U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > U.S. Forums > Florida
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
Closed Thread Start New Thread
 
Old 04-21-2008, 11:41 PM
 
Location: Fort Worth, Texas
10,732 posts, read 31,746,623 times
Reputation: 6774

Advertisements

Given the houses location, I would rent it as a vacation home. You should be more then able to bring in the amount of money to pay the mortgage, taxes and insurance on what you make on the weekly renting.

I have a friend who lives in Miami who owns several properties and she clears enough in 6 months to pay the utilities, taxes, insurance and mortgages.

Frankly I can't imagine just walking away from your home and screwing your credit. I would find another way.

There are alot of people who still come to Florida for the winter from colder climates. Advertising your home to the European market will bring in people who have alot of money to spend, check out how much the dollar is worth next to the British pound. There are management companies who can set you up on this entire process.

Hold on to the house until real estate bounces back and you can sell it for what you should be able to.

 
Old 04-21-2008, 11:55 PM
 
1,315 posts, read 3,449,439 times
Reputation: 319
Quote:
Originally Posted by LikeAStone View Post
We relocated to Fort Pierce, FL in July 2005 to be closer to our family.

We bought our home for $242,000. Unlike many other people, we put money down. Less than 10%, but still, we put money into the home.

5 bedroom, 3 bath, roughly 2,000 sq ft under air. Built new in 2005. Overall, a very nice home, nice neighbors, community pool, fitness center, 24-hour gated security, three lakes and a huge clubhouse.

We felt like we made a decent decision. 10 minutes to the beach...10 minutes from family support for raising our kids.

July 2005. We close on the home. Mortgage is not anywhere near too expensive. Not too much house for us. Even now, the mortgage is roughly $2,100 a month. God has been good, and we have no issue with being able to afford the house.

At closing, the home is appraised for $300,000. We were looking for a home, not a flip, so we took no interest in cashing out the equity and selling or using the equity to buy other things. We never refinanced.

In three months, it will be three years we have lived here. I am co-owner of a business and we are about to centralize our operations in Raleigh, NC and start building a bigger staff. We have employees in PA, IL and FL.

Naturally, I need to sell my home so I can move to NC. I investigated homes selling in my area and found that the extraordinarily high number of foreclosures in my area has driven the prices waaaaaaaay down.

My same model house was just sold in a short sale for $129,000. The next seven houses to the right of me are all sitting empty. Every one is padlocked and some have bank notices on the front door. There are nearly 1/3 of the nearly 500 homes in my community sitting empty. Not even able to be rented. There are huge 3,000+ sq ft homes selling for in the 140s on my street. Foreclosures mostly.

We had every intention of living here for years to come, but the business is growing and we need to centralize our core team of developers. Raleigh is a hotbed for tech firms like ours and after much research, we feel our headquarters needs to move from Chicago to Raleigh.

I get plenty of interest in my home. Dozens of inquires have come in. Not one showing. We have staged the home to sell and made lots of upgrades. It looks amazing and as soon as the prospects start investigating the area, we never hear back. Not once.

What to do? Can't get anyone interested enough to buy. We have dropped the price of the home below the latest assessed value from February 2008. It now sits on the market in the low 170s. Nothing doing. Can't sell it.

I have nearly perfect credit. My credit score is a few points away from 800 out of 830 according to Experian. The other two are even higher. I have never missed a payment...on anything.

Bank won't talk to me about adjusting the payoff of the loan down to the latest tax assessment of $180k. Even at 180k, I am looking at a $62,000 loss. At this point, the bank would be fortunate to get $130k in a foreclosure sale.

To start discussions with the bank about a short sale or deed in lieu of foreclosure, I have to miss a minimum of three payments. That will be roughly 200 points off my credit score. Snapped right off a credit score that I have spent years building by doing the right thing and spending responsibly and within my means. 200 points off my score just to TALK about the possibility of a short sale. A short sale requires a BUYER, mind you...something I have been unable to scare up. Form what I understand, even if I do find a buyer who will to take the house for say $150k, there are no guarantees that the bank will agree to write the difference off the value of my loan. I may be nailed with a summary judgement for the difference.

