell it, rent an apartment, and pay off what I lost on the house.

Walking away screws you up and then the bank can come after you for the balance.

Check into Dave Ramsey and his website.

Yeah, if you 'walk away' you are going to have at least 7 years and possibly 10 to rassle a foreclosure (in some states it's 7 years on unsecured credit and car loans but 10 years on a foreclosure). Keep in mind that credit reports are used for all kinds of stuff like job applications, car insurance rates, etc. meaning there could be wider ranging repercussions than just a blotch on your credit.

If you just are not able to find a job in Detroit and you'd be facing foreclosure anyway, I couldn't really see a downside. Sometimes if you have to move for a job the company will help you find a house and sell the old one. Worth an ask.

I don't see how he can buy another house if he hasn't sold his first one. He mentioned not being able to make payments in another thread and that implies to me a lack of savings. Where is he going to get his 20% down payment? The underwritters are going to see he owes and is struggling on house one and has no cash, why would they approve a second mortgage?

From what I see, his best option is to stay put and continue to pay his mortgage. It sucks, but that is the responsible thing to do and probably the only way to stay out of financial limbo.

The alternative is to rent for the next few years (maybe ten).

WilD wrote: The underwritters are going to see he owes and is struggling on house one and has no cash, why would they approve a second mortgage?

Because they're stupid and don't take those kinds of things into consideration like they should. Its all based on your FICO score these days. Its a big part of the reason were in this mess now, giving loans to people who cant afford them.

I'm in a very similar situation - I bought a house in AZ in a new neighborhood a couple years back and recently got a job offer to move across country. The house is in a neighborhood full of foreclosures, either by people that got greedy and bought too much and now can't pay or people that just don't feel like paying, take the easy way out and mail the keys in. I made sure not to accept anything less than what I would need to keep the house in AZ and afford rent on a decent place in my new town. It worked, and now I know I'm safe if the house doesn't sell. If it does, then I'm better off than I'd planned.

As for the credit repercussions of walking away, you should really get a real estate lawyer and explore this options. I believe that even a short sale can negatively affect your credit, though that could be a state-to-state thing. Either way, research before you do anything.

And, not to get on a high horse, but IMO people mailing keys in/leaving their house is what's gotten us into so much trouble. All of these mortgages are being treated as liabilities because nobody knows who's going to pay their mortgage or not. And it's not simple math of who can afford to or not...now we have people that can make their payment deciding that they don't feel like honoring the agreement they made. That introduces uncertainty and that's what contributes to plummeting stock values (Bear/Stearns, et al) that leads to major institutions that invested heavily in these mortgages having so much trouble. Walking out on a mortgage you can afford, to me, is a question of honor and integrity, not of budget and finances.

Believe me, I've thought long and hard about walking away from my house: nobody lives there, it's a constant source of stress, and it will be a LONG time before I can break even. Regardless of the stress and financial strain, though, I signed the mortgage and I agreed to the terms. It sucks, I wish I didn't have to worry about it, but it's my burden to carry.

I hope this doesn't come across as altruistic. It's my opinion, though, that we would be in a much more stable economic situation if everybody that could honor their obligations did.

Here are a few hundred job listings in your area:

http://detroit.craigslist.org/jjj/

Are they all dream jobs? Do they all pay as much as your last job? No. But the proverbial "Car Wash" is always hiring, and $8/hr is better than $0/hr. You need some sort of income, and posting on internet message boards at 1PM on a thursday doesn't pay much. Find SOMETHING, 2 jobs if you can, and pay the mortgage until you can get the house sold, but don't ruin your credit. Best of luck.

poopshovel wrote: Here are a few hundred job listings in your area: http://detroit.craigslist.org/jjj/ Are they all dream jobs?

No, and I'm not holding out for my dream job, trust me. I have sent out plenty of resumes to companies that I know I would fit into that job and had only 1 prospect in a month. I have made it my full time job to find a job and I still have nothing.

poopshovel wrote: Do they all pay as much as your last job? No. But the proverbial "Car Wash" is always hiring, and $8/hr is better than $0/hr. You need some sort of income, and posting on internet message boards at 1PM on a thursday doesn't pay much. Find SOMETHING, 2 jobs if you can, and pay the mortgage until you can get the house sold, but don't ruin your credit. Best of luck.

