Walking away from a mortgage

[Mike80]

Unfortunately due to the state of the economy among other things, my house in Springfield isn't getting any interest whatsoever.

I'm not saying I'm seriously considering walking away yet, but the idea did cross my mind and I had some questions as to the process if nothing else. Anyone ever had to go through this or have to deal with this situation?

I have someone willing to rent the place, but they want a certain number of things done to it which I view to be completely unacceptable in some cases (I'm not putting all new siding on the house when the person who wants to rent it doesn't like the color, that's just too goddamn bad). Some of it is general maintenance stuff which isn't a big issue.

Any help or ideas (or offers) would be greatly appreciated.

 

[DubCoffman62]

Unfortunately due to the state of the economy among other things, my house in Springfield isn't getting any interest whatsoever.

I'm not saying I'm seriously considering walking away yet, but the idea did cross my mind and I had some questions as to the process if nothing else. Anyone ever had to go through this or have to deal with this situation?

I have someone willing to rent the place, but they want a certain number of things done to it which I view to be completely unacceptable in some cases (I'm not putting all new siding on the house when the person who wants to rent it doesn't like the color, that's just too goddamn bad). Some of it is general maintenance stuff which isn't a big issue.

Any help or ideas (or offers) would be greatly appreciated.

I hope you told him to go fuck himself. I'm sorry about your situation, I see it way too much, it scares me. My neighbors left their house a few months ago, I think there were some squatters, I heard some noises and saw a flashlight in the middle of the night once. This shit is getting very bad and I'm afraid if it gets much worse that crime is going to skyrocket. I've already read some stories like this county up in Oregon that can't pay their law enforcement and people are stocking up on weapons. This could get really crazy before it's all over.

 

[buckeyebri]

I know your quandary well Mike. I still have a house in NC that I never got any interest on and had to rent. Getting it rented wasn't difficult, but I am renting it for a hair less than what I pay for it, just so I don't have to walk away from it and/or to not take a huge hit on it. The rental stuff is tough long distance, but we are getting through it reasonably well. With some of the government bailout programs, it can be easy to think that way and for me I already have another house where I am now so no need to look for a new mortgage. For me though, I can't do it in good conscience.

Good luck with everything and if you decide to rent and have questions about anything let me know.

 

[Taosman]

Make every effort to rent it. It could be a good investment long term.
Don't panic!

Wiki...Wall Street Banker
"A bunch of mindless jerks who will be the first against the wall when the Revolution comes!"

 

[THEWOOD]

You have to be careful walking away. Ohio is a recourse state, which means the lender can go after the borrower for the difference in sale price and amount owed. The one out you have is that the judgement can only be enforced for 2 years.

My wife and I have discussed this issue at length, not about us walking away, but about others. You hear many "stories" of people who go out and buy a new house and a new car, then they walk away and destroy their credit. I believe it is also taking about 18 months on average to even be kicked out once you stop paying.

 

[CleveBucks]

My advice would be to pay your mortgage and live up to the responsibilities that you agreed to when you bought it. Otherwise you're just fucking over the rest of the people in your neighborhood when your bank-owned house sits vacant or is sold for pennies on the dollar.

 

[calibuck]

Not sure how the law reads in Ohio, but in Cali, if you 'walk away' the house stands as collateral for the loan. In Texas, however, you are still personally responsible for the loan regardless of the value of the house. Ergo, if the bank sells it for $1, you still owe the amount of the loan not covered. Better check it out. Credit rating will take a serious hit. No purchase for 5-7 years. (Unless single, so get married and have her purchase w/o you on the deed or mortgage).

Also taxable 'gain' on the mortgage if you leave it. You are 'making money' if you have less debt (happened to me once on an apartment bldg in Arizona). Cost me the loan amount over depreciated value as income.....

