I can't answer your specific question, but if you read the article below you'll find that you're not alone.

Here is a link that might be useful: Strategic defaults

why would you buy something without a job there and obviously something you could not afford???
then to want to walk away from an obligation you willingly took on...so you can get on with your life....
*sigh* but an implication that you can pay it with your job in VA and the income from it.

Have you tried loan modification with the bank? If you can't sell the property or make enough renting to cover the costs on it, walking away might be your only choice.

Jane

Fur3, I'm pretty sure you weren't looking for a slap on the wrist. Christina, the entire situation wasn't written out here. What if Fur had an inheritance that afforded a down payment? What if he or she had wanted to live in their hometown and purchased this house with hopes of living near family? What if there was a positive employment outlook that changed dramatically within months of the house purchase? Hey, what if this person's had a job and it was downsized or the company went broke? I realize alot of folks were irresponsible with home purchases, and maybe that's the case here. From the info given we don't know what happened or why, but does that really matter? What matters is this person purchased a house and now 6 years later is in a difficult situation that is probably quite frightening. Sounds as if the OP is trying to do the right thing, but can only carry this burden for so long....probably didn't need a scolding from anyone.

Fur, you're not the only one suffering in this current market. We're in a situation where we can't afford to sell our house and my husband has become nearly blind with a commute that's over 100 miles a day. Assuming he doesn't lose his gov't contract in the next month or so, we've committed to sticking it out another year or so. BUT, if he ends up jobless, employed out of state, or his eyesight gets worse I won't hesitate to short sale this house or foreclose on it. I'm not one to tuck tail and run, but at some point a burden becomes too much to bear. I'd rather deal with the credit implications than continuing to pour money down a pit.

Christina, why would you say something so mean to somebody? I hope you never fall on hard times or make a bad decision!

Fur, I'm sorry, I have no experience in this but at this point, I would seriously consider my peace of mind. Stress can make you really sick. You've tried to short sale it. You're renting it. I would talk to the bank and see if they have any ideas to help and if not, I'd think about giving up. I can't imagine what you're going through. I wish I could say something to be helpful.

From a quick Google, it looks like Florida is usually (not always) a recourse state, so even if you walk away, you'll probably still end up paying the difference between what the house sold for and the mortgage balance, and you'll screw your credit.

We do feel your pain though- we're 50% underwater on a house DH has owned for 10 years, in a state I absolutely hate. And we sunk another 25% into maintenance/upgrades before the market imploded. The only things keeping us from walking away are that we're in a recourse state, and we don't want to have ruined credit while job hunting somewhere else.

truth is sometimes painful.... and i have been between a rock and a hard place.
people just love the good times, the over extended credit... but then when it crashes...
we all make bad decisions, but i don't think bailing, foreclosing to "get on with my life" is an answer when an implication stands that although not pretty can make the payments from VA.

"I'm considering allowing the home to go into forclosure so I can move on with my life."

That may or may not be a practical idea for you right now. On a rental property in FL, I believe they can sue you for any shortfall on the loan. Once you get through with all the fees and potential judgement, you may end up paying just as much to NOT own the home as you would to own it and rent.

You really need to see an expert. The National Foundation for Credit Counseling will have free or low cost advisers in your area. They have a link to Housing Counseling right on the front of their website.

FYI - the NFCC is the real, federally approved counseling organization. These aren't the scam people you hear on the radio etc. They will be able to do a full review of your finances and have lots of experience with all the applicable laws.

Here is a link that might be useful: NFCC

FL property is starting to really pick up in sales volume. Much of this is due to short sales and foreclosures that are great deals. Investors are buying them. The well priced properties get multiple offers and sell quickly.

Anyway, maybe your short sale didn't price it low enough last year? Maybe now they would price it better, as in the past year lenders have gotten off the fence and have priced many short sales properly(lower), because they were sitting unsold before that when the price was not good enough.

Do you have a say in the list price for a short sale, or is it only the bank?

I think a short sale needs to be looked into again, and price aggresively to move it. Short sales are much better on your credit when you keep paying your monthly mortgage until sold. I think you will feel much better about a short sale.

Maybe you can find a realtor that is very astute at short sales. Maybe they can work with the lender to get it priced correctly to have it sell.