Short sale, foreclosures and DIL of foreclosure all slash from 250-300 points or more off your credit score. What is the difference? Who cares.

I have three options left:
1) Find my own buyer for the home and take out a loan for over $100,000 to finance the cash I will need at closing to satisfy the difference between the sale price and the loan payoff. This assumes that I can find a buyer and that a bank will give me no-collateral personal loan for over $100k. Two EXTRAORDINARILY UNLIKELY scenarios.

In this example, I will be paying the mortgage without the home for at least 15 years. Money that would go into retirement and education for my kids.

2) Stop paying my mortgage, after three missed payments I can hopefully begin negotiating with the bank for a short sale. Again, I have to find a willing buyer...and again, the bank will have to agree to swallow over $100k in a write-off of the loan. I get a 1099 for the difference between the sale price of the home and the remaining loan balance. Thanks to the mortgage debt forgiveness act of 2007, instead of having to claim $100+K in additional income for that money, like years past, the federal government will not view that money as income and I won't owe taxes on it. Since I only have one mortgage, that mortgage is for my primary residence, and I never refinanced, I qualify under the terms of this Act.

In this scenario, I still take a 200+ point hit on my credit and I have a black mark on my credit that will not go away for 7-10 years (depending on what you read). This will make purchasing another home in Raleigh...OR EVEN renting a home, very difficult and in all liklihood, impossible for many years. Lenders will certainly run my credit and landlords almost all do the same.

3) Walk away. Mail in the keys. Take the same 300 point hit on my credit that the foreclosure would take away eventually anyway. Start rebuilding my credit immediately, instead of months/years from now. The home will be sold as a foreclosure and I will get a 1099 in the mail to claim the income on my taxes. I am forgiven that tax burden by the Act I mentioned above...so that is just paperwork. Will I be able to purchase another home for my family in Raleigh, NC? Not after that 300 point credit hit...NO WAY. Will I be able to rent a home/townhouse? Almost certainly NOT. Where will we live then? Sigh.

I did everything right and on the up and up. No stated income highly adjustable ARM, no Zero-down crap...nothing but straight and narrow. But now, because it seems the bank was giving away loans to anyone who wanted one...without income verification, or requiring money down, people with bad credit and no money invested are simply walking away. Leaving people like me holding a rapidly depreciating "asset" that I am unable to sell for even 50 cents on the dollar.

I have consulted with two real estate/foreclosure attorneys. Both gave me the same advice...mail in the keys. Walk away now and start over. Bankrupcy would not even be helpful...I have ZERO other debt.

What to do? I feel I have no choice but to walk away.

Convince me I am wrong.
buy the Raleigh house first. Like now. Good luck
 
Old 04-22-2008, 06:03 AM
 
24 posts, read 46,531 times
Reputation: 23
Quote:
Originally Posted by Lindsey_Mcfarren View Post
Given the houses location, I would rent it as a vacation home. You should be more then able to bring in the amount of money to pay the mortgage, taxes and insurance on what you make on the weekly renting.

I have a friend who lives in Miami who owns several properties and she clears enough in 6 months to pay the utilities, taxes, insurance and mortgages.

Frankly I can't imagine just walking away from your home and screwing your credit. I would find another way.

There are alot of people who still come to Florida for the winter from colder climates. Advertising your home to the European market will bring in people who have alot of money to spend, check out how much the dollar is worth next to the British pound. There are management companies who can set you up on this entire process.

Hold on to the house until real estate bounces back and you can sell it for what you should be able to.
What do you know...a completely cogent opinion with real, well-constructed recommendations.

However, there are a couple negatives to consider in that scenario:

I am scared enough about getting full-time renters and the damage they will cause to the home. Let alone week-to-week renters. Ugh! It wouldn't hurt to investigate a couple agencies to see what kind of policies they have in place regarding who covers damage and a weekly cleaning service.