Many years ago when I was first married I said that same type of thing "if I need to get 2 jobs at McDonalds to pay the bills, I will." What happens when those 2 jobs won't pay the bills? There is a job I have hesitated to apply for because I knew I'd get it. It's just 2 miles from home and right up my alley. Why did I hesitate? Because if I'm working 50 hours a week (not making enough to pay the bills), when do I scour the 'net looking for jobs that will pay the bills? When will I interview, I don't want to jeapordize that new job by asking for an afternoon off right after I start? BTW, I did apply for that job this afternoon, and was turned down flat, "over-qualified." Now I want to thank you all for your replies, it is educational for sure. But let me say this. I do NOT want to walk away from my house. I have put A LOT of work into it since we've been here and I hate to think of not living here. I'm not one of those that got roped into an ARM loan and can't pay, we intentionally DIDN'T mortgage as much house as we could of for this very reason. Now, none of that matters and I'm simply trying to figure out how to take care of my family as best I can.

Thanks again all and keep the replies coming.

SupraWes wrote:

WilD wrote: The underwritters are going to see he owes and is struggling on house one and has no cash, why would they approve a second mortgage?

Because they're stupid and don't take those kinds of things into consideration like they should. Its all based on your FICO score these days. Its a big part of the reason were in this mess now, giving loans to people who cant afford them.

No, that's not true. FICOs are your admission price to the mortgage zoo. Once you enter then they check all kinds of other things. There are many checks and balances put into the system. They DO take the 2nd house into consideration. You have to show to either qualify with both house payments or show the other house is rented.

If you show the other house is being rented and you don't have a history of renting the house you may also have to have 6-12 months house payments in reserve to show you can afford to handle a long period of the house being unrented.

And NO you can't just make up a rental agreement, you have to show $$ changing hands and they do a follow up physical follow up on a random number (we think 1 in 20) plus they do a records check on almost all of them to show that utilities have been turned off and put in someone else's names.

Now if the pols would quit forcing asinine mortgage types on us things would be just fine.

DrBoost wrote: Renting prob wont work either. Anyone who can afford rent can afford to buy a house in this market. Assuming the house doesn't sell and I can't rent it what are my options?

There are people like me that can qualify and afford to buy a house right now but are choosing not to. I am doing consulting work that can dry up at anytime. So renting may be more plausable than you believe.

Also, You might be able to negotiate a temporary situation with reduced payments until you are working again. The banks and mortage companies already have way more homes than they can deal with. You may have more negotiating power than you realize. Having a few months of lower or delayed payments from you might be infinitely more paletable(sp?) to a lender than taking over another house that isn't going sell.

On the job search front, I have done recruiting in my career. i have also been a job search coach. PM me and I'll be happy to take a look at your resume to see if there is something we can do to make it stand out a bit more.

I agree with the short sale as being a possibility, but don't forget the possibility of renting in Co and renting your house out. I did that for about a year. I moved to a rural area to get experience and rented a small but very liveable apartment. I also rented my house out to a tenant/roommate, as I came back once a month to party and interview and so on so I needed to be able to stay in it sometimes. I adjusted the rent appropriately. After paying the remainder of my mortgage, and my rent and utilities in the apartment, my living expenses were the same. I found a great tenant who left my house better than she found it.

There were some lean times before I found a roommate, finding a good one took about 8 weeks. I was late on some CC payments, was behind on my utilities, all that jazz, but I always paid my mortgage and my car lease note/insurance. I figured I can take a few hits on my credit report on my few credit accounts, but I'm not going to lose my freakin house! I love this place and I keep all my crap in it.

Anyway, made it through, and with the roomie it could have gone on indefinitely. I got the job in town I wanted and came back. Now the only thing I have to deal with is going beyond my mileage on a leased car as I drove all over the damn state. Didn't count on that when I leased the damn thing.

Anyway, for what its worth. There are professional and cool people who need places to live, and you have such a place. It beats taking chances with creditors or walking away IMHO. It could even be fun.

Any moron can make $15/hr hiking shingles up onto a roof or doing other hard physical labor (plowing snow, mowing lawns, trimming trees, garbage removal). I would suggest making good on your responsibilities and stop trying to screw us honest, hardworking, responsible taxpayers.

I am spending $15k OUT OF MY PAYCHECK this year to keep worthless people like the OP off the streets and in a home they cant afford because they overextended themselves. It really pisses me off to throw money at people who dont deserve it when bullets are so much more economical.

Despite having a decent paying professional job, I dont have a car note, I dont have kid(s) I cant afford, I dont have a mortgage or rental payments. Just gotta pay taxes, utilities, and car insurance and license costs.

