[♥]

I am thinking of letting my house foreclose for personal reasons.

Ideas?

[Cold Warrior]

Do you really think a bank will lend you money for another home after you default on another?

[Jawbone54]

Originally Posted by Cold Warrior 

Do you really think a bank will lend you money for another home after you default on another?

What I was thinking.

I don't see letting your house foreclose solving your problem.

[Eug]

Ouch.

Do you owe more than the house is now worth? BTW, is this you?
Cuz in that nice area (at least judging by the pic) I'm a bit surprised 25% of the houses are foreclosures.
Are a lot of these second homes or something?



Good luck, whatever the case.

[Heavy Fluid]

I am not sure that you want the damage on your credit that you will get from a foreclosure. Credit is not that easy to build up, trust me, I was there, not with a foreclosure or anything like that, but I have had one hell of a time building it back up.

Personally, I would not walk away from that. I would try to sell it, or fix it at least.

[MacosNerd]

Your credit rating is going to get pummeled and while you'll eventually be able to get another mortgage. It will take a long time and the rate that you'll get charged will be a lot higher then what most others will get because you were foreclosed upon which might push the cost up so it may not be feasible for you to own another house.

If it was so bad, stuff strewn along and not getting anything for your fees why did you buy the house? Generally speaking you should have gotten paperwork about what the association is supposed to do before you buy the house.

I cannot answer about your neighbors or the issue with the slab since its doubtful you could have done or known anything about that when you were looking at the house initially.

My opinion is that while running away seems like a good move now, I believe in the long run it will harm your financial future. Don't forget that more and more organizations use your credit score to measure you, for instance many employers now use that. Their thinking is that if you cannot make sound decisions on your own finances, why should they hire you. Also credit cards will not give you good rates or even a line of credit for that matter. Car loans, what happens when you need to buy a new car and opt for a car loan.

Do you have any legal recourse on the builder or town regarding the slab foundation? The same question for the association. If your paying dues and are not getting the promised or documented services take them to court.

[♥]

I'm not worried about my credit score. I have reasons why.

I just think I should walk away. To answer questions, I bought this house as a foreclosure (karma?) and got a good deal on it. I was thinking of short-selling the house also.

[KeriVit]

I'd sell at a loss before letting it foreclose. That just seems dumb.

[peeb]

Did you get a home inspection done? Is the builder still in business? What is your relationship with the property management company and the security company? Can you stop paying them?

[♥]

Thanks, peeb.

The builder is close to bankrupt. Large builder that has laid off 95% of the force. Property management company is THE worst. They should be sued for non-performance. They allot 20 hours per week to "manage" a 400+ home community with myriads of issues. The rub, however, is that if I stop paying them then they attach a lien to the home, etc. The HOA fees are $300 for nothing. Zilch. Zippo.

The home is devalued about 20%. Selling at a loss means short-selling since there is a mortgage and I'm not willing to take the hit personally.

Anyone else ever do this or consider it?

[brassplayersrock²]

good luck with everything cody

[Eug]

Originally Posted by KeriVit 

I'd sell at a loss before letting it foreclose. That just seems dumb.

I guess it depends upon how much of a loss (and how important her credit is her to her).

She said it's depreciated about 20%, but we don't know how much of the mortgage is left owing.

The other point is where is she gonna live? Cody, if you can tough it out for a few years, maybe that'll do it. Then again, maybe it won't.

[andi*pandi]

yike!

[Dork.]

You had less than 20% of equity in the house before it was "devalued", I assume?

[MacosNerd]

Well if you don't care, or rather not concerned about your credit score and have no moral issues to breaking the contract. Then there's little reason to stay.

[♥]

Actually, just about 20%.

The moral issue is this: The builder sold us a home knowing fully well that the previous home on the lot, and the slab, did not pass inspection. In short, my house was built on what used to be a pond. The pond is seeping back up as it were. The slab is cracked in three places. The builder doesn't give a crap - they're about out of business. Meanwhile, the floor is cracking, etc. I can't stand the neighbors that are drunks and smoke and party until 5:00 AM every night. Today when my spouse went to work the guy was still drunk from being up all night and started harassing my spouse, threatening things, etc. It never stops. Telling the cops doesn't work. Telling the HOA doesn't work. There is no security. What is a person supposed to do except retaliate in kind? And I'm just not that kind of person. I'd rather walk away.

[peeb]

Well, just make sure that you really don't need to worry about the implications of this for your credit score, and then reconcile the fact that your complaints about the builder and the neighbors really have very little to do with your contract with whoever lent you the money to buy this house, and then you should be fine just to stop paying back the money you borrowed. Yep, no moral issues there.
Seriously though, this is a crappy position to be in - you might want to try talking to your lender about it. It's possible that they would be interested in cutting a deal rather than having you default. If not, there are apparently companies and books that tell you how best to default - you can probably live in your house for 7-8 months without paying anything, and then pass the costs onto the general pool of lenders who continue to pay their debts. Good luck!