I don't know what weekly rentals would bring in through an agency in terms of revenue, but regular rental fees advertised in this area are less than 50% of my monthly carrying cost for this home (mortgage, utilities, HOA fees, lawn service, etc.)

The other issue, which is, frankly, a deal-killer: HOA. The HOA gets wind of this, which they will, and I am smoked. Every rental contract must be approved by the HOA. No way they agree to this. The rental rules are partly to blame for such a high percentage of houses in this community either owned by a bank or soon to be owned by a bank.

Were I not in this community under the strict rules here; your suggestion would be realistic.
 
Old 04-22-2008, 06:09 AM
 
24 posts, read 46,531 times
Reputation: 23
Quote:
Originally Posted by 12buttons View Post
buy the Raleigh house first. Like now. Good luck
Looking more and more like the path out of this mess.

I have given myself another few months of wait and see time. If after some more research and introspection, another option fails to present itself, I will bump my salary and apply for a second loan in Raleigh. No way that I fail to do that before stopping payments on this home and forcing the bank to begin negotiating. I am currently drafting the needed documentation in the event walking away becomes a reality.
 
Old 04-22-2008, 06:43 AM
 
Location: Pittsburgh, PA
1,303 posts, read 2,666,501 times
Reputation: 1131
Default Foreclosure or Short Sale?

Quote:
Originally Posted by LikeAStone View Post
Looking more and more like the path out of this mess.

I have given myself another few months of wait and see time. If after some more research and introspection, another option fails to present itself, I will bump my salary and apply for a second loan in Raleigh. No way that I fail to do that before stopping payments on this home and forcing the bank to begin negotiating. I am currently drafting the needed documentation in the event walking away becomes a reality.
You are truly in a no win situation, but I genuinely appreciate how you are rationally approaching this problem. It appears that you have explored your dilemma from all vantage points and possible scenarios. Are you not concerned that if your house goes into foreclosure that you may still be "on the hook" for the difference between the sale price and the amount of your loan? I would think that would be a triple hammer for you (credit hit, bank fees and possible loan repayment).

The prospect of negotiating with the bank for a "short sale" appears intriguing. Given from your earlier posts that your home is worth probably $100000 less than you paid for it, what figure do you believe that the bank will accept in the short sale? Does your credit take a significant hit with this negotiation?

I am sorry that you are in such an unenviable position, but your posts are most insightful and informative.
 
Old 04-22-2008, 09:32 AM
 
24 posts, read 46,531 times
Reputation: 23
Quote:
Originally Posted by Retiredcoach View Post
You are truly in a no win situation, but I genuinely appreciate how you are rationally approaching this problem. It appears that you have explored your dilemma from all vantage points and possible scenarios. Are you not concerned that if your house goes into foreclosure that you may still be "on the hook" for the difference between the sale price and the amount of your loan? I would think that would be a triple hammer for you (credit hit, bank fees and possible loan repayment).

The prospect of negotiating with the bank for a "short sale" appears intriguing. Given from your earlier posts that your home is worth probably $100000 less than you paid for it, what figure do you believe that the bank will accept in the short sale? Does your credit take a significant hit with this negotiation?

I am sorry that you are in such an unenviable position, but your posts are most insightful and informative.
Q) "Are you not concerned that if your house goes into foreclosure that you may still be "on the hook" for the difference between the sale price and the amount of your loan? I would think that would be a triple hammer for you (credit hit, bank fees and possible loan repayment)."

A) Concerned... more like TERRIFIED. Florida is one of the few remaining states where deficiency judgments on a defaulted Mortgage Note are still possible. I have spoken two three real estate attorneys now. Every one said the same thing..."Could it happen? Yes. Have I even seen a deficiency judgment assessed in your situation? No." One of the guys I consulted with has 20 years experience dealing with foreclosures in FL.

