Would you Walk Away from your Home

[disneysteve]

If you get rid of F&F and FHA, you will see a stable responsible housing market that practices your fundamentals.

Sounds good to me. Just put me in charge. I'll clean up this mess.

[disneysteve]

Not everyone has the luxury of staying in one home for many years.

That's true and I do feel very sorry for people who bought homes that they could comfortably afford with the intent of staying there long term and then had some life-changing event that forced them to move only to be stuck with the house because they were now upside down and couldn't get out. I'm not sure what the answer is there. Rent it out? A short sale, I suppose, if you could even find a buyer and get the lender to accept the deal.

[maat55]

Sounds good to me. Just put me in charge. I'll clean up this mess.

I believe you would.

[ua_guy]

I absolutely would. In fact, i am ruminating over that very proposition right now. My current home is fraught with nothing but bitterness and bad memories. What I expected was a 3-5 year move has convinced me that I may not just be experiencing a prolonged nightmare, but perhaps the lowest depth of hell itself.

Burning the house to the ground or driving a truck through it at this point is about the only thing that would make me happy. Arson and/or insurance fraud don't look particularly good in a background check, so I'll avoid that for now.

But walking away from it is a real possibility. At some point, the cash bleeding has to stop, and life must go on. Banks can't even tell who-owns-what right now since so many mortgages were bought/sold without proper documentation. Me? I'd be content to stop paying and live in the house, not throwing another cent at it, all the way until the bank figures out what they want to do.

BTW, can totally afford the place, just hate it and all its problems to pieces.

[disneysteve]

My current home is fraught with nothing but bitterness and bad memories. What I expected was a 3-5 year move
BTW, can totally afford the place, just hate it and all its problems to pieces.

Are saying you bought the house only expecting to live there for 3-5 years? If that's true, why do you buy rather than renting? Buying a house is not a short-term proposition.

Can you share what has changed that is making you consider walking away? I'm really curious what would make someone consider that as an option.

[jerrycates]

If the need to go away is very strong, and needed, and practical I would. For the better good I always say.

[ua_guy]

Are saying you bought the house only expecting to live there for 3-5 years? If that's true, why do you buy rather than renting? Buying a house is not a short-term proposition.

Can you share what has changed that is making you consider walking away? I'm really curious what would make someone consider that as an option.

When we bought the house, everything surrounding it seemed "right" including:
-being the smallest house in the neighborhood but having a large, wooded lot (1/3 acre)
-located in an established neighborhood that is on the upswing in terms of improvements and upkeep
-has a rec lot with lake access shared by association members
-located in a financially 'bulletproof' community in the Issaquah/Sammamish plateau
-in a prestigious public school district
-great location for easy access to any of the eastside freeways.

As such, even in the economic downturn, the house and the neighborhood have done much better than average at retaining value. Our home is still an access point for entry into the community; not many houses like ours come up on MLS searches. Most of the houses in the area are larger (4+ bedroom, 2500sqft+ and usually into the $500k range). We paid $440k for ours at what we now call the height of the market and completed our yearly market comp just one month ago. A couple differnt realtors all peg it right around $400k for a moderately quick sale.

That said, the hell that I spoke of:

The day we moved in, the dishwasher exploded a water line and leaked all over the floor. That same day, while removing some of the owner's trash from a corner of the garage, we discovered a carpenter ant infestation in a garage wall. We tore out the entire interior wall and had to exterminate the ants.

The roof has been replaced twice in a period of 3 years. The seller agreed to pay for the roof replacement as the old roof was uncertifiable. Two years later, we discovered the roofer replaced certain sections of plywood with the wrong thickness causing tarpaper to tear in spots, and the roof to leak. After almost 6 months of "battle" and blue-tarping, the roof was replaced at no charge for a 2nd time, including all plywood.

The roofer failed to connect the vent fan to the exhaust through the roof (discovered last November). Mold issue.

6 months after moving in, we discovered a leaky shower after my foot went through a sheetrock wall. Not visible in the inspection. Floor was also rotted around the toilet, so that began a master bath remodel.

When swapping toilets with the guest bath, we discovered that the toilet flange had pulled out of the floor (rotted) --also not visible from inspection under the house since the subfloor is on top of tongue-and-groove. Major rework of guest bath.

A windstorm put several holes in the roof, damaged a car that was parked outside, and broke windows. So began energy efficient window replacements, since the originals were single pane and we discovered that many of the seals were shot.

Consequent wind storms also damaged the house; begin $5k of tree removal.

The kitchen needs to be replaced. We later discovered the kitchen cabinets were installed on top of pergo (floating floor) and that the countertops are mostly unsupported. Just months after moving in, we noticed the countertops pulling/falling away from the walls, and buckling in the floor. I don't have $20k to remodel the kitchen right now; so it stays.