[♥]

I'm not intending to foreclose by squatting. I intend on either short-selling (the lender can keep my downpayment and devalue and resell the house to a qualified buyer who is willing to make a real-market offer based on actual appreciation versus jacked appreciation) or I will call them and say, "Come and get your keys. I'm leaving." They can have the house immediately after I decide to move out. As a responsible person I feel some sense of responsibility, but as a person that feels duped by not knowing that I'm living in a house thank was built over a swamp - and the first time sank into that swamp - and living in a situation that is untenable, I put my family first, therefore no guilt.

[Atheist]

If you're not worried about your credit rating....just walk away. Life is way too short to worry about anything.

[Uncle Skeleton]

It seems to me you were "fooled" into this bind. You should be very careful that you're not currently getting "fooled" again into thinking that walking away is a good option. It's pretty brash to declare "I won't need credit again," especially for someone who purports to put their family first. In case of the unexpected (again), your family may need that credit rating again sooner than you now think.

By the numbers you gave it sounds like you could be out of there without defaulting if you just go to the trouble to sell it for less than you paid, but the same as you owe. The trouble it takes you to sell it might save you and your family from far greater hardships down the road. Just make sure you think it through this time, and be more cautious than you were the day you were "fooled" into buying the house in the first place.

[Atomic Rooster]

They build houses on slabs? Weird.

Be like other Merikans and live in a trailer.

[ShortcutToMoncton]

Originally Posted by Atomic Rooster 

They build houses on slabs? Weird.

"Foundation?"

[ghporter]

Sue the builder, and "work with" the lender on suspending the mortgage. There is a minimum level of habitability that can be demanded from a new house. If the builder didn't work with you on a warranty basis, it's time to try to make 'em bleed. There's a builder here in San Antonio that built a whole development on sketchy land, and when the foundations started failing, they "graciously" offered to buy the houses back. For the then current market value. Of course market for a house with a crumbling foundation is pennies on the dollars the homeowners had invested. A court straightened that builder out-without even going to trial.

Your first step is seeing a lawyer about this.

[peeb]

Originally Posted by ghporter 

Sue the builder,

That was my first thought, but it sounds like the builder might be pretty much bancrupt, and you can be sure homeowners are going to be at the end of a long list of people waiting for money from them.

Originally Posted by ghporter 

and "work with" the lender on suspending the mortgage.

Absolutely - they may well be willing to work with you on this.

Originally Posted by ghporter 

Your first step is seeing a lawyer about this.

Agreed.

[KeriVit]

I had a crack in the foundation in my last house. Got a quote to have it jacked up- about $15 grand. But, a seller came along and bought it as is. Honestly the crack was there for years, but minimal movement in a 10 year period. I'm sure that's not the same as your situation, just sayin...

[peeb]

The crack itself is not the issue as much as whatever ground movement caused a crack in a couple of years.

[finboy]

Originally Posted by brassplayersrock² 

good luck with everything cody

I echo that. Sounds like you're in a very bad situation for many reasons. Leaving your "responsibility" isn't your moral dilemma. The dilemma is whether to botch up your credit.

The only hit you'll take is your credit score, although the bank may come after you for their loss (especially since you bought a foreclosure to start with -- don't ask me why, but they pursue those more aggressively from what I've seen). You don't want to end up bankrupt (legally I mean) just b/c of a house.

[peeb]

Originally Posted by finboy 

Leaving your "responsibility" isn't your moral dilemma.

Really? As bad as this is, why is "responsibility" in scare quotes? You don't think people have a responsibility to pay back money they borrow?

[♥]

I appreciate all of the advice.

Sue the builder. Like peeb said I'd be at the back of a LONG line.

Hey, ghporter, who was/is the builder in Texas?

???

Wondering if it's the same company.

[peeb]

Is the Jewishness significant on the advice front?

[♥]

Well, he's VERY smart. At least I've always thought he was!

He sees things in ways that not a lot of people do and he knows a lot. He doesn't really know if he would walk away himself, but he said that if he were in the identical circumstances that he might. I'm just taking all the advice I can get.

[peeb]

Well sure, I was just wondering why you mentioned that he was Jewish. I didn't want to assume it was because you thought that 'Jews are good with money', or anything like that....

[♥]

No....

But, he IS great with money, now that you say that.

One half of my family is Jewish, that's all.

[Uncle Skeleton]

Originally Posted by ♥ 

Actually, the advice to walk away is coming threefold:

1. Very smart Jewish uncle CPA
2. Very smart lawyer whose specialty is bankruptcy and real estate litigation/foreclosure
3. Very smart mortgage broker (40 years working with the very smart Jewish uncle)

They are the ones suggesting that I roll out of the house and get out now.