Sending positive luck/thoughts your way. It must be very stressful for you. Realize this is very, very common in FL. Try to find some experts that will help you...realtor, appraisor, title company, web sites, consumer org, dept within eour lendor, etc. This is so common that lots of folks are know the ropes of short sales, more so that 1 or 2 years ago.

"FL property is starting to really pick up in sales volume. Much of this is due to short sales and foreclosures that are great deals. Investors are buying them. The well priced properties get multiple offers and sell quickly."

AS a buyer of REO from banks (though not in Florida) it is little help that sales are occurring since they are at a lower market point.

Anything can be sold if the price is right (read 'low enough').

This is of no help to folks who own other properties in the area, since the lower sales just further drive prices down.

It is of help to sellers that sales volume has picked up in Florida, even though the majority of the sales are low priced. The good part of this all is that the glut of active "for sale" homes sitting on the market has decreased. It used to be that the market was saturated with X months of homes for sale. Due to the large sales volumes that has been ocurring, the X months of homes currently for sale is lower, by a good margin. It is good for sellers that the market is not as saturated with homes to for sale (competition).

The good part about all this for the original poster is - if they are doing a short sale and if the lender approves/sets the asking price, then it is very likely that the lender will allow a low price that will move the house. The lender will use the recent comps and also the lenders have been pricing to sell in many cases. So a short-sale might be the original poster's answer to getting out from under this home. The recent activity probably will help the seller in this particular situation.

"It is of help to sellers that sales volume has picked up in Florida, even though the majority of the sales are low priced. The good part of this all is that the glut of active "for sale" homes sitting on the market has decreased. It used to be that the market was saturated with X months of homes for sale."

Take your losses now or take them later is hardly good news for sellers looking to not take a bath.

Better to be For Sale against 35 other homes in your price bracket versus being For Sale against 100 other homes in your price bracket. Less competition means more chance your home sells. With the increase in sales volume, there are fewer For Sale homes to compete against.

If the original poster is able to price decently via a Short Sale, then a sale might just happen this time around. Then foreclosure can be avoided. This would be awesome.

"With the increase in sales volume, there are fewer For Sale homes to compete against. "

If you price anything low enough it will sell, often quickly.

Losing money now is barely preferable to losing it later.

The problem is that the place is now going to be treated as an investment property and a short sale may then result in a big tax bill (the house is no longer a principal residence).

The OP needs to talk with a tax attorney and make sure they will not get smacked with a 1099 for a short sale.

You agreed to buy the house for a specified price. Some lender fronted enough money to add to the money you had to pay the seller. You promised to repay the lender. As I see it, that is the entire picture.

You agreed to buy the house for a specified price. Some lender fronted enough money to add to the money you had to pay the seller. You promised to repay the lender. As I see it, that is the entire picture.

This is less than helpful. Sure I agree that someone who, say, has a good job and is just tired of his house shouldn't just blithely allow the house to go into foreclosure.

And, where possible, if you owe more than your house will sell for you just suck it up and bring a check to closing. I know whereof I speak. I recently sold my house and brought $70k to closing. It hurt to do it and is financially not great for us. But, we had the money to do it so we did it.

But, not everyone can do that. Sometimes people have a house is location A but no job there and they can get a job in location B. They can't sell the house for what is owed and they don't have cash to bring to closing. That is a bad situation to be in and just saying they should pay may not magically create the ability to do so.

"I'm considering allowing the home to go into forclosure so I can move on with my life. Does anyone have any experience with this and can offer advice?"
And the lender does what with your promise? The lender made no profit when you bought the house. And would not participate in any gains realized if the market had risen or does rise in the future. Move on with your life at the expense of the lender? Gee, what a great guy!

Ignore the nastiness. Compassion isn't a quality valued by some people.

You've gotten good advice to contact the NFCC, as well as a tax advisor. Be aware that a short sale, even if the bank is willing to forgive the loss, will still hit your credit. Nonetheless you can recover from this; it takes a while but is not impossible.

We, too, were underwater in the beginning on our home - bought it on the upswing in 1989 and watched the market fall 30%. We didn't think we would ever recover, although we finally did. But it was a long, hard slog. If we'd had someplace else to live we might have walked away too.

Never do anything financially drastic without paying for professional advice first. There is a way to do things that will minimize damage, and it's important you know what NOT to do, as well as what is POSSIBLE to do.

