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Fine, let us look at your original thread per my questions.....
1) You took a 75K loan against your property to use for what?
1a) To pay off you car debt and credit card debt......
1b) For living expenses and start a business.....
Q -> So ultimately should we all be responsible for this? If you think aren't all won't
pay this back with higher fees down the road you are mistaken.....
2) Business expense for lender? No, it is a liability that they will eventually recover
from all of us. An expense would be say advertisement, but they are getting a ROI
from that expense in print ads, TV ads, etc. What they are getting back from you
is a liability, correct?
3) So, should you not bear the full burnt of the risk? I would bet that if this went the
other way (major reward) you wouldn't offer to share would you?
4) Really? you signed the contract, I wonder if it didn't state in there about full
of the loan? yes the property would be collateral and if it doesn't cover the original
loan and your 2nd loan then shouldn't be cover it?
5) I don't really care if it is your thread or not.... You ACCUSED me of not knowing
or understanding being in your 'shoes' I was rebutting that.... enough said....
6) Again, how do you if or when he sells, did he ever suggest he was going to sell
down the road?
7) Oh, I guess not or you wouldn't be asking about foreclosure. Did you ever do an
analysis of what paying make in Vegas vs what housing costs were?
To your final point about the CONSEQUENCES about this decision, aren't CONSEQUENCES related to right/wrong. So don't foreclose and pay back what you owe and you won't have bad credit for many years or foreclose and have crappy credit for many years and let everybody else also down the road share the burden. Sorry if that sounds heartless but I have a hard time feeling for you when talk about buying a house in NC and walking away from your 1st property which you happened to use as a ATM to also get out of other debt......
I would consider renting the condo out a while longer. Perhaps there are things that you could do to make it rent for more. This would be a tax write-off for you, and you would be investing in marketable improvements that could bring a higher selling price down the road. You might also be able to put together an attractive lease-option package that would increase the rentability. This isn't something I do, because I hold properties long-term, but I know several investors who have found this a viable strategy.
If you have assets, you will probably have to file bankruptcy. You will only be able to homestead one property and everything else will be liquidated for distribution. Depending on your goals and employment situation, this could be detrimental for some time to come. Lenders and credit card companies are tightening their standards, landlords almost always run credit checks and employers routinely run background checks. The social stigma of a bankruptcy has lessened, but the financial repercussions are becoming more pronounced. We live in a world of financial scoring (FICO, CLUE, etc.), where people who don't know you or your situation judge you on paper. You will feel the effects on your credit card interest rates, your insurance premiums (and your ability to secure insurance), your ability to finance a car, your rental deposits (and your ability to rent property), even your deposits for utilities and other services. You will not be able to obtain certification for some jobs and employment in certain industries. I would do everything possible to avoid bankruptcy. It's a decision many live to regret.
Dude, you just don't quit do you?
1. Yes, the costs of my mistakes will ultimately filter down to you. Just like your mistakes will filter back to me. If not yours, then your families mistakes, your friends mistakes, etc. That's why they call it society. If you don't want to be affected by other peoples mistakes, then go live on an island. I paid $53,000 in federal taxes alone last year, and I've got a feeling a large part of that was for other people's mistakes.
2. I'm not going to blow off the dust from my old accounting books, but lenders take a calculated risk when they make loans. Their buisness model will determine how much risk they take. In this case, they may have taken too much risk. I am going to go on a limb and say that the paper a lender carries is called an asset. It becomes a liability when the borrower defaults. Right now, I'm in the asset category.
3. When people make money on real estate, their lender makes money too. That interest I'm paying isn't going to charity. No, I wouldn't share a gain with a lender, that's not part of the deal. Here's the deal, again: man borrows money from lender to buy house, man pays lender interest on loan, if man defaults - lender gets house and maybe more if house doesn't cover loan (hint, that is what this thread is about).
4. second loans are more risky, that's why they have higher interest.
5. IF and WHEN he sells his house it could be worth a lot less than he paid for it, are you denying that?
6. Yes, I did. If things had continued at half the velocity they were in 2004, I'd still be in Vegas - and in my condo.
Goodbyehollywood,
Thanks again for sticking to the point of the thread. Your points are taken. Regardless of which route I choose, I will seek the advice of an attorney. Do you think I should speak to a real estate attorney or bankruptcy attorney?