An exterior patio was draining water at the side of the house. We did not know; nor did the inspector since that area of the crawl space was inaccessible due to HVAC ducting. Not only was the patio covering a foundation vent, but stray rainwater was entering the vent making the crawlspace damp. Removal of patio, replacement of patio door, and rebuilding damaged studs and foundation footers = $5k.

The house needed painting. Unfortunately, the ants had damaged some of the siding, and the previous roof had leaked into some of the walls, so there was work to be done there as well. $5k later had a bunch of the cedar siding replaced, whole house prepped, primered, painted, and finished. Looks great.

While the ducting for the HVAC system was 'connected' --it was leaking air horribly. My other half and I spent a week down there putting sheet metal screws in vents and either heat-taping or sealing them with mastic. This also mandated a call to the company that installed the vapor barrier in the crawlspace; The job was done so poorly that I sent them pictures and advised my next step was small claims court if they were unwilling to rip the entire thing out and replace (with my supervision) the following week. It was done by the following friday.

A simple office door rubbing on its frame turned into an interior renovation project. The door was rubbing because there was no header; someone had done an improper remodel. This requierd ripping out that entire interior wall, re-framing, new drywall, etc. $1k.

...And that's all I can recall at the moment. There was a bunch of minor stuff as well, and tons of moments where you look at something that's been done, i.e trying to replace a light fixture in a box that is not attatched to framing correctly, screws stripped out, and the Romex missing the ground wire. Everything turns into a huge project.

In December, I discovered more water coming through the roof. I was ready to kill someone. I crawled into the attic and discovered it's actually a masonry issue. The chimney has finally failed; needs a new cap and the whole unit above-roof needs to be sealed. A neighbor who is a mason estimated the work at $1k.

Not only is the house underwater from a financial perspective, but even after all this heartache and money bleeding, and "post-inspection" discovery, there is a lot of work that needs done.

-Kitchen needs fixed (new cabinets, flooring, countertops)
-Carpeting needs replaced (cheap carpet only lasts 5 years. We're on year 6).
-Landscaping (the yard is a disaster...beyond what a rake and shovel can do)
-And a bunch of finish work (molding, hinges, maybe put drywall up in the garage again).
-The driveway will need to be repaved at some point (tree roots); a future homeowner could take issue with it or it could be a nasty liability if I stay in the house.

There are days when I'm just f*cking done. I'm 28 years old and have spent the last 5 years of my life busting my ass to pay for this house and all its problems; spending my free time fixing what I can to cut costs, mediating damage, etc.

I estimate it will be a good 5 years before it's even worth what we paid, plus it needs an extra $40k estimated in work. So, I've been through a lot, done a lot of work, but it's still not enough to make me stay.

A smart business man would absolutely walk away; unfortunately, I'm just not convinced that it's the right thing to do for our country. Forget banks and predatory lending- to hell with banks. But defaulting on a mortgage trashes more than just the banks.

On the flip side, I've been unable to pay down my $40k second mortgage on the place. I had planned to nuke that with the tax return, but instead it's gone to repairs and supplementing income in a crappy economy. Another exit strategy is to dump 100% of my resources into paying off the second, which would let me get out of the house at only a sight loss (say $10k?) --that might be worth it just to be done with this nightmare.

The good news is I'm still jamming 15% of my income into a retirement account and saving another 10% in cash to keep things flowing, so I'm down, but not out.

[ua_guy]

Oh, and I bought instead of renting because I thought we were in for a California market of $500-$600k entry level homes. I knew there was going to be a reset, but figured it was at least 5 years off.

The good news is I bought something that I can stay in (situational...good area, relatively close to work, family). The part that didn't work out...well, turns out the house is possessed/demonized. I've refinanced, so the loan structure is good and I can live with it.

Tell me this: What's the risk in bailing on my mortgage? I've got a credit score of over 800, I don't have any credit card debt, student loans, etc. I've heard the credit hit is between 150-200 points which would put me in an average credit bracket. I live in the house rent free for say, 12 months, while the bank figures **** out and collect cash, and then they take it and it goes down as a foreclosure on my record.

Theoretically, I'd rent for the next 3 years or so while I rebuild credit (assuming I can find a place that will rent to me with a 600 beacon) and then if the market is still hungry for buyers, i can buy another place. (All this is assuming I pay off the 2nd mortgage, which is unsecured--they could come after me legally and garnish wages, etc)

Win? Tell me it doesn't work in my favor. (It's a good thing I have a conscience, still debating my overall responsibility to the USA as a homeowner).

[CCCFree]

The first 6 months of 2010 saw over 1.9 million foreclosure proceedings initiated. This staggering amount accounts for an average of 1 in 411 homes receiving notice.

