[jinxs50]

I have spent most of this morning reading through various threads on this subject. I have seen a lot of great info as well as a lot of conflicting information. I reside in Florida. I purchased my home almost 3 years ago. I am in the final months before my adjustable arm will begin to increase my payments. I have an 80/20 loan with two different lenders. I have never been late on a single payment but I have maxed myself out totally with CC and other means just trying to keep myself afloat while my insurance, property taxes and HOA fees keep rising. After calling my bank and asking what my options are...I realize I dont have any. I was told to "weather" out the dying market and although my payments will increase $200-$400 each year with a home that currently is showing $40K in NEGATIVE equity...I am starting to think foreclosure is my option. I know there are things such as a short sale but have also been told that you have to be in default, and the lender has to agree which is not common. I really am trying to find someone who has recently gone through the process that can offer some advice. What exactly happens in the process aside from my credit being shot? How does this affect my taxes? The judgement that sometimes the lender can put against you..is that common in Florida? Also I heard the gov passed something with a 1099 in Dec which would be waived for the next 5 years for people going through this? Please just friendly info I am looking for. This has been a tough choice and really stressful but I think it is time I cut my losses and rent and now pay down the $10K in credit card debt I have racked up in this process.

Thank you for your help.

[heydade]

if you sell through a short sale, there was a new law that became effective in Dec/2007 or Jan 2008 that says you CANNOT be taxed on the difference in price between what you owe and what it sold for. So don't worry about that. Deficiency judgements are not that common....but the lender does have the right to come after you for the difference in price. Again, not common....but CAN happen. Being that you have two loans....the 2nd note holder WILL probably come after you for the difference....this may or may not mean wage garnishment. If you are going to walk away....try to get paid 1099 and make sure to change your phone number, mailing address and really "lay low" and be a ghost for a couple of years. By Florida Law, the statue of limitations on deficiency judgements is 4 years....so after 4 years of being a ghost and not being able to be contacted (served), you should be in the clear. Good luck !

[Ladywithafan]

Your situation is going to be come the "norm" very shortly...loans are getting called in and home equity lines are now being frozen...this will be impacting a huge number of homeowners, not only in Florida but across the board....

[nanwalt3]

This is good info, the law I thought also said that shorts in 2006 would be included so they cannot be taxed on the short side. Let's face it there are going to be so many in this situation, it will probably take more then 4 yrs to sort thru.
If your house is $40,000 less than when you bought it,,,,if you can't sell it and break even, the mortgage co certainly won't be able to. So yes be a ghost for 4yrs, (check the statute to be certain that is the proper time). This means,,,never,,,never give them any communication in writing. If they do call you and you tell them to stop, they'll ask you to give it to them in writing. Once you give them any written instructions the time starts over again and you'll go another 4 yrs. from that date.
You may want to consider deeding back in lieu of 4closure if you know you're going in this direction. This saves them attorney fees, etc. so the shortage is not as great. Good luck to you and all the others out there in the same boat.

Originally Posted by heydade

if you sell through a short sale, there was a new law that became effective in Dec/2007 or Jan 2008 that says you CANNOT be taxed on the difference in price between what you owe and what it sold for. So don't worry about that. Deficiency judgements are not that common....but the lender does have the right to come after you for the difference in price. Again, not common....but CAN happen. Being that you have two loans....the 2nd note holder WILL probably come after you for the difference....this may or may not mean wage garnishment. If you are going to walk away....try to get paid 1099 and make sure to change your phone number, mailing address and really "lay low" and be a ghost for a couple of years. By Florida Law, the statue of limitations on deficiency judgements is 4 years....so after 4 years of being a ghost and not being able to be contacted (served), you should be in the clear. Good luck !

