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Hi Wendy I think now the short sale is a good idea , trying to work something out, my cousin did it and it worked well for them, however the loss to the bank was really the commision for the real estate, so I guess that is why the bank jumped on it.
Hi Wendy I think now the short sale is a good idea , trying to work something out, my cousin did it and it worked well for them, however the loss to the bank was really the commision for the real estate, so I guess that is why the bank jumped on it.
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.
you didnt have enough income thats wy you lost the home if you had been saveing to refi when the rate went up about 7k you could have refied even if the value went down to a fixed rate and you should have put more money down when you bought this is a good lesson for you dont buy unless you have the full amount.
you didnt have enough income thats wy you lost the home if you had been saveing to refi when the rate went up about 7k you could have refied even if the value went down to a fixed rate and you should have put more money down when you bought this is a good lesson for you dont buy unless you have the full amount.
I gotta say...sounds like you've been drinking. j/k
Seriously, though, you make zero valid points. At least none that I can de-code.
1) I didn't "lose the home." I still am very much here and not missing payments...on anything.
2) If I had done a refi, I would be really, really screwed right now. Since having done so would have disqualified me for the mortgage debt foregiveness act of 2007. I would be issued a 1099 from the lender for any difference between the sale price and the loan payoff (assuming I can work out...a very unlikely...short sale or deed in lieu of foreclosure). I would have to claim the shortfall as income on my taxes. Same scenario...I am protected from having to pay income taxes on the estimated $100 shortfall if I end up walking away and entering foreclosure.
3) I did not get a shady loan. I think I explained that already. Full doc. I got a great interest rate without having to put more than 10% down. Why, oh why, would I have put more down??? That money would be gone right now too along with all the other "equity."
Your problem is you bought at the wrong time. You should have rented. It doesn't matter if you have a gated community and granite counter tops- if nobody can afford to buy a house for the asking price, they won't buy. Florida has a lopsided economy and can't support the housing prices people are trying to ask for. Your own business is a perfect example, you are locating your company in Raleigh, North Carolina... not Florida. Lots of other businesses are doing the same exact thing- the result is a peon economy that can't support 300,000 dollar homes.
Whatever you do, I would caution against taking a hit on your credit. Good credit is hard to come by. You'ld be better off taking a financial loss and writing it off your taxes than hurting your credit. So many people out there have bad credit and it hurts them in the long run.
We're in roughly the same situation. I have no advice, only empathy... we're moving to CT for DH's job, and we can't sell our home for half of what we paid for it. We did not over-reach when buying our home, did not take out a risky mortgage, and have been able to pay for everything every month no problem... until DH lost his job here, was unable to find another, and now we must relocate across the country. We're trying to find a tenant to pay for half of the mortgage payment so we can hold onto the house for antoher year or so, maybe the market will go back up.
Ugh, this economy sucks! And people automatically assume you did something wrong or made a terrible decision, when really, it's no one's fault.
Guess you prefer the McCain, "F*** 'em" approach???
I was thinking about it though and wondering if your business partner would let you use the business' credit to get back on your feet if you walk away from the house. At least use it to rent a place in NC and purchase a vehicle when you need to.
McCain wasn't my first, second or third choice...but he is the best remaining option for a social conservative.
As for the business credit thing...yeah, we have plenty of reserves that I can tap into. I can pay myself a much higher salary in order to qualify for 2nd home loan for a home in NC and then start negotiating with the bank on an acceptable short sale price on my current home. I have a few months before I need to start drawing a higher salary in order to lock in the pre-approval.
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.
People either need to rent, if they think they are just going to stay for a few years in search of that career oppurtunity, or BUY AND PUT DOWN ROOTS. Get involved in your community. Start a business HERE. Make Florida a better place. Otherwise, stop complaining. Hand in the keys and lose credit or take the financial loss. Just do something- people have choices it's not like people are being forced to do anything.
Your problem is you bought at the wrong time. You should have rented. It doesn't matter if you have a gated community and granite counter tops- if nobody can afford to buy a house for the asking price, they won't buy. Florida has a lopsided economy and can't support the housing prices people are trying to ask for. Your own business is a perfect example, you are locating your company in Raleigh, North Carolina... not Florida. Lots of other businesses are doing the same exact thing- the result is a peon economy that can't support 300,000 dollar homes.
Whatever you do, I would caution against taking a hit on your credit. Good credit is hard to come by. You'ld be better off taking a financial loss and writing it off your taxes than hurting your credit. So many people out there have bad credit and it hurts them in the long run.