Plus, Mike is right, sometimes you gotta just own up to it and pay it. Rent to defease your mortgage (you'll pay less in net outflows), but being a landlord is a pain in the [Mark May]. My house is worth about $200,000 less than bought it/put into it, but not moving so hope will come back. Prices will, but hope I'm still alive to see it.

Ultimately, you do what you have to do. If your cash flow cannot handle it, minimize your losses and do what's best for the welfare of your family. We all would, regardless of what we say in print. The banks have more money to handle the losses than you do. Renegotiate the rates? work out a deal with them? Let them know it's redo or walk, and they might be willing to negotiate (or not), but you never know until you try.....

Good luck and God Bless,


:gobucks3::gobucks4:

 

[sandgk]

Rent it out.

Tell the lessee to forget about new siding. Give them the maintenance items.

Tell them if they want a new color they can paint it themselves and you'll pay for the paint.

Take the passive losses you likely will incur as your only joy every April 15th.

Keep the lease at a specified length - oh - and get someone you trust nearby to handle "site management" on your behalf, or hire a company to run that interference. That way the lessee isn't bugging you day and night - about siding, or other minutiae.

 

[PlanetFrnd]

My advice would be to pay your mortgage and live up to the responsibilities that you agreed to when you bought it. Otherwise you're just fucking over the rest of the people in your neighborhood when your bank-owned house sits vacant or is sold for pennies on the dollar.

I'm guessing from Mike's MO on this site, that the above would be his first choice, if anywhere near feasible. I am, in a [literally] perverse way, impressed by your comment. Usually, moralistic tough-talk is reserved for poli-forum strawmen.

 

[muffler dragon]

Mike:

I'm going through a default process right now. It's been a raw deal with my primary mortgage provider for some time, and I am essentially going for a strategic default/foreclosure. For me, the decision was "easier" to make, because Oregon is a non-recourse state. Feel free to PM if you have any questions/comments/concerns. I highly suggest that you look into legal counsel in this mess before you make a decision on your own. I have an attorney and he has been indispensible on helping me make the proper decision.

My advice would be to pay your mortgage and live up to the responsibilities that you agreed to when you bought it. Otherwise you're just fucking over the rest of the people in your neighborhood when your bank-owned house sits vacant or is sold for pennies on the dollar.

Quite a myopic statement without having all the background to Mike's or anyone else's situation.

 

[Thump]

Quite a myopic statement without having all the background to Mike's or anyone else's situation.

I do not believe so.

I believe he is speaking more to the prevailing idea in today's society that an agreement means nothing and that people are "entitled" to being bailed out.

Maybe it was my upbringing but when you sign your name on a dotted line or shake on an agreement, you live up to it.

 

[buckeyegrad]

While not making any judgments on any individuals, I certainly understand Thump's sentiments. Having watched an in-law go through bankruptcy a few years ago--one that had recklessly spent money and gone into debt while the times were good--I couldn't help but feel that he had stolen money from those who had extended him credit over the years.

 

[muffler dragon]

I do not believe so.

I believe he is speaking more to the prevailing idea in today's society that an agreement means nothing and that people are "entitled" to being bailed out.

So, at what point in Mike's tenure here, do you believe that that statement categorizes how he's treating the situation?

Maybe it was my upbringing but when you sign your name on a dotted line or shake on an agreement, you live up to it.

Yep. I gather that, and I applaud you for never having the opportunity to have to go back on your word. FWIW, I consider this an amoral situation. Thus, the consideration that you present may linger, but it's by no means at the forefront.

 

[muffler dragon]

I couldn't help but feel that he had stolen money from those who had extended him credit over the years.

Which to me speaks to the culpability on both sides.

 

[buckeyegrad]

Which to me speaks to the culpability on both sides.

Well, you will get no argument from me that in our society, credit is obtained too easily these days. However, part of the reason is because we have eliminated the risk too much on both sides of the equation--allowing those who use credit to walk away from their obligations and allowing those who extend the credit to recuperate their losses through government bailouts and other financial advantages.