93gsxturbo wrote: Any moron can make $15/hr hiking shingles up onto a roof or doing other hard physical labor (plowing snow, mowing lawns, trimming trees, garbage removal). I would suggest making good on your responsibilities and stop trying to screw us honest, hardworking, responsible taxpayers. I am spending $15k OUT OF MY PAYCHECK this year to keep worthless people like the OP off the streets and in a home they cant afford because they overextended themselves. It really pisses me off to throw money at people who dont deserve it when bullets are so much more economical.

and people thought I was harsh

93gsxturbo wrote: Any moron can make $15/hr hiking shingles up onto a roof or doing other hard physical labor (plowing snow, mowing lawns, trimming trees, garbage removal). I would suggest making good on your responsibilities and stop trying to screw us honest, hardworking, responsible taxpayers. I am spending $15k OUT OF MY PAYCHECK this year to keep worthless people like the OP off the streets and in a home they cant afford because they overextended themselves. It really pisses me off to throw money at people who dont deserve it when bullets are so much more economical. Despite having a decent paying professional job, I dont have a car note, I dont have kid(s) I cant afford, I dont have a mortgage or rental payments. Just gotta pay taxes, utilities, and car insurance and license costs.

Look Dick head. You have no idea who I am or what kind of person I am so I suggest you back off! If you got off your sister and read my post you'd see that the last thing I'm going is trying to get out of paying my house off. I'm trying to see what options are out there for me. My number one responsibility is to my family and I'll do anything necessary to keep them safe, happy and healthy. If you read my post you'd see that I specifically DIDN'T over extend myself when I purchased this house. In fact I didn't even say I can't afford this house numb nuts. I said I have a possible offer on the other side of the country and wanted to know what options there are for this house. The best one so far is renting it out.

I've never collected unemployment, food stamps or any other kind of "public assistance" (not that there is anything wrong with that) in my life. I've always handled my responsibilities and will continue to do so.

BTW, if you are ever in Fenton, or anywhere near here why don't you drop me a line and I'll show you what kind of man I am!

Some peoples kids.........

I feel for you, Dr Boost. My wife and I moved from Michigan to Illinois nearly 2 years ago. I spent 9 months looking for a job in Michigan after my previous company went belly up. I made the second and third round interviews at a few companies but always heard the same thing, "We really like you but have decided on the other candidate as they have more experience". I have a college degree, 10 years with my former company, and was trying for jobs that paid 20% less than I had been making. Those "other candidates" must have been awfully desperate.

Poopshovel, I was turned down flat by Home Depot, Crate and Barrel, and others because I "will leave as soon as an office job comes along". They may have been right but I was a little shocked they would say that to my face, as more than 1 manager did. Do they really expect hardworking, long-term employees for $8 an hour?

Our townhouse condo is still for sale in Michigan. We bought it in 2003 and its now priced $15K under what we paid. Its just so hard to compete with foreclosures. The only bright side is its a condo so the outside maintenance is taken care of.

(Now that my sob story is over, here is my advice)

People will rent in this economy because not everyone has the 20% down and 700+ credit score banks are requiring now. Lending has tightened up so much that even if people are interested in your house that probably can't get funding. Check into having a real estate agent manage your property and if it sounds good, check out that prospect in Denver. Getting out of Michigan was the best thing we could have done. I sent 1 resume to Wisconsin, 1 to Ohio, and 1 to Illinois and wound up with a great offer in Chicago in less than a week.

93gsxturbo wrote: Any moron can make $15/hr hiking shingles up onto a roof or doing other hard physical labor (plowing snow, mowing lawns, trimming trees, garbage removal). I would suggest making good on your responsibilities and stop trying to screw us honest, hardworking, responsible taxpayers. I am spending $15k OUT OF MY PAYCHECK this year to keep worthless people like the OP off the streets and in a home they cant afford because they overextended themselves. It really pisses me off to throw money at people who dont deserve it when bullets are so much more economical.

That's very generous of you seeing as how you're a complete jerk and all.

93gsxturbo wrote: Despite having a decent paying professional job, I dont have a car note, I dont have kid(s) I cant afford, I dont have a mortgage or rental payments BECAUSE I LIVE AT HOME WITH MY PARENTS..

Fixed.

Even if you have to rent the house at a loss, its not a complete loss. The money you lose on the rental as well as any maintence, improvements done within a prescribed time, and trips back to check on the house are all write offs.

No this is not the way to make money, but it does substancially ease the burden if you rent and move.

I'll say this, you want to live in Colorado, this place is great.