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I had a pretty serious discussion with a friend this weekend and I mentioned that perhaps they should walk away from their home. I never thought I would ever say that to a friend, urging and suggesting it. She said they couldn't, it was unethical, but I just feel like it might be a good idea.
First off they really need to talk to a real estate attorney but they are being cheap and not doing it. I urged her to push her husband so they can consider BK.
Would you do it if you were in this scenario?
Last April their condo building burnt. There was a lot of damage and everyone had to move out. They have been renting since then. The building was so old there was no sprinkler system because it was not required when built "grandfathered" in.
They paid $525k for their 1 bd condo. Yes that's right. They put down $200k. They were actually in the midst of selling it because they were pregnant with their 2nd child. They can't sell it now obviously.
Right now it appears that the earliest people could move in might be this September. The condo association is now going to raise monthly HOA fees, and potentially there will be a one time special assessment of $60k+. They currently pay $800/month in HOA fee, but it includes heat, etc. This should be going up.
I told her that perhaps it would be best to have stopped paying on their mortgage and walk away.
Her argument is that they have $200k in their place. My argument to consider is, whose going to pay close to $525k when HOA fees are going up? And with the special assessment that cuts into their $200k down payment. Also what happens if other people can't afford their mortgage and rent, like my friends and have already stopped paying their mortgages? And foreclosures in the building go sky high? Property values will drop right?
I wonder is it so crazy to consider walking away? I am praying they take the advice to talk to a lawyer, but financially when does it make sense to walk away?
First off they really need to talk to a real estate attorney but they are being cheap and not doing it. I urged her to push her husband so they can consider BK.
Would you do it if you were in this scenario?
Last April their condo building burnt. There was a lot of damage and everyone had to move out. They have been renting since then. The building was so old there was no sprinkler system because it was not required when built "grandfathered" in.
They paid $525k for their 1 bd condo. Yes that's right. They put down $200k. They were actually in the midst of selling it because they were pregnant with their 2nd child. They can't sell it now obviously.
Right now it appears that the earliest people could move in might be this September. The condo association is now going to raise monthly HOA fees, and potentially there will be a one time special assessment of $60k+. They currently pay $800/month in HOA fee, but it includes heat, etc. This should be going up.
I told her that perhaps it would be best to have stopped paying on their mortgage and walk away.
Her argument is that they have $200k in their place. My argument to consider is, whose going to pay close to $525k when HOA fees are going up? And with the special assessment that cuts into their $200k down payment. Also what happens if other people can't afford their mortgage and rent, like my friends and have already stopped paying their mortgages? And foreclosures in the building go sky high? Property values will drop right?
I wonder is it so crazy to consider walking away? I am praying they take the advice to talk to a lawyer, but financially when does it make sense to walk away?
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