Big red flag. You've known these people a long time I take it, by any chance did they advise you to buy the house in the first place?

This is waaay too big a decision to make based on what other people think is best for you. You need to make it based on what you know is best for you. Try to convince us this is the right decision, based on the facts not on appeals to authority. If they are right in their advice, they should be able to explain it to you well enough for you to explain it to us (or anyone else, if you're not comfortable sharing on the internet). But if you don't have a firm enough grasp of the reasoning to convince someone else of it without deferring to your smart uncle, then you're not ready to pull the trigger on it yet. It's that kind of impulsiveness that likely got you into this mess in the first place.

[ShortcutToMoncton]

Oh, there we go, the uncle is Jewish, she got advice from him, things must be okay then, he's Jewish, never saw that one coming at all, no significance, he's just Jewish, like my family, one-half is Jewish, like my smart uncle.

[Atomic Rooster]

From houses on slabs to jews.

I predict great things for this thread.

I still say join the crowd and get a cheap trailer.

[KeriVit]

The people that bought my house were hispanic, not jewish, is that significant?

BTw, it's back on the market 15 mos. later.

[ShortcutToMoncton]

Originally Posted by KeriVit 

The people that bought my house were hispanic, not jewish, is that significant?

BTw, it's back on the market 15 mos. later.

I bet you ripped them off too didn't you! Bastard!

[lefty mclefty]

i live in a renovated chicken coop...and couldn't be happier!

[KeriVit]

Originally Posted by ShortcutToMoncton 

I bet you ripped them off too didn't you! Bastard!

Um... I just don't think people should finance 100% of a house over $200K, especially with property taxes at about $5K per year. However, I am not a financial advisor. Are you?

[Face Ache]

Let me get this straight: You two smart, successful, conservative business people used 80% credit to purchase a house in a bad neighbourhood that is now sinking in every sense of the word? And despite alluding to your own personal wealth, you're thinking of letting your house foreclose merely as a financial decision, thereby letting the lender cop the results of your real estate "misfortune"?

Talk about having your cake and eating it too.



ps: Didn't you threaten to sic your husband onto Mastrap (6'8")? Surely he can handle your neighbour?

pps: Does your Jewish uncle have any nice chicken soup recipes?

[ShortcutToMoncton]

Originally Posted by KeriVit 

Um... I just don't think people should finance 100% of a house over $200K, especially with property taxes at about $5K per year. However, I am not a financial advisor. Are you?

Yes! THAT MAKES PERFECT SENSE

[ghporter]

The builder I'm talking about goes by "KB Home" nowadays. When they got into trouble in the upper Midwest, they were Kaufman & Broad. They have the most inconsistent quality of any builder I've seen (and I spent a long time shopping before I chose a builder and development). What really floors me is that they sell houses in the $300K range and higher! I've seen their designs and their regular production quality, and I just shudder at what sorts of problems those $300K+ buyers are going to run into.

[♥]

Um, first of all, I'm not going to give much information about my finances. I have more than one home first of all. In fact, I can walk out of this home tomorrow and buy another one. (I actually am online looking at other property.)

And, yes, I agree that if you're happy living in a chicken coop, a trailer, or a tree like that guy out in the Northwest, then live there and be happy.

To be honest, those people are a heck of a lot happier than I am.

Here's the thing: I've got something else going on that makes lawsuits and prolonged fighting bad for my health. I won't elaborate, but I don't have the energy to fight the fight, that's all.

That's one of the reasons I'm thinking of walking away.

[ShortcutToMoncton]

What's the other? You've got a rich husband?

[Rumor]

Is garbage is an issue, you can call the city or county and they will cite the HOA.

Also, HOA's are horrible, horrible ways to go.

[Eug]

I personally don't take financial advice from family members, but that's just me. I find that they can never look at the issue completely objectively... and I can't receive advice from family completely objectively either.

P.S. How hard are they going to go after you if you walk away? I don't know what the laws are where you are.

[♥]

Not very hard. They can lien any subsequent properties I purchase if they choose to, but the probably won't as long as the house is in good condition and able to be occupied and sold. And I would leave it in sparkling clean condition, painted, etc.

I'm taking a lot of advice. I may just try to lease it out to someone and take a monthly hit on it (the difference between the mortgage and the rent) and see how well that goes.

On the other hand, MacNNers may warn me against that route also. Uncle M. did.

[brassplayersrock²]

i say just sell the thing and get it out of your life if it is causing you this much grief. try to get some money out of it.

[Cold Warrior]

What about writing it off on your taxes? If it's a second home, can you treat it as an investment property? (If investment property losses can be written off?)