When to walk away?

[tmango]

. Our house is very modest and within our means to pay. .

So you agreed to pay, and can pay? But dont want to? If you were to sell the house at a profit, would you share the wealth with the bank? No of course not, so why shouldnt you take the loss on a bad gamble. At one point you thought this house was worth X, and you agreed to pay that. Unless your house has shrunk, I dont see why you shouldnt have to pay what you agreed to pay. Or just sell it at a loss.

[PrincessPerky]

I see that most of you still look from the moral side.

What if you were a business owner whose place of business was located right across the street from a factory. Then one day, the factory closed and all your customers were gone. Is it morally wrong to close shop and move? That's all I'm considering. If homes are an investment and that investment tanks, why don't you have the right to get out. I'm fully well willing to pay the costs. I just want to know what those are going to be and people's experiences about if they went through that process.

close shop sure, refuse to pay any debt no...there is a big difference, yes you took out a loan, you signed your willingness to pay..not pay if your job held, but pay period.

I will not ignore morals in decision making, sorry.

if you are fully willing to pay, than why talk of walking? getting out of an investment involves selling...selling at a loss sometimes. not running away.

[Smelly_Cat]

I wish I knew how to do that Quote paste thing.

Moma o1 1 and 150 said " I am tired of people playing the victim when many of them knew that they shouldn't be buying as much of a house that they did."

That is a true, But buying a house makes me and some folks crazy. Somehow with the emotions that buying a house causes and perceived happiness, all your dreams will come true.. etc, Its A lot of pressure. Then having the realtor call you each time some one views the house you like.
Next thing you do is sign the contract. Boom now your in it, Vrrrom get a loan, pay everyone involved

If you are young and naive, you get caught in this whirl wind and lose sight of reality. I think realtors and brokers should have something like the Police miranda thing. You have the right to a Attorney, anything you sign will be used against you . SC

[rizzmo]

Looking at your primary residence as an investment does not make much sense. It is more of a forced savings plan, that yields a low rate of return. Even then that only holds up if: property value increase, you don't borrow against or refinance your home, and don't make costly improvements that return less than they cost (which is nearly all home improvement).

I assume that you cannot afford to carry both your current mortgage and the rent at the new area which you will be moving to. If this is the case and you cannot find a renter or a buyer, I would take the whatever steps are required to put you and your family in the best financial situation possible. Two of my extended family members were talked in to 0 down with interest only 2nd mortgages and both of them have recently negotiated deed in lieu of foreclosure without being held liable for the deficiency (difference between what they sell the home for and what is owed). This might be the best way to go for your situation.

[asmom]

I wish I knew how to do that Quote paste thing.

Just click "quote" and it should automatically fill in. Inside the "quote" tags, delete all the parts you don't want and after the last "quote" tag which looks like this..... [/QUOTE].....start typing your response.


Now carry on all.

[FrugalFish]

I'm really torn on Helpme's dilemma. This doesn't seem to be a case of someone who doesn't want to stay in a house because they have bad feelings about continuing to pay on a house that's worth less than is owed. The facts, as I see them, are as follows:

1. Helpme is upside-down on the mortgage.

2. The family must relocate soon for work.

3. There are no buyers in the area, no matter how low the prices go. (I've lived in a town at one point where no one was buying anything at any price- it does happen).

4. Renting the house out is not an option. Sure, Helpme could get a renter who can't cover the complete costs, but in markets like Helpme's, renters are a losing proposition. They will not likely take care of the property, and may very likely trash it.

It seems to me like Helpme is facing a situation where the house will potentially not sell for many years and it's unrealistic to maintain a new primary residence (rented or owned) and continue paying costs on this other house while he waits for a market recovery. I'm reading the situation that Helpme is considering cutting his losses now, rather than hold onto the house for another few years (throwing good money after bad) and then likely allowing a foreclosure to happen at that point.

It's a terrible situation with no good answer. I feel for you, Helpme, you've gotten caught in the crossfire. If there's any way for you to get out of this without going all the way to foreclosure, I would encourage you to go that direction. If you feel trapped and feel it's only a matter of time until a foreclosure in inevitable- then maybe it's best to cut your losses now.

I do have a bit of a problem with your statements regarding not caring about morals. That attitude is what got us into this situation in the first place. More of the same on your part doesn't make matters better. Unfortunately, your posting that way made you come across as someone with low morals- when you seem to be trying hard to remove that aspect from this decision to make yourself feel better about it?

[segmond]

I feel your pain! I am in Michigan too, I just made a post like yours only to find yours. http://www.savingadvice.com/forums/d...tml#post196863

[banditfist]

Call you lender and try the short sale route. This will be the least harmful to you. If they won't let you sell it at a price that it will sell at, then screw them.

Soon enough banks and lenders will go back to sound lending practices:
no more than 35% debt to income ratio
20% down payment!!!!!!!
Proof of income and a reliable job

Until those three happen, the lenders deserve to get hammered! Of course, following those three tenets will also cause housing to come down in price another 10-20%. It absolutely needs to. There is no way to avoid it.

On the home owner side, people need to get back to looking at their home as a place to live and not an investment. The reversion to the mean in house prices will eventually mean that houses will get back to appreciating at about 0.1%+the inflation rate. With the run up in the housing market, the reversion to the mean will take a long time especially with the government screwing things up.

