What Happens When You Walk Away From Your Home?

Cat Damiano

Mortgage Wars
Sep 10, 2007
10,541
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Colorado
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It was just last summer that Charlotte Perkins made the hardest decision of her life as she and her husband Jim were caught in the vise of the housing bust.

Wanting to downsize their lives as they headed toward retirement, they bought a new house in Mesa, Arizona, before they sold the old one, also in Mesa. Their previous home had been appraised at nearly $400,000 at the height of the market, but as the housing crisis ravaged Arizona, they were told they'd be lucky to get $200,000 for it.

They were carrying a loan of $260,000 on their original home alone, meaning they were well 'underwater,' owing much more than it was worth. Combined with the mortgage on the new house, their housing payments had become an "anchor around our necks," she says, threatening to gobble up all their retirement savings and leave them with nothing.

The couple made a difficult call: They would do a 'strategic default,' and simply stop paying the old mortgage. "We really had to wrestle with it," said Perkins, 60. "We had worked all of our lives to build good strong credit, and we're proud people. But it came down to, 'Can we keep doing this?' We had to say 'No.'"

As the housing bust drags on, many homeowners are thinking like Perkins. Almost 11 million homes are now underwater, says financial information provider CoreLogic. Around 3.5 million homeowners are behind in their payments and another 1.5 million homes are already in the foreclosure process, according to online marketplace RealtyTrac.

As banks start to work through their backlog of distressed properties, the New York Federal Reserve estimates that 3.6 million foreclosures will take place during the next couple of years.

Read More Here:

What Happens When You Walk Away From Your Home? - Yahoo! Finance
 

WalkedFromGVNV

LoanSafe Member
Oct 11, 2011
31
2
8
Reno, NV
Good read Cat.

One other thing that I have found in my research is the still present disparity between median incomes and median home prices. The historical trend is for the median home price to be about 4 times the median income. Even with as far as the home prices have fallen, they are still about 7 times the median income, which would lead me to believe that home prices still have to fall another 40% to 50% to get back to their historical trend.

It looks like we still have a way to go.
 

MtSIAlumni

LoanSafe Member
Feb 7, 2012
7
0
0
Here is what happened to me in WA State

Defaulted Oct 2010 on a 400+ property because of job loss (emptied my savings trying to make it work)
Offered to give property back to bank multiple times, they never respond, they still won't respond
Still no NOD as of Feb 1 2012 and I am tired of waiting so the property will be abandoned and probably just rot with no power or heat here in the NW ...

It's just bizarre, who are running these banks anyway?
 

SuburbanSiren

LoanSafe Member
Feb 14, 2012
1
0
0
I also have a mortgage through MetLife. Similar situation. It's as if they jut don't want the house/don't care. I was told last week by the foreclosure attorney's office that they've been waiting for paperwork from MetLife since April 2011(!!).

Today I checked my credit at a NACA event and my credit profile is showing that MetLife discharged my full loan amount even though there's been no foreclosure and I haven't filed for bankruptcy. I'm so confused...
 

Cat Damiano

Mortgage Wars
Sep 10, 2007
10,541
39
48
Colorado
www.loansafe.org
SuburbanSiren.


Welcome to the forum and thank you for joining.........

Have you asked the foreclosure attorney to look into this for you? What did they come up with?
 

MtSIAlumni

LoanSafe Member
Feb 7, 2012
7
0
0
I don't understand it much myself. It seem's like some of the banks are just deciding that it's not worth the time or effort to take them, at least right now, and are hoping you will hang around and take care of the place for them until the situation works itself out.

Of course if you read the articles below this seems to be mostly in areas that are pretty run down, if you live in a mixed area (some nice, some not so nice houses) then the banks may just think yours is not worth taking, even if it is, that could be my problem.

If they discharged the loan then it does sound like they may have just given up the process, if that's the case you are in legal limbo in regards to ownership/responsibility but I guess if you are happy living there then maybe you just ride it out while putting "rent" in and account somewhere ( though if you live in a judicial state it may be prudent to keep it as cash ... ) and wait for it to be over.
 

DrDrew

LoanSafe Member
Feb 28, 2011
54
0
6
We walked away from two houses last year ( one mine, the other my husband's)....mine went back to the bank when it didn't sell at auction in November 2011. ..his went to a third party at auction in Februar 2012. Today my credit score is 750 (this is the only financial obligation I have ever not fulfilled)... His is in the mid 600s. One of our fears was that we would have problems finding a rental if we moved... But yesterday we found out that we got our dream rental halfway across the country where we're relocating for job reasons. We aren't even ideal renters because we have three dogs! But our landlord gave us a great reference, our HOAs gave us good references and it's all good. We both feel a huge weight off our shoulders after getting out from under houses worth 50% of what we paid for them. Good luck to all... Cat gave us some great things to think about on these forums when we were making the decision. Thank you!!!
 

dmzinaz

LoanSafe Member
Jan 6, 2012
22
0
0
Phx, AZ
I'm glad to hear that DrDrew. I'm scared we won't be able to find a rental, and we need a house since we have a dog. Glad to hear things have worked out for you.
 

poveraccio

LoanSafe Member
Apr 8, 2012
3
0
0
Suburban- we are just into the process with Metlife, we are not even 30 days past due yet, have you heard from them?
 

