You would have to pay to live anywhere else, so why not just stay where you are and make your payments? You will have a very hard time renting if you have walked away from a house, and it will be years before you can buy again. And in those years, property values may or may not go back up. You don't lose if you pay for the house you have already purchased and agreed to pay for. Walking away simply undermines your faith in yourselves and teaches your children that they do not need to commit to a contract if it does not work out they way they think it should. We all own houses that have lost equity in recent years - that's just life, and you just deal with it.
I think your attorney is right.If a home has no equity in sight maybe 20 yrs, is foreclosure the answer?
Maybe your attorney wants you to decide since the choices will gain no positive results.
So, you don't think you should have to stick with the contract you signed when you originally bought the house. You haven't been paying the mortgage do I don't understand how you can be so broke. I disagree with your attorney, I think the housing markets will recover within a couple of years. It really cones down to a question of ethics and morals. My husband has been unemployed for a year and I don't make a lot of money. However, we sacrifice other crap so we can pay our mortgage.If a home has no equity in sight maybe 20 yrs, is foreclosure the answer?
While your attorney may be right on a lot of his advice- I do not believe you will need to pay tax on the "phantom income" That is what they call it when a mortgage company turns that in to the IRS. If that were true then it would be the exact same thing- only in a much larger dollar amount- with the shortage on the foreclosure.
I would find another attorney and this time- find one that knows a lot about real estate and mortgages.
You are allowed 4 loan modifications during the life of the loan but can only request a modification once a year. The problem you have now could have been eliminated by calling your lender directly the moment you realized you were gonna have problems with the payments. The lender would have worked with you in your situation by offering options such as the previously mentioned loan modification, deed in lieu of or a short sale.
A loan modification could help you through the hard times, and after you are able to catch up, you could do another loan modification. You don't lose equity in the home at this time you gain valuable time in order to save your financial situation now.
Deed in lieu of means the you give the bank your home in exchange for the balance of the loan. You lose your home, your credit is hit and the bank has another home to add to their inventory.
A short sale is when the lender will accept an offer on your home that is lower than the amount of the loan you owe. Problem is you do not get any profit on the sale, your credit is hit and this is a longer process than you can imagine. This means down the road you might have trouble renting or buying a home.
Foreclosure doesn't help your credit either and you will have to wait 3 years before trying to buy a home. Another problem may be the lender will sue you for any monies owed such as court costs.
My husband faced foreclosure 6 years ago before we got married. In 2002 he lost his job and had sustained unemployment until 15 months later. This is when the economy was doing well. He had missed a few payments on his condo. He was throwing good money into a sinking ship. He sold items, borrowed against his insurance to end up losing his home.
He went to the foreclosure hearing and the judge wondered why he showed up. The bank had no intention of helping him. Lately after hearing on the news that most foreclosures were rushed through it doesn't surprise me that the real estate market ended up this way. Personally, in 2002 I was looking at buying a home in my home state of PA. I was looking at purchasing the home for $35, 000. I later checked online for curiosity sake to see the value of the home after I moved to Ohio. In 2007 before the crash, the same home was on the market for $95,000! I would have almost doubled my investment. I checked within the last year and the value of the home is down to $40,000. If someone had purchased the home in 2007 they would be underwater on the loan.
My suggestion to you is to seek the help of a bankruptcy attorney. If you keep missing payments then your credit is going to be damaged in the end anyhow. The housing market is in a mess right now and isn't looking to get better for a few years according to rebound according to Suze Orman. You can go to several sites that offer help from your State, HUD. I recently read that it is better to get advice from experienced professionals. They can look over your information and give you the best advice.
I went through the foreclosure process with my husband. He was brave during the whole process but I know it broke his heart. He lost almost $100,000 that he had paid into the condo over 19 years of living there. We had to file bankruptcy because of credit card companies trying to garnish his wages. The condo debt was paid off at the Sheriff's sale.
It is hard to walk away from a home, but your family is more important than house. A friend and his wife are working 2 jobs each to finance a home. They are working to pay for a home. They almost ended up in divorce just a few weeks ago. They don't spend time together and are constantly working. This isn't living. They are working themselves to the bone just to pay for a home. No home is worth your family. I would get help and advice from a professional.
However, you can do a short sale or file for bankruptcy.
My husband and I are due to be done with the bankruptcy in just a few short months after 5 years of payments. In about 2 years or sooner we can start looking to purchase a reasonably priced home. We use credit very carefully. We only have a car payment right now. You realize that after living through a bankruptcy how important family is rather than money. If you need to find a bankruptcy attorney check with your local lawyer referral service. I wish you and your family the best. Good luck.
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