Fact is, this house has been declared my homestead. I never refinanced and took equity out of the home (my lender was pushing hard to encourage me to grab the $50k in paper equity available to me at closing to eliminate PMI and pay off my minivan, boy am I glad I did not listen). Given that I never took money out and I don't owe a second mortgage (like most speculators who were leveraging 110% of value and higher at the time), a deficiency judgment is HIGHLY IMPROBABLE. If you walk away from a first and second mortgage...that lender in #2 position will go after the deficiency judgment nearly EVERY time. Are there any guarantees that I won't get slapped with a judgment? No. However, given "bubble" in this area and the facts in my situation and the extremely low risk of my lender pursuing a judgment, my legal counsels believes that I should have walked away by now and not even give it a second thought.

Q) what figure do you believe that the bank will accept in the short sale? Does your credit take a significant hit with this negotiation?

A) What do I believe the bank will accept? I am not entirely sure. Wish I knew. From what I have read, this is all based on negotiation and many lawyer letters. I have also read that 1 in 10 proposed short sales are ultimately negotiated down to the offered sales price on the home. This was information published by a company that claims to have handled thousands of foreclosures/short sales. I have little faith that the bank will say..."$100,000 less than the loan payoff, sure, no problem."

A short sale is roughly 2/3 or so of the credit score impact of a foreclosure. Short sale typically knocks 200 points off and foreclosures typically knock off 300 points. Both are on credit for 7-10 years. The impact is lessened over time, but the black marks remain for that long. As soon as you start missing payments (on purpose or otherwise) your credit score starts taking a beating.

Not so Fun Fact - It is more detrimental to your credit score to go 60-90 days late on CC payments than to keep your CC payments current and take the hit from a foreclosure.
 
Old 04-22-2008, 10:57 AM
 
2,838 posts, read 9,027,023 times
Reputation: 2874
Quote:
Well, in retort when you buy a house there used to be an assumption that you wanted to put down roots in a place and make it home. If you are willing to leave a place simply for a better job... how much "home" is there really? That is the third alternative- end your business and stay where you are at. nobody is holding a gun to anybody's head and forcing you to move to North Carolina or Connecticut.
I suppose no one's holding a gun to our heads, but when there are simply no jobs available, then starvation and homelessness is being held to our heads, no? DH could conceivably go get a job at Walmart, maybe, and we would still lose our home, because a minimum wage paying job is simply not going to pay the bills. I'm talking house payment, minivan payment, utilities, groceries, gas... no credit card or BMW bills. I think you're being idealistic and unrealistic at best.
 
Old 04-22-2008, 11:25 AM
 
Location: Central Fl
2,903 posts, read 10,924,521 times
Reputation: 2860
Likeastone,

I agree with Retiredcoach's last post.
While I have not posted in this thread before, I have followed it with interest.
This post and your situation has for me, "Put a face" on this whole real estate situation in a way no other article to date has done.

I truly feel for your situation and pray for you to have wisdom and discernment as you feel your way through this.

Because I am still living in NY, I have not been exposed to the real estate problems that florida has had, other then seeing Zillow's "Zestimate" on my Florida home go down.....

I'm fine with that, and do not regret my buy down there. That being said, i thank you for your honest posting of your situation.....I have learned much from it.

Frank D.
 
Old 04-22-2008, 02:31 PM
 
944 posts, read 3,533,846 times
Reputation: 578
Quote:
Originally Posted by beanandpumpkin View Post
starvation and homelessness... BMW bills
Wait, you are in a position to go from BMW to homeless?
 
Old 04-22-2008, 06:41 PM
 
2,838 posts, read 9,027,023 times
Reputation: 2874
Quote:
Originally Posted by Muggy View Post
Wait, you are in a position to go from BMW to homeless?
Did you actually read what I wrote, or just having fun cutting and pasting?

I said that if one can't pay their bills, starvation and homelessness could result. I also said that I was talking about utility/food/housing/gas bills, NOT BMW bills.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Closed Thread


Options
X
Data:
Loading data...
Based on 2000-2016 data
Loading data...

123
Hide US histogram

Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > U.S. Forums > Florida
Similar Threads
Follow City-Data.com founder on our Forum or

All times are GMT -6. The time now is 06:48 AM.

2005-2019, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 - Top