Jenna

LoanSafe Member
Feb 2, 2010
40
0
6
Walked away
I'm really glad I walked away, the stress was too much for me. I am an old-fashioned lady who fought so hard to keep my house which left no money for food, etc. It was a difficult decision for me to make since I lived in my house for many years and thought I would live there for the rest of my life. I loved my house but one day I became ill (chronic disease) and I lost my job, could not walk due to my illness except on crutches, and finally I asked myself "Is it really worth it to just live for a house?"... No, it wasn't. I admit it was really difficult to break the emotional ties I had to this house and property but looking back now I wished I had done it sooner. It was one of the best decisions I ever made..

I moved to another state where I am renting and I am so peaceful now.. The cost of living is so much lower compared to where I used to live (Long Island). And my illness is beginning to improve.. Again, the stress is simply not worth it..

Jenna
 

oceanside

LoanSafe Member
May 22, 2012
2
0
0
Hey Jenna! what did you do? foreclosure or short sale?

I'm glad you are feeling the relief! And I most strongly agree with your answer to the question "Is it really worth it to just live for a house?". I'm on my way to feel lighter too! :)
 

shouldntBpoor

LoanSafe Member
Feb 10, 2012
4
0
0
42
When you walk away is it ok to stay in the same community? We have a very nice house, so I have a feeling we will be forced out soon. And we're doing strategic default...is it going to be harder on us b/c we're baking all the cash? Any suggestions?
 

joshallen

LoanSafe Member
Jul 5, 2012
10
1
1
Im not if sure my question belongs to this thread, but I'll ask anyway.
I walked away from my house last July and stop paying my mortgage payment. I received a property tax bill that is due this Nov and Feb next year. Part of my monthly mortgage payment is for my property tax and house insurance. Do you think my lender will still pay for my property tax? Am I still obligated to pay that property tax? What is the consequences for me for not paying that property tax?
Thanks
 

Cat Damiano

Mortgage Wars
Sep 10, 2007
10,541
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48
Colorado
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Im not if sure my question belongs to this thread, but I'll ask anyway.
I walked away from my house last July and stop paying my mortgage payment. I received a property tax bill that is due this Nov and Feb next year. Part of my monthly mortgage payment is for my property tax and house insurance. Do you think my lender will still pay for my property tax? Am I still obligated to pay that property tax? What is the consequences for me for not paying that property tax?
Thanks
You may want to ask your question in your own thread where members that are going through or have been through the process were helping you here;

http://www.loansafe.org/forum/foreclosures/49446-moving-new-house-foreclosing-older-house.html
 

joshallen

LoanSafe Member
Jul 5, 2012
10
1
1
You may want to ask your question in your own thread where members that are going through or have been through the process were helping you here;
Ok Thanks. I saw your thread titled "What Happens When You Walk Away From Your Home?", so I was thinking that maybe someone on your thread can answer my question. I'm trying<!-- google_ad_section_end --> to find a way to delete my post to this thread, but no luck. Sorry my bad ;)
 

Cat Damiano

Mortgage Wars
Sep 10, 2007
10,541
39
48
Colorado
www.loansafe.org
Ok Thanks. I saw your thread titled "What Happens When You Walk Away From Your Home?", so I was thinking that maybe someone on your thread can answer my question. I'm trying<!-- google_ad_section_end --> to find a way to delete my post to this thread, but no luck. Sorry my bad ;)
That is why I suggested the other as well, help from both angles.:)
 

imunderwater

LoanSafe Member
Oct 18, 2010
115
1
18
Yuba City, California
Hello everyone,
I am a returning poster after thinking and thinking and thinking about walking away from my mortgage in California. I am over 100% underwater. Current value is roughly $80,000 and I owe 175,000. It seems like a no brainer to walk away, however I am scared. I am worried that nobody will rent to me with a foreclosure on my credit report. Not sure how long it takes for that to show up. I was thinking of socking away money for about 4 months and then contacting local property management companies and explaining my intent and then they will be able to tell me if they would rent to me or not or they could qualify me before the foreclosure shows up on my credit report. So all of the unknowns is what scares me. Also, if I vacate the property, what happens if somebody comes onto the property and for some ungodly reason gets hurt! Am I liable?? I have many questions and concerns. I hope someone on this forum can help me understand the process better, know what to expect in some kind of a reasonable timeline and plan my strategic default in a way that will be positive for me. thank you so much for reading my post!
 

TomEason

LoanSafe Guide
Jun 18, 2009
12,390
85
48
SF Bay Area CA
imunderwater

Thanks for your post. If you like your home and can afford to stay current on the mortgage, I recommend you NOT walk away. IMO the fact you're underwater is immaterial; over 30 % of CA homes are underwater.

However, if you don't like your home and neighborhood, that's a different story.
 

imunderwater

LoanSafe Member
Oct 18, 2010
115
1
18
Yuba City, California
Why is it immaterial?? That's the first time I've heard that, especially on this forum. What's the point of staying in an older home that needs lots of repairs that I don't have money to fix? I will never recover my equity. I think that advise is lousy. Thanks anyway. Am I not posting on the right thread? I wanted to hear from individuals who have gone through the process; who could offer me support. Which forum do I need to be posting on? By the way, due to the drop in home values in my neighborhood, my neighborhood is crap.