Good luck to you going forward.

I agree with bus driver - the bank agreed to give you a loan, and you agreed to pay it back. You did not sign anything stating you would agree to pay the loan back only if things remained all nicey-nice in your life. If you can't handle owning this house anymore, and rental is no longer the answer - then sell it or auction it, take whatever you can get for it - and then go on with your life.

We ALL owe more on our houses than what they are really worth. Anybody who has a $200k house with a 25-30 yr mortgage and only pays minimum payments - by time the loan is paid off, will have paid at least $350k for it. Why shouldn't we all just walk away? If you buy a $30 toaster with a credit card, and it is now only worth $5 at a yard sale - do you fail to pay for it when the credit card bill arrives a month later? I know there's a big difference between a $30 toaster and a $200k house - but you still see my point. You agreed to purchase said item, and to just walk away would be considered irresponsible.

A very small percentage of foreclosures may have been the result of some terrible unforeseen tragedy - something maybe you can't blame whoever defaulted. But a lot of foreclosures are brought on because of poor choices. I see so many people out there who blow their money on so many stupid things, and very few people seem to have the ability to save their money for a rainy day. I have no idea what choices may have brought you to where you are today, but I am certain that the bank and all the other people who are going to end up paying for this are NOT RESPONSIBLE for those choices.

I also have a house I could not sell and was forced to rent (at lower than the mortgage was). This house, when I sell it, may be a $40k loss. I have another house that I bought at peak, and has probably lost $150k in value. I lost my job for 3 months due to lack of work (no fault of my own), then was forced to accept another position with a $12k pay cut. My wife was in a major car accident (other person's fault - who was uninsured - she almost died), was unable to work for 6 months, lost her job, and then had to accept a postition with a $20k pay cut. Maybe I am a prime candidate for walking away myself - but I refuse to do that. There is a big difference between what is legally allowed and what is morally right.

Yes, I have had a lot of losses, but I will still bounce back, I will not give up. I have prepared for the future, I have plenty in savings to help me through the hard times. I got this way because of hard work, self-control, and patience. It is amazing what you are capable of when you simply live below your means, and keep your finances under control. My intent was not to toot my own horn or to make myself appear better than anyone else. I just wanted to let you know that I have also had plenty of problems and I have overcome them - and YOU CAN TOO. Take a good hard look at whatever you are doing and make any changes that you can. With some patience and some determination, you CAN overcome this, and your life WILL get better.

Good luck

"I agree with bus driver - the bank agreed to give you a loan, and you agreed to pay it back. You did not sign anything stating you would agree to pay the loan back only if things remained all nicey-nice in your life. If you can't handle owning this house anymore, and rental is no longer the answer - then sell it or auction it, take whatever you can get for it - and then go on with your life."

And the bank is paid interst based on the risk of lending the money.
If they believe the risk of a default is low the rate is low.
If the default risk is high they charge more.

"We ALL owe more on our houses than what they are really worth. Anybody who has a $200k house with a 25-30 yr mortgage and only pays minimum payments - by time the loan is paid off, will have paid at least $350k for it."

Um, no.

If you sell the house and can recover more than the loan BALANCE you are fine.
The interest you pay on the loan does NOT add to the value of the house, and is not used in determining what the value actually is.

The loan can almost always be paid off early with a significant savings in the total interest you will have to pay.

Even with the decline in the market I can still sell my house for significantly more than the balance on the mortgage, pay it off and walk away with money in my pocket.

"Anybody who has a $200k house with a 25-30 yr mortgage and only pays minimum payments - by time the loan is paid off, will have paid at least $350k for it."

"Um no"

Um...YES - in fact, it is much worse than I thought.

I used a simple mortgage calculator found online.
$200k house - 10% down ($20k) = $180k loan
5.5% interest
30 years

If you pay mimumum monthly payments (as most people do) - by time the last payment is made at the end of 30 years - you would have paid $514,000 for this $200,000 house. Thats definitely what I would call paying more for something that what it was worth. And that doesnt include property taxes, insurance and maintenance.

I was not referring to selling the house for more than what was owed. And I also know you cannot ask $514k for this house once you pay it off.

Point still is - we all pay way more for a house than it is worth - and we all do not choose to walk away from our responsibilities.