[Wendyb0077]

I guess there will be a lot of ghosts out there in the next few years. It's a damn shame in a country like ours that people are suffering like this. I could write a book with stories I have heard over the last couple of years. Good hard working people that just can't pay all of their bills due to job loss or sickness or some unexpected issue that wipes them out. All that is left when the savings is gone is credit cards, equity loans and those convience checks.People get deeper and deeper into debt hoping something will happen to fix the mess. It just don't get better and the next thing they know the house payment is late. Then try and get two months payments together when you can't get one. Horrible!!!! I feel for you all!! We are struggling too. So let's all take a deep breath and become invisible

Originally Posted by heydade

if you sell through a short sale, there was a new law that became effective in Dec/2007 or Jan 2008 that says you CANNOT be taxed on the difference in price between what you owe and what it sold for. So don't worry about that. Deficiency judgements are not that common....but the lender does have the right to come after you for the difference in price. Again, not common....but CAN happen. Being that you have two loans....the 2nd note holder WILL probably come after you for the difference....this may or may not mean wage garnishment. If you are going to walk away....try to get paid 1099 and make sure to change your phone number, mailing address and really "lay low" and be a ghost for a couple of years. By Florida Law, the statue of limitations on deficiency judgements is 4 years....so after 4 years of being a ghost and not being able to be contacted (served), you should be in the clear. Good luck !

[Momma_bear]

Originally Posted by Wendyb0077

I guess there will be a lot of ghosts out there in the next few years. It's a damn shame in a country like ours that people are suffering like this. I could write a book with stories I have heard over the last couple of years. Good hard working people that just can't pay all of their bills due to job loss or sickness or some unexpected issue that wipes them out. All that is left when the savings is gone is credit cards, equity loans and those convience checks.People get deeper and deeper into debt hoping something will happen to fix the mess. It just don't get better and the next thing they know the house payment is late. Then try and get two months payments together when you can't get one. Horrible!!!! I feel for you all!! We are struggling too. So let's all take a deep breath and become invisible

The OP is not facing some unexpected issue. He financed 100% of the value of his home, leaving himself no wiggle room should the market decline. He took adustable rate loans that he HAD to know would increase in cost at some point. This was all forseeable.

I DO feel bad for folks who are losing their homes but let's not pretend that this was something that nobody could possibly have forseen. Not everyone took a 100% mortgage and not everyone took an adjustable rate loan. If the OP can afford the payments I would say just last out the market. If not, contact an attorney to minimize the stain on your credit.

[FHMullane]

One cannot count on property values rising and the economy skyrocketing. Just needed to see what the government was doing... over spending etc. People needed to live within their means. Too many people wanted houses they could not afford and too many lenders lent too much money without checking the buyer or the property. I know of people who walked who could have made it work but it seems it is easier for some to walk.

[TNRyan23]

I'll offer this advice...

Before you get foreclosed on and your credit goes south, make sure you rent something.

[Momma_bear]

Originally Posted by FHMullane

One cannot count on property values rising and the economy skyrocketing. Just needed to see what the government was doing... over spending etc. People needed to live within their means. Too many people wanted houses they could not afford and too many lenders lent too much money without checking the buyer or the property. I know of people who walked who could have made it work but it seems it is easier for some to walk.

It's just my opinion but I believe that if you borrow the money you should pay it back unless you truly can't. Bankruptcy/foreclosure is not intended to get people out from under bad investments. It's intended for those who truly do not have the means to pay due to job loss, medical problems, etc. To walk away simply because an investment went sour is immoral.

[Lilybeans]

Originally Posted by Momma_bear

It's just my opinion but I believe that if you borrow the money you should pay it back unless you truly can't. Bankruptcy/foreclosure is not intended to get people out from under bad investments. It's intended for those who truly do not have the means to pay due to job loss, medical problems, etc. To walk away simply because an investment went sour is immoral.

I agree. Walking away from a house just because it is worth less now than what you paid for it is wrong. You purchased it as a place to live. You didn't purchase it to sell it right away.

Cut back on spending. Get rid of Direct TV. Get a second job. Foreclosure is not something you choose to do because it is expedient.

What kind of car are driving? What are your car payments? Do you belong to a gym? Have a boat?