[rj.phila]

Tell me this: What's the risk in bailing on my mortgage?

hey-here's my thoughts; keep in mind this is coming from a borderline(maybe full blown, depending on your POV) democratic socialist leftie guy who has no qualms with the idea of walking on a mortgage.

bottom line: i dont think its in YOUR best interest to walk. im gonna try to keep this quick and to the point:

1-your gain: in theory, you gain 40k in the sense that FMV of your home lost 40k. you also get a "bye", in the sense that you get a chance to not pay out all the interest inherent in your mortgage loan.
2-your loss: your home, and any principal/repairs/closing costs/fixed costs related to a home purchase. plus your credit score for 7-8 yrs, but that's negligibly important, or hugely important-depends on POV.

here's the big kicker, and to me, the crux of the whole thing for you:

dealing with the emotional aspects of the fact that you bought what some would call a lemon.

it SUCKS. you were "had", in a way. if it helps you, you are nowhere near alone. lots of people bought lemons, especially at that time. my friend did, and hes a GC!!! completely blows.

but here's the thing: that risk will come with ANY house. you got unlucky, but there's nothing preventing you from getting unlucky again. it could happen.

IMO, if your only option is to contract out all that work, then MAYBE consider walking. its gonna be expensive. if some of it is stuff you can live with while you learn how to do repairs yourself, and then DO the repairs yourself, its worth considering keeping.

[jerrycates]

Walking away is not it, it is more like living away from home. You are not totally abandoning the family ties but only wanting to experience the real life on your own. Independently. That is never a bad thing to do. Hopeful though that your family understands this well.

[littleroc02us]

Oh, and I bought instead of renting because I thought we were in for a California market of $500-$600k entry level homes. I knew there was going to be a reset, but figured it was at least 5 years off.

The good news is I bought something that I can stay in (situational...good area, relatively close to work, family). The part that didn't work out...well, turns out the house is possessed/demonized. I've refinanced, so the loan structure is good and I can live with it.

Tell me this: What's the risk in bailing on my mortgage? I've got a credit score of over 800, I don't have any credit card debt, student loans, etc. I've heard the credit hit is between 150-200 points which would put me in an average credit bracket. I live in the house rent free for say, 12 months, while the bank figures **** out and collect cash, and then they take it and it goes down as a foreclosure on my record.

Theoretically, I'd rent for the next 3 years or so while I rebuild credit (assuming I can find a place that will rent to me with a 600 beacon) and then if the market is still hungry for buyers, i can buy another place. (All this is assuming I pay off the 2nd mortgage, which is unsecured--they could come after me legally and garnish wages, etc)

Win? Tell me it doesn't work in my favor. (It's a good thing I have a conscience, still debating my overall responsibility to the USA as a homeowner).

You could walk a way but that would leave a huge red mark on your credit history for years. First of all I would like to know who this Inspector was, because apparently he doesn't know how to do his job. If he had half the knowledge he should have pointed out a majority of these flaws, even though it is a buyer beware market. The construction workers were also at fault, but I'm the type of person who check their work when their done, because I have some knowledge in home repair. As for walking away again, I personally wouldn't do it, imagine if your were to fix everything up and stay there for another 30 years, you might laugh at it someday when it's all paid for and the mess is done. Rent the movie "Money Pit", I find that humor gets me through a lot. You can make it if you try.

[rj.phila]

First of all I would like to know who this Inspector was, because apparently he doesn't know how to do his job. If he had half the knowledge he should have pointed out a majority of these flaws, even though it is a buyer beware market.

this brings up a good point. AFAIK, the inspector has liability, but the owner has MORE liability, in a conract. there may be an option of lawsuit here. from an outsiders POV, this very much looks like active deception, regarding home condition. if you push hard enough, you may be able to get a settlement out of the seller. arbitration or litigation is expensive to actually complete, but it is a MASSIVE motivator, when weighed against settlement. trust me, this is true.

[Frugal]

I would hold on to my house. I have one, and I know that walking away can damage your credit score really, really badly. Not to mention the morals of it.

[ua_guy]

this brings up a good point. AFAIK, the inspector has liability, but the owner has MORE liability, in a conract. there may be an option of lawsuit here. from an outsiders POV, this very much looks like active deception, regarding home condition. if you push hard enough, you may be able to get a settlement out of the seller. arbitration or litigation is expensive to actually complete, but it is a MASSIVE motivator, when weighed against settlement. trust me, this is true.

To the inspector's defense, we used him on a prior home purchase and he was great. There was also a lot about this home that he (and we) couldn't see.

The owner... We've contemplated litigation against the owner. But we're also smart. We know she has no money. I've kept track of her over the last couple years (facebook is so dangerous). If we sued her and won, we'd win the debt because that's all she's got, and we'd be out money for our troubles.