So if a borrower has a streak of bad luck or discovers that they made some ill-advised decisions, they get out from under their obligations and dump the problem on the lender. And the posts above essentially say that the lender should suffer if they placed confidence in someone whose best promises amount to nothing more than only definite maybies. I keep my promises and that makes me nasty?

No, keeping your promises makes you a person of integrity. Your lack of compassion and judgment of somebody's situation which you do not fully understand makes you nasty. There are some people who walk away from their mortgages just looking for an easy out when they can handle the burden and many of those people are certainly less than ethical. You cannot determine from the mere few paragraphs above if the OP is being unethical or if they have no way out. Personal integrity is a wonderful thing but sometimes many of us are at the whims of situations that are not within our control.

Keeping promises doesn't make you nasty. But things aren't as black and white as you seem to think they are. Sometimes people need to sell, due to lack of work in the area or being transferred, for example. But what to do when you can't sell the house for what you owe and you can't rent it for anything close to enough to cover the expenses?

It is fine to say that the first choice should be to sell and just pay the amount you are short. I did this when we sold and it was difficult but I had the money so I did it.

But not everyone has the cash to do that. Some people get lenders to agree to a short sale. Not all lenders will do a short sale. In that situation, the person may have no viable choice except to default. They can't just manufacture cash to pay the deficiency. I certainly don't recommend defaulted except as a last option, but I don't think it is all that easy to judge that it is always a terrible thing to do.

Too see whether you qualify for IRS debt forgiveness from a short sale..check IRS Publication 4681-Canceled Debts,Foreclosures, Repossessions and Abondonments. This pub is free at irs.gov.

Congress passed the Debt Relief Act of 2007 which forgives IRS debt of short sales, eetc if PRIMARY RESIDENCE for years 2007-2012. Maybe you can somehow qualify it as primary residence, either if you lived there before or maybe can move there specifically for this reason. Also, as brickeye suggests, consult a tax advisor.

The "No" connect was in response to this odd thinking.

"We ALL owe more on our houses than what they are really worth."

What you will will end up paying is NOT what you owe.

You only "owe" the principal balance, not the total of all the payments including the interest.

You pay the interest that has accumulated every month on the provincial balance.
The remainder of your payment is then applied against the principal balance.

Unless you have a loan with negative amortization, the principal balance never increases.

What you actually owe (the principal balance) decreases every month.

Interest is the rent that is paid for the use of other people's money.

Reading some of the comments here just makes me sort of ill. So interesting how some of you are patting yourselves on the back for taking the "high road" and passing such ignorant judgment on others for not following in your footsteps. Understandably some of you have had a rough road complete with medical emergencies, job losses and a host of other difficulties and were able to climb your way back to the top. Good for you. I think it's wonderful that you had the fortitude to get to where you are. But, for some people, the outlook isn't the same. You suggest that we find ourselves here because we spend our money on stupid stuff and end up financially over our heads and then choose to walk away because it's the easy thing to do. Well, NO, for many of us that is not the case. We are very frugal. We do not take vacations, buy new cars, shop till we drop, eat out regularly or do anything financially that is stupid. Some of us are still paying 8 year old medical bills from a child that was on life support for two weeks (we too have our expensive and sad medical story). If the day comes that we HAVE to leave this house we will not be able to afford two households. What are we supposed to do when our house just won't sell? What are we supposed to do when we can't afford to sell our house? My husband will not be able to continue a commute that keeps him in the car for the average 3 hours a day if his eyesight gets worse....what are we supposed to do then? I can't afford to rent this house out....I can't afford to deal with the risk of having destructive tenants...but, I guess I'm supposed to take that risk and possibly end up more in the hole with this house? Is that the recommendation?? What are we supposed to do if my husband loses his job that he has held for almost 9 years because the federal government shuts down his program? Are we supposed to just suck it up and suffer with this house that has been the worst financial drain imaginable? We have suffered with this house. We had an inspection and did everything by the book to buy our first home only to realize after the fact that every major system was failing. Within our first six months we discovered rotten siding, chimney needed complete rebuilding, horrible roof, hot water heater leaking (in the attic and on our newly laid laminate flooring), termites, carpet that made us very sick, windows that were rotten, garage doors that was dangerously rigged and broke, AC unit on it's last leg....oh, those are the just the main things that come to mind. We've managed to take care of almost all those issues that we didn't anticipate dealing with right off the bat. We still can't sell this house and we've put in thousands of dollars fixing stuff on a house that wasn't but 8 years old when we purchased it. We did it because it is our home and we had an obligation to suck it up and press on. But, at some point the financial burden of a house is just too much to continue. Especially when you can't even afford to sell it. SO, please, do tell me what exactly I'm supposed to do???