I may do just that, rent it out longer. As for the tax loss, I was a little dissapointed this year as I expected to regain a large part of the rental expense/loss in my refund. But, because of my income, I cannot claim it this year. My accountant said the loss is still good for future tax returns.
I've done many calculations on best case/worst case scenarios, what we are talking is about worst case. I've had enough sleepless nights over this condo and I've pretty imagined all possibilities. But, you must admit, there comes a point when it will be beneficial to declare bankruptcy and give the condo back. If it looks like I won't ever regain the cost to float the condo, if I won't be able sell it, and I don't use credit cards anyway, and I stay in the same house for at least 5 years....there's a lot folks out there that might say it was a bad decision and a mistake to hold onto the condo as long as I have. Think about it, I could be 18 months into bankruptcy, and only 3.5 years to good credit if I had walked away in 2006.
I'm over the whole credit stigma. What is bad credit anyway? I won't be able to buy more than I can afford. "Sorry, honey. We'll have to stick with the 42" plasma for another couple of years". I would even venture to say that there are so many people in this mess that credit standards, leases, deposits may not be affected. People still have to do buisness. To your point, both my renters paid double the deposit because of their bankruptcies. But, they're in a home because they have good income and are digging out of the trenches. Plus, they are long term! year to year leases, of course.
So, goodbyehollywood, at what point do you cut bait and run? Everyone, even these high and mighty holier than thou respondants to my thread have a point where they would have to walk...Everyone. How do you know when it's time to quit?
formerLVguy, If you can't or don't want to hold on to your property, why not sell for what you can and pay the rest back as you seem to make a very good salary (per your comment about paying 53K in taxes)?
Fine, you asked for options the one I mentioned above seems to be one with the least
painful consequences for you and society. If you choose to walk away from the LV property what happens if you have trouble in NC, are you going to walk away from that? What bothers me the most is you will have gotten out of debt (car, credit cards, business startup) on the shoulders of other people (as you say society) that may have looked at similar scenarios and decided the consequences weren't worth the risk.
Again I refer back to Beena's post about being in the similar situation and the debt
was honored.
If I could be done with that condo for 24K, I'd happily write the check. Last year I had it listed with me bringing that much to closing, I didn't get a bite. If I decide to let it go, once it sells we'll figure out what the balance is and if I can pay it. If not, I'll seek a shelter. Sorry that bothers you so much.
Re-reading Beena's post, I think if they would have bled a little longer they might have walked away, it certainly sounds like they thought about it, which is what I'm doing. Beena please comment. Everybody has a point of no return, even you den1jen. All this talk of society, how much it will cost, credit scores, blah-blah-blah, I haven't even metioned the number one reason for my vigor in seeking an end to this situation. The physical cost of this mess is more than I can bare. What is credit worth, what is a condo worth, what is what you think about me worth if I'm dead of a heart attack? What good is my credit score to my family then?
Don't forget, I'm not one of the deadbeats you fear. I have treaded water and treaded water longer than almost anybody would. I've treaded water so long I'm starting to feel alone amongst everybody else that is simply walking away.
Former LV...yes I would have eventually reached a point of no return. But certainly not without a fight. And no 24k was not that point. However, it sounds like you and many others have gone through several alternatives including renting for a loss and short sale, and yes I would have done that too if I had too. I would also have taken a hit of 50k or 75k if I had to, and would have basically had to roll it into my primary mortgage had it gotten that high. Yes that is painful. Again, we live and learn. I have many many friends going through the same thing. Yes there is a dollar amount where I could have no longer taken the hit.
It could be somewhat concerning that you used a portion of the 75k you pulled from the condo to pay off your car loan and credit cards. I am not sure how the lending institution or court would view that. You hear so many people pulling 75k, as you did, from either a refi or a HELOC and then using that as down payment on a cheaper primary residence while letting the old one that is "under water" go back to the bank. Yes ethically I have an issue with that. But that is me.
We have a serious housing crisis on our hands that affects us all, and some level of compassion and understanding is necessary. I do respect people who try several alternatives before letting the property go. It is wise to seek advice from others as you are doing.
formerLVguy
I will just bring up a couple points to consider.