I agree on the Florida economy. We never had plans of hiring anyone here or locating the business here (at least not Fort Pierce). We are incorporated in IL, and most everyone works, in Chicago. The cost for quality programmers is about 20% lower in Raleigh. When you are talking about positions that pay $160k - $250k, that is a lotta scratch. Overall, costs are lower and the tech sector is much hotter in RTP/Raleigh. The salary is just one example.
I moved to Fort Pierce for three simple reasons...my wife, my son and my daughter. We have a large family support blanket here and my kids are very young. Having cousins, aunts, uncles and grandparents around means a big bump in quality of life. Would I do it all over again...NOT WITH THIS HOUSE. I would rent a condo on the beach and call it a day. Anyone have a way-back machine handy?
As far as your suggestion of taking a financial loss...what do you mean?
I have to move. The house is now worth about $100,000 less than I owe. If I can by some miracle find a buyer and swing a short sale...Credit ruined anyway. If I stop making payments and try to negotiate a payoff...credit ruined anyway.
What I think you are suggesting is that I take a loan for $100,000 to pay off the balance of my loan (again...ASSUMING I CAN FIND A BUYER AT $130k). How is that going to be less damaging on my family's financial future? Answer: It isn't.
I have an almost 800 credit score. I can tell you right now, if I was offered a hit of 200-300 points on my credit in exchange for $100,000 cash, there is no question I would take the cash and stuff it in my retirement.
In a conservative investment, assuming only a 6% rate of return (maybe a whole life vehicle - NMFN got me 8% the last two years), that $100k would be $541,000 in thirty years. That is without putting one more dime in principal in the account other than the 100k.
What do you think the better credit rating would net me over the same time frame in better interest rates over the next 5 years?
Even if I DID have $100k laying around and could "afford" to pay off the balance of the loan at closing...why should I even consider for a second making that sacrifice?
Not when I see all my neighbors foreclosing on their zero-down, adjustable ARMs and walking away, not when I see Bear Sterns getting bailed out, not when I see inflation rising unchecked due to the devalued glut of dollars the Fed is printing and pumping into the economy...NO FREAKING WAY. Why be the only responsible one in the face of such reckless irresponsibility?
I am a dying species...a middle-class American. The rich get richer and the poor get poorer. The gap only gets wider in economies like the one we are in.
Many of the posters here have written oposition to my belief that walking away is a justifiable path for many well-intentioned, middle-class families like mine, who played by the rules and got screwed. Many, like me, have always played by the rules and we took our lumps when we were left holding the bag. I a'int holdin' the bag on this one.
My decision will ultimately be devoid of any emotion and "morality." This is business, pure and simple. There are contracts and laws for a reason. I will work within the contract/law and take whatever punishment (credit score) I am dealt.
I pay the mortgage and I get to live here. I don't pay the mortgage... the bank tells me to get out and sells the property to someone else. Period.
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.
People either need to rent, if they think they are just going to stay for a few years in search of that career oppurtunity, or BUY AND PUT DOWN ROOTS. Get involved in your community. Start a business HERE. Make Florida a better place. Otherwise, stop complaining. Hand in the keys and lose credit or take the financial loss. Just do something- people have choices it's not like people are being forced to do anything.
Things change my friend. If this was a medical condition forcing the move or something worse, few would be pointing fingers.
Stay in Fort Pierce and quit my job and end my business. Sure. I can take a job locally in the booming construction business. Oops. There is NOTHING here. The average salary in Fort Pierce is $30,000. I am in the technology sector. There are ZERO jobs here for me and no pool of applicants should I want to headquarter my business in Fort Pierce.
What you are suggesting is pure nonsense. Yours is a baseless, weak argument without one shred of practical advice.
What you are suggesting is that I fly in the face of human history and ignore a fundamental rule of every successful civilization in the history of the world and settle AWAY from where the jobs are. Brilliant. I will simply start farming my zero-acre lot and go on unemployment and become a burden of the state.
NO ONE would do what you are suggesting were they in my position. NO ONE.
Let me get this straight:
If you were me, you would, on principle alone, throw away your college education, years of business experience and honing your skill set in technology, fire 7 employees of yours, give back millions of investment capital, tell thousands of clients...sorry, we are closing our doors, FORECLOSE on the house ANYWAY because you would lose your job, find another career doing god knows what in Fort Pierce, and pretty much abandon everything you have worked your life building...because you think it would be immoral to walk away?
I call BS.
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Wendy
And people automatically assume you did something wrong or made a terrible decision, when really, it's no one's fault.
