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There are owners in my large condo building in Chicago who've walked away from their mortgage and let the bank have the property because, though they were working and could afford the mortgage, the value of the unit(s) dropped by 50% as compared to what they paid for it, they poured another 70-80000 into the unit in upgrades, and they don't want to wait a decade or more to get back to the break even point. They were willing to take a hit on their credit for up to 7 years as a cost of starting over. They had, however, inlaws who bought new property for them, put into the name of the inlaws, and after the bad credit period they will be put onto the deeds. Doing that forced a low-priced sale by the bank and our values decreased even more. Those of us remaining are pissed-off, because we're all facing the same decline in market value but have chosen to fulfill our responsibilities to the lenders.
Thanks for sharing & the post.
Great example of what happens when buying into "apples for apples" comparison type homes (condo / townhomes / sub SFH / McMansions) in the "same" location, landscape & neighbourhood.
Subdivision = more homes in a smaller area; most every plots are similar.
If "something" claim they can maintain the value of that home w/ that great "common" denominator of a "common value"... if it means keeping it "up", usually it also meant to keep all "down" to become "just the same"... no matter who you are (that proud meticulous homeowner or that uncaring tenant). Great while its on the upswing market... is it really that grand when the value goes down & affect "all"???
While apples to oranges...
= even if its a rural SFH vs a sub SFH
or
a bunch of ranch homes in the rural area... might be similar but one is on the hill, the other is not (higher chance to flood basement) & close to creek... or one has sunporch while the other have a deck... or one has older mature trees... while the other have saplings... or one has the location & landscape you want, while the other do not... one is raised, the other is not
where the math combo makes it less of "the same" (because there is simply no HOA codes to follow, thus they can adorn their property / landscape the way they want to... etc.), thus more of a apples to oranges scenario.
It's not clear from your post if you are in some type of dire situation that forces you to dispose of your property quickly; ... or if it just 'feels' like a dire position to be that far upside-down on your mortgage. Also, is this a second property that you bought as an investment ... or your primary residence?
Sometimes in property, stock or other investments, people feel that if their investment has lost value (at the moment), they must immediately take action ... often divesting themselves of an investment when it is down. This is sometimes referred to as 'buying high and selling low' and is a favored practice of those who regularly lose money on their investments.
When an investment is down, the best course of action is often to simply take a deep breath and 'ride it out' until things are no longer as dire. Of course, in the current 'property bust', you may truly be in a dire situation and forced to sell. That being the case, you've already lost the money -- why compound the problem with a bankruptcy or forclosure until/unless it is absolutely necessary?
Agreed, I didn't see anywhere in the original post that indicated that the situation was dire, only that the property had lost value. Is Chicago a recourse state, where they can come after you if you let the house go? You've already jumped to bankruptcy just from your place losing value.
Quote:
Originally Posted by middle-aged mom
Some consequences are more obvious than others. Your credit score determines a lot of thing,s including your auto and homeowner insurance premiums. Prospective and current employers often look at credit scores and given the job market, many are inclined to favor people who honor their obligations and do so on time. The interest rate paid on credit card balances is based in part, on your credit score.
Leaving the morality and ethics out for a moment and just considering the credit score consequence, I would take not losing $170,000 (the loss in value) over my credit score any day of the week. It would be far better financially to let the place foreclose (assuming you think the value will remain down) and not have to pay that $170k than to hold on for your credit score. Again, I'm not speaking to the ethics or morality, just the idea that you should throw away money to maintain your credit score.
There are owners in my large condo building in Chicago who've walked away from their mortgage and let the bank have the property because, though they were working and could afford the mortgage, the value of the unit(s) dropped by 50% as compared to what they paid for it, they poured another 70-80000 into the unit in upgrades, and they don't want to wait a decade or more to get back to the break even point. They were willing to take a hit on their credit for up to 7 years as a cost of starting over. They had, however, inlaws who bought new property for them, put into the name of the inlaws, and after the bad credit period they will be put onto the deeds. Doing that forced a low-priced sale by the bank and our values decreased even more. Those of us remaining are pissed-off, because we're all facing the same decline in market value but have chosen to fulfill our responsibilities to the lenders.
Tons of that crap occurred here in AZ, too. Especially in the high rent districts like Scottsdale.
As per another friend who owned a HOA property who also lost value close to 100K, that HOA fee is something that even bankruptcy and foreclosure cannot discharge, very much like that college loan.
Your friend is mistaken.
Generally speaking, unpaid assessments incurred before filing for Chapter 7 will be eliminated in bankruptcy, assuming such debt was listed on the bankruptcy petition. Assessments incurred following the filing will not.
Foreclosure laws vary state to state.
Anyone contemplating a short sale, foreclosure and/or bankruptcy should consult with a competent attorney instead of relying on information acquired on an internet forum.
Generally speaking, unpaid assessments incurred before filing for Chapter 7 will be eliminated in bankruptcy, assuming such debt was listed on the bankruptcy petition. Assessments incurred following the filing will not.
Foreclosure laws vary state to state.
Anyone contemplating a short sale, foreclosure and/or bankruptcy should consult with a competent attorney instead of relying on information acquired on an internet forum.
Google, google... you rule the world.
P.S. Why everyone should not just take base upon another human's assumptions = not mine (just to be fair when indicating someone else) either & do their own homework & "educate" themselves.
Apples vs apples or Apples vs orangutans... ain't no comparisons in itself.
^^^ "If" it is that easy (is it that easy??? You "the story tellers = people who own these homes" tell me).... to shake that shroud off from the HOA obligations (then why all these worrisome "what if / will it affect me scenario" stories)... there'll never be contracts & that "compulsory pay up" up to the wazoo... one has to adhere to.
Freedom is an easy choice when I never ever have to "wonder" or "deal with" any of the above.
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