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i bought house in 2004 for $400000 in vegas. 320000 on primary mortgage load 80000 in secondary loan in Wells fargo.
now house worth 180000. have more than 50K in credit card due + car loan, expenses. monthly due 1500 + living expenses + mortgage (2K)...
so for i'm not behind !!!
now i see the dark side ...
called wells fargo... since i'm not behind on payment... they are not ready to help.
should i stop making payment for 3 months then work with them or walk-away ?
i'm thinking of stop making payment and work on short sale. what you think?
Look at your contract and if you don't understand it all, consult an attorney before you do anything.
To put it simply - most mortgage documents contain a clause that in the event of non-payment the title of the property will go to the lender.
If that is the case with your contract, you should be able to just quit making payments without any recourse until they throw your butt out.
If it were me in your situation, I would take that option.
Forget about your credit score. Rent a place that you can afford and bank the extras such as taxes/insurance/repairs/maintenance.
I see nothing immoral or deceptive doing that - just following the terms of your contract.
To put it simply - most mortgage documents contain a clause that in the event of non-payment the title of the property will go to the lender.
If that is the case with your contract, you should be able to just quit making payments without any recourse until they throw your butt out.
If it were me in your situation, I would take that option.
Forget about your credit score. Rent a place that you can afford and bank the extras such as taxes/insurance/repairs/maintenance.
I see nothing immoral or deceptive doing that - just following the terms of your contract.
Excellent advice. I hope more will wake up to this as the only sensible option for folks upside down in their mortgages. Don't be afraid to walk away.
Contacting Wells Fargo right now, if your mortgage payment is more than 31% of you income. There is a good chance you will be approved for a loan modification without being late.
Now if your interest rate is below 7%, and/or the payment is less than 31%. This is a sign the mortgage is not the cause of your problems. You lender can reject your modification request.
But right now your credit is not your 1st priority, your home is.
Now if you want to let it go - the best way is a deed in-lieu. The encompasses a short sale. After three months the property will go back to the lender and you will have the debt discharged immediately.
If you just do a short sale - if the house doesn't sell after three months, it can continue into foreclosure. Having a foreclosure on your credit report, is compared to jumping of the high driving board into an empty pool - ..."SpLaT"... Your credit score will drop between 250 to 400 points, and can remain there 7 to 10 years.
If you do a short sale before the foreclosure, or your bank does the foreclosure after. You can be hit with a deficiency judgment, which is the difference between what you owe and what it was actually sold for.
In either case they could still sent you a 1099-C, where you could be responsible to pay taxes on the difference to what it was sold for. The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief. You need to speak with your accountant about filing for relief from the taxes.
Other than Nevada is a Non Judicial state - meaning all your lender doesn't have to go through the court system in order to get your house back. All the have to do is send you 30 day notice, your house will be auctioned off on the court house steps. I could comment more, but I do not know the specifics of your situation. I sorry if I am being forward with you, just telling you the truth.
Good Luck
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I am in a situation where my house is not worth what we paid for it , we want to relocate back home near our family. We cannot sell our house because banks are selling foreclosures for 40,000-60,000 less than tax value. I can't compete, we have had our house on the market for a month had 2 showings and both bought comparable foreclosures, one @ $60,000 the other @ $90,000, I owe 130,000 NOT including realtor fees and closing costs OR repairs to close the deal if any. We are NOT behind on any payments. However I am VERY frustated with banks under cutting the sale of my house and I am suppose to come up with the $50,000 or what ever it might take to get rid of this pain in my ..... house. I am considering walking away....we don't have $ they could come after and not much in assets, we do have EXCELLENT credit ....we would be throwing away something we have worked so hard for...Any advice on my situation I would appreciate it... we live in North Carolina can they come after me for $$$$ after the sale?
You must talk to a lawyer before walking away. If you just walk, they could come after you for the defiency. Mortgage lenders pursue homeowners even after foreclosure - Yahoo! Finance (http://finance.yahoo.com/news/Mortgage-lenders-pursue-cnnm-3107909798.html?x=0 - broken link)
Sorry to hear the situation you are in but you are by no means alone! The banks would no doubt prefer to have people who are honest and diligent at trying to do the right thing by continuing to pay while at the same time digging yourself into a deeper hole. That's why they won't talk to you when you are current! would suggest the short sale strategy as the best option. Much better than waiting for the ultimate action of a a foreclosure which will be worse for you in the long run. Put the house on the market with a reputable REALTOR, get the lender to send you a short sale package, fill it out, get a contract and submit it all to the bank. They won't even take a serious look at it without a purchase contract,HUD and short sale package. The process will get better and faster in April, but you need to get started as quickly as possible. For a few hundred dollars there may be an attorney in your area who has a process for helping you navigate negotiating with the lender.
I'm of those people you would talk to on the phone if you called your mortgage lender. Sounds to me that you can afford the payment but hate the fact that your upside down on your mortgage. It's a tough place to be and sadly to many folks who own real estate in the Vegas market are in the same boat. You need to ask yourself if walking away and taking a 10 year hit on your credit report is more important than sucking it up and paying your mortgage until the value comes back up. There is no easy answer or way out. Only you can say what is best for you.
Between walking away and short sale, short sale would be the best option.
Or waiting it out if you have the means because Vegas is still one of the biggest growth markets in the country. If the investment was wise before, it probably still is.
An analogy for you. One share of Goldman Sachs prior to the financial crisis trade for around $120 per share and was a solid investment. At it's lowest point around Dec '08 it bottomed out around $65, today it opened at $152. The moment you sell that asset, and remember despite the emotional attachment it is still an asset, it goes from a paper loss to an actual loss.
I know it's aggravating to make payments on an asset that is upside down, just like it was maddening to continue to contribute to you 401k during the slide, but remember that all things are cyclical, it will be back.
Suzie is right...preserve your cash...anyway you can ! During hard times , those with the cash win , in the end. History repetes itself , take the advice thats based on fact not fiction....As long as there are lenders , Bankers , and mortagage brokers ( fewer than there was ) , cash will be king , everyone want it...your included. Don't be fooled by all the hype , the ads , the ways to make money on your misfortune...its just common sense to stay as liquid as possiable always. When things get really bad , its only your ability to buy food and clothing from your savings thats important , no one else cares , or will lend you a hand...they are all too busy fending for themselves....and for some , tring to seperate you from your money as well.
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