Sorry for my rant, but it's just really annoying to know that people are so black and white with their comments. Some of you don't mind being a bit hurtful when people are looking for decent advice. You can share your opinion without being rude or ugly. You can offer decent advice on how you would handle the situation without passing judgement and coming across as snotty. It may not be the advice someone is looking for, but at least you could be decent in how you handle your comments and give some good food for thought....

So if times get tough, we decide to let our problem become someone else's problem. That sounds nasty to me.

The only folks that irritate me are the ones using 'strategic default' to escape with no real excuse or the 'flippers' who had no idea what they were getting into.

Though I should thank them for the two REO properties I purchased last fall at bargain prices, at least they did not tear the places apart.

Just last month, a fellow my age, senior citizen by any standard, had his house sold at foreclosure sale. Have known him almost all my life. Built his house in 1978. His wife died in 2002. But about two years before that, they had refinanced the house. They had earlier embarked on trying to each outspend the other on non-essentials and the refi was to get more cash to do more of the same. Another fellow, now serving life for murder, still owes me for money borrowed. Said he could not (before the murder) even make partial payments. But he had cable PLUS Dish Plus TWO different cell numbers at the same time. Plan ahead before incurring debt.

bus, you're clumping people with true hardships in with the same people you explained above? Are you suggesting that anyone who has to short sale/foreclose is the same kind of person that refinances their home and spends all the money for stupid stuff without the ability to pay it back? You're clumping people like me in with the likes of the dude who committed murder? For crying out loud, the man obviously had no morals or priorities. My husband and I don't even have cable in our home. We have one cell phone and no land line. Sometimes I even make my own laundry soap. I don't buy convenience food and we eat out rarely. I don't buy crap at the store and we certainly don't choose luxury spending over taking care of our home and family. I buy one tank of gas a month for my car and the kids and I stay home and entertain ourselves. You seem to wash over the fact that people sometimes have to use all their savings in order to pay off bills that come along unexpectedly. How about having a baby that gets sick and is for all practical purposes dead? Can you imagine the medical bill for that? Well, we can and it wiped us out...and we're still paying for it over 8 years later. We didn't declare bankrupcy or fall in default. We struggled and kept this roof over our heads and are still happily paying that hospital bill every month. We've gradually worked on repairing our broken home as the money has become available. Try building up a decent savings account when you're trying to deal with paying off the people who saved your kid and while repairing a money pit of a house. Somehow you clump people like me and my husband in with the likes of people you just described. You essentially are suggesting that we're no better than them should we have to walk away. I guess it is black and white for you and for people like you. I'm done...

Bleigh - you obviously have had a a bunch of very big problems in your life beyond your control. Yet you continue to do the right thing, pay your bills the best you can, and after all the crap you have been through, you still seem like a genuinely nice and happy person. I totally respect you for that.

I apologize if I came off earlier sounding really cold and unsympathetic to people in this situation. The types of people who keep trying their best to get ahead and still keep getting deeper and deeper in trouble no matter what - then yes, I feel bad for them, and maybe foreclosure could be in their best interest. I have just seen way too many people who are very obviously making the wrong CHOICES, and those are the people I find a hard time feeling sorry for.

I see it over and over again. The people on food stamps, yet they have money for beer, cigarettes and lottery tickets. The people who haven't worked in months or even years - and they aren't looking for work - they would rather suck up as much unemployment as they can. The people who claim disability when they are obviously quite capable of doing SOMETHING - but its easier to mooch off of others.

I have had a lot of bad times myself, but I also realize just how lucky I truly am. I would think if I had some REALLY hard times, I would always handle it and always make it back on top - but I could also be wrong. If I were unfortunate enough to have some REAL ISSUES like the poor people in Joplin, Missouri, or during Katrina so many years ago - who knows, maybe I would be a lazy good for nothing homeless person right now. I can see how big events like this can ruin lives. I know I should appreciate my situation a little better and think of this more often.

