do people really hand keys back to banks?

[coolchix]

i am sick and tired of the stress of trying to keep my head above water.

i have actually become quite depressed recently - have lost my job and currently have a mortatorium thank god but the level of debt i still owe is overwhelming me. the only way the bank will ever see the full amount is from my life insurance and i hope that wont be for a while yet!

so am thinking of moving in with my parents - myself and my dc's and giving the house back to the bank.

BUT how feasible is this in reality - does personal insolvency absolve people of thei debts. the mortgae i have its about 3 times the value of the house

anyone have any info??

[Esozh]

Call your bank and talk to them about your situation. It's going to be a pain and it's going to take a lot of patience on your part to get a hold of the right person in the mortgage department. You can do a mortgage modification, which may help. Of the mortgage modification crowd, about 2% of those approved are able to get some principle reduction, aka debt forgiveness. Slim chance, but possible.

The other option would be to try a short sale. The bank may leave you on the hook for the difference in the amount the house sells for versus what you owe, which from the sounds of things, does you not an ounce of good.

The last option would be to go through a foreclosure.

I went through this process when I got divorced. Problem was, my income had dropped significantly, the bank would not modify the mortgage because the house was still valued at the loan amount, and the short sale fell through 2 weeks before closing. I ended up going through foreclosure and took a 300 point hit on my credit score.

[Jerry91]

As you’re underwater, it will be better if you could apply for mortgage relief options. You should contact the lender and apply for it. If you want to get rid of the property, then you can apply for a deed in lieu of foreclosure. If the lender gives you the option of cash for keys, then you can surrender the keys of the house and get cash.

[Gailete]

But be prepared for tax consequences which could be worse. I know someone will correct me if I am wrong on this, but if you have a debt forgiven or decreased, I believe you will owe money on that amount. At least something to check out.

If you haven't done it yet, now is the time to cut up credit cards to prevent making more debt. Time now for truly frugal living.