No one can "promise" you that the lender will not try to pursue the judgment they will receive when they go through the foreclosure process. Many folks will state "they are not likely to" a lot will depend on the lender especially when they review your credit and see the additional properties.
This is one of the things we looked for when I was a foreclosure specialist.
Many lenders, once they have been asked to accept a short sale will want documentation that you can not continue to keep the property again red flags may arise when they see the additional properties.
In a deed in lieu part of the agreement can be negotiated so the lender agrees not to go after you for the difference in exchange for not having to go through the costly expense of foreclosure.
As it has been mentioned there would be the possibility of you filing for Bankruptcy
here is a link that lists the exemptions for NC
some of the highlights
Homestead exemption is $10,000 which would mean if you have more than $10k in equity the trustee could require the sale of the property.
Personal property exemption $3500(if your single with no dependents). that includes all personal property,household goods, furniture etc.
This one is scary because most folks have more "stuff " than the $3500 worth.
If you have a car that is not secured by a lien it can not be worth more than $1500. more than that and again the trustee may require it to be sold.
Also remember that all of your credit cards and unsecured debt must be included in the BK whether there is a balance on the cards or not. North Carolina Bankruptcy Exemptions
I would make an appointment to discuss your options with a BK attorney find out what could be at risk and then you can make an educated decision.
formerLVguy
I will just bring up a couple points to consider.
No one can "promise" you that the lender will not try to pursue the judgment they will receive when they go through the foreclosure process. Many folks will state "they are not likely to" a lot will depend on the lender especially when they review your credit and see the additional properties.
This is one of the things we looked for when I was a foreclosure specialist.
Many lenders, once they have been asked to accept a short sale will want documentation that you can not continue to keep the property again red flags may arise when they see the additional properties.
In a deed in lieu part of the agreement can be negotiated so the lender agrees not to go after you for the difference in exchange for not having to go through the costly expense of foreclosure.
As it has been mentioned there would be the possibility of you filing for Bankruptcy
here is a link that lists the exemptions for NC
some of the highlights
Homestead exemption is $10,000 which would mean if you have more than $10k in equity the trustee could require the sale of the property.
Personal property exemption $3500(if your single with no dependents). that includes all personal property,household goods, furniture etc.
This one is scary because most folks have more "stuff " than the $3500 worth.
If you have a car that is not secured by a lien it can not be worth more than $1500. more than that and again the trustee may require it to be sold.
Also remember that all of your credit cards and unsecured debt must be included in the BK whether there is a balance on the cards or not. North Carolina Bankruptcy Exemptions
I would make an appointment to discuss your options with a BK attorney find out what could be at risk and then you can make an educated decision.
Tips & tricks to avoid the collector, depending on how much cash you have not put into the property:
Buy with little down (below threshold, if possible)
Hoard commodities/precious metals
Only have a bank acct with minimum for essentials (no investment accts)
Dump rest in Roth/Traditional IRA where no collector can touch it
Lease car or buy beater with little/no equity
Try to take side jobs paying under the table (outside your day job of course)
This is mildly insane...it just is not this class of problem.
Nevada is a trust deed state. They generally will go for a non-judicial trust sale. That does not allow for defiency judgements.
That can within a very limited time frame file a judicial action to collect a deficiency judgement. The rarity of this action is up there with blue moons.
Even if they should chose to chase you there is a very strong liklihood that you can negotiate a settlement.
The property involved is a most interesting one. A truly wonderful location...but a condo conversion. I am of two minds...that particular property is irreplaceable and has to take off...and the secondary market on all the strip residental properties is so bad as to defy description.
Go beat up your lender some more. See if you can get anybody to split the loss with you. Threaten and bluster until you get someones attention and then talk nice.
Hire a Nevada RE attorney and start pelting them with option. Figure out some grounds to sue them...get their attention. Charge. Then try to negotiate something rational. A fascinating property be a really interesting thing if you can hold through this bottom. But I think five years not two...LV will get better but the strip is going to be longer burning off the speculators.
Anyway stick to your guns and charge. And if it can't be worked out walk. Screw all the moralists. It is dime a dance idiocy. One does not screw up ones life to avoid offending the sensibilities of our libertarian fringe.
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