[segmond]

Call you lender and try the short sale route. This will be the least harmful to you. If they won't let you sell it at a price that it will sell at, then screw them.

Soon enough banks and lenders will go back to sound lending practices:
no more than 35% debt to income ratio
20% down payment!!!!!!!
Proof of income and a reliable job

Until those three happen, the lenders deserve to get hammered! Of course, following those three tenets will also cause housing to come down in price another 10-20%. It absolutely needs to. There is no way to avoid it.

On the home owner side, people need to get back to looking at their home as a place to live and not an investment. The reversion to the mean in house prices will eventually mean that houses will get back to appreciating at about 0.1%+the inflation rate. With the run up in the housing market, the reversion to the mean will take a long time especially with the government screwing things up.

after reading about what people are going through with countrywide and shortsales, i will not even attempt to do a short sale with them.

[Gjowers]

I am torn on this as well, but only to an extent. Your circumstances have changed and apparently through no fault of your own. There, but for the grace of G-d, go many of us. Your moral obligation, as I see it, is first to your family. The law has created avenues of relief for people in your situation. From what you've told us, I see no shame in taking one of those.

[cptacek]

Sorry, you agreed to pay for the house, you need to pay for it.

The only job your wife can get is 3 hours away? Hmmm, the only job I can get is 2.5 hours away from my husband (or take a $40,000 pay cut), and I'm doing it. It sucks living this far away from him during the week, but this is a sacrifice we are both making to reach our goals and live up to our obligations. We owe a crap-load of money to a lot of people, and we could just decide we didn't want to pay them and go into bankruptcy, but as I sit here writing this in my rented room, he is 160 miles away probably sleeping on the couch or playing with our puppy.

Character is what you do when others aren't watching. And what you decide to do when others are getting away with doing the wrong thing.

[Goldy1]

How would this affect his credit and fo rho wlong? Me an dmy DH have great credit and a CLERICAL error ar AAA once put my credit score down like a few points, no tmany which put me in the next lower tier of rates and it was jacke dup, and this is just one insurance for the car. They fixed it, but I was pretty mad.

Michigna has been hit bad, but so has a lot of other states. My parents bought a condo a few years ago that went down in vale like 30% in a couple years at least. Yes, they are still paying off the note, but easy for them as partial retirees.

[Joan.of.the.Arch]

According to this article, Southeast Michigan unemployment rates mixed - Crain's Detroit Business, the unemployment rate in Detroit in October was 8.8%. In my city it is currently counted as 12.2%, but we see many regional layoffs set for this month, January, and February--including in the auto industry. It surprises me to see that unemployment is not counted higher in Detroit than here. I had been persuaded that Detroit was the kind of place that would soon be an other-worldly ghost town, a Mad Max place which anybody with any alternatives should leave. But maybe that is not really so.

[disneysteve]

The only job your wife can get is 3 hours away? Hmmm, the only job I can get is 2.5 hours away from my husband (or take a $40,000 pay cut), and I'm doing it.

I've stayed out of this thread (because there was no point in getting involved) but I did want to comment on this. I don't know what things are like in Michigan but here on the east coast, 2-3 hour commutes are pretty common. I live in Southern NJ and know numerous people who work in NYC, 90 miles away. That is 2-3 hours of travel time by car and train. Folks leave home before 6am and get home after 8pm or 9pm. Some people maintain an apartment in the city and don't come home every day. I have a cousin who lives in CT and works in NYC. For years, he had an apartment in NY in addition to his home. He spent 2-4 days in NYC away from his family and came home on the weekends.

One of the sales reps who calls on my office just had her territory changed. She leaves in the northwestern suburbs of Philadelphia and her territory is now all of Delaware. So every day, she will be driving a couple of hours from home and making sales calls all through Delaware, which is a couple of hours from north to south by itself, so at some points of the day, she may be 4 hours or so from home.

I'm sure it sucks to have to make that kind of commute. I live 8 miles from my office so I can't relate at all. I'm glad I get to see my wife and daughter every morning and every night. But lots of people don't.

[rooskers]

Wall Street Investors (you know the ones I am talking about) - Made money going up, made money shorting, made money through ponzi schemes, made money inside information, still making money.

Big Banks - Rescued and get to keep million dollar bonuses.

Mortgage Companies - Made billions, kept money, declared bankruptcy or got rescued.

Real Estate Investors - Made millions, last couple deals just walked away without feeling any moral obligation for anything else, some working system to get bailout money.

Real Estate Agents - (not all of them) Did absolutely anything to make the sale.

Loan Officers - Lied, Cheated, Lied, anything to get the people money so they got commissions. Now working with different rescue plans, bailouts and such calling back customers and redoing loans and making more commisions.

Dumb People - Did no research, got way above their means, rescued by bailout. (ok I know not all but some are)

Responsible Ones - Bought house within their means, house now worthless, get layed off, no bailout, financial ruins for next 5 - 10 years, get laughed at by all the above, feel regret and guilty for bad decision, will probably pay higher taxes to help all of above, if temtped to walk away spit on and yelled at by above and everyone else.

NOBODY SAID LIFE WAS FAIR

Just so you know I bought a house I could afford and it is now currently worth 40% less from investors just walking away from them and the massive overbuilding in the area. I do plan on paying for my house partly from moral obligation and other factors (we like the house) but I can certainly understand the posters feelings.