One of my family members fell onto some really hard times. Partially no fault of their own, but also because of CHOICES they made. They got a divorce after only 5 years - you could say that wasn't their fault because maybe the other person was the moron. But then again, yes you can put some blame there for picking the wrong person to begin with - and there WERE some trouble signs before they got married. They also ran into trouble with medical bills. They both worked very low salary jobs, had 2 children, no insurance, and they maxed their credit cards out paying the medical bills. Really tough luck? Yes and no. Their CHOICE not to carry medical insuance and their CHOICE to have children before they were ready - both emotionally and financially. And sorry, but plain stupid to max your credit cards out when you have absolutely no hope of paying them off - STUPID. They had bill collectors constantly calling them, they were constantly given money by other family members, and it made no difference. After the divorce, their parents allowed them to move back in with them (rent free) for 7 years. This was the time for them to save their money and pay off their bills, or maybe even train for a higher paying job. Did any of that happen? No. It was party time - they bought all kinds of music CDs, video games, went out to eat all the time, went to concerts, got cool cell phones with cool ring tones, bought themselves cool custom wheels for the car - they did lots of stupid things. Very aggrevating. It embarrassed me that one of my own family members was like this - because they sure weren't raised that way.

This is the way a lot of these types are - when you help them, you truly aren't helping them, and they take advantage of you. I am sorry to lump the better people in with the worse people, but these are the types of people I picture most often when it comes to foreclosures, welfare, whatever. You come to a point where you stop feeling sorry for them, stop trying to help them, and you realize they deserve what they get.

OK then - I guess all that had nothing to do with buying/selling houses, but I just wanted to let you know where I was coming from. I truly wish you the very best of luck in everything you do. I hope it gets better. I hope your husband will think about taking a job closer to home - even if it means a pay cut. Commuting that far is NOT worth it. All the money he thinks he is making by doing that he is actually losing by paying extra gas, higher insurance, more wear and tear on the car, more wear and tear on himself - you get the picture. OK I am finally done. Good luck. Take care.

bus_driver said:

The lender made no profit when you bought the house. And would not participate in any gains realized if the market had risen or does rise in the future. Move on with your life at the expense of the lender? Gee, what a great guy!

That sounds awfully naive to me. As I understand the world we live in, the lender probably profited long ago by selling the mortgage to a third party, who profited by breaking it up into chunks and selling mortgage-backed securities. The current loan administrator will profit whether or not the mortgage goes into foreclosure. Of course, people get hurt - the rubes who bought the mortgage-backed securities, the actual party who holds the note if anyone can figure out who that is, and the neighborhood and the economy as a whole.

But the banks have behaved so badly that's awfully hard to see them as the victims here. The crash was caused by the house of cards built on top of the foreclosures much more than the foreclosures themselves, and many of the unemployed are victims of other people gambling on their homes. If the unemployed weren't still being hurt more than the bankers there would be a sort of cosmic justice to it.

Do a short sale. My friend just finished short sale #2 in FL and it was fairly easy. She claims it has minimal affect on your credit and that "half of FL has a short sale on their credit report -- not a big deal down here."

There is a written agreement between the homeowner and the lender. Some homeowners decide unilaterally on their own to abrogate the agreement. And some here find that abrogation to be at least marginally acceptable under certain circumstances- circumstances decided by the homeowner to be fitting for the action. Now suppose that the lenders should decide, for their own unilateral reason(s), to abrogate the agreement? Fair for one, not for the other?

"Some homeowners decide unilaterally on their own to abrogate the agreement."

The terms are in the contract (note/mortgage.deed of trust), no one is abrogating.

The borrower is simply in default under the terms and the owner of the debt then follows the already defined procedure.

Now suppose that the lenders should decide, for their own unilateral reason(s), to abrogate the agreement? Fair for one, not for the other?

It isn't a matter of fair. It is a matter of legal and other consequences. If a borrower defaults on a mortgage and breaches the agreement, then the borrower is to pay the consequences which may include a deficiency judgment (in many states), damage to credit, etc. Likewise if a lender breaches an agreement, the lender can be sued and has to pay the consequences of the lender's breach. Obviously the legal results that occur when there is a breach will depend on the facts and the law applicable to the particular agreement. For someone deciding what course of action to take, an attorney licensed in that state should be consulted.