What to do when you can't get out

[Pernillep]

almost 6 years ago we bought a house in a "transitional" neighborhood. We wanted ot make sure we did not over buy so the payments were reasonable. Rehabbing was starting to sprout up here and there but we were probably one of the first to move in. Now 6 years later and the economy has tanked completely halting any improvements and actually making everything take a turn for the worse. It is just not safe here anymore and with 2 small children I can't justify staying. We can't take walks outside or really spend any time in our yard. The schools are horrible and filled with gangs, we would have to do private school for sure which is $11k a year min. Drug dealers are openly dealing and nothing gets done. i call but they are still here. Last week a huge fire took over the block behind us (we share the alley) when presumably addicts set fire to an abandonned house. This particular house has already been set on fire once this year. My husband gets pulled over by the cops with our children in the car because they think he is here to buy drugs. They are tough Chicago cops and pretty scary, not somethign I would want my children to remember happening on a regular basis. Our garage has been burgelarized not once, not twice but 3 times. One of our windows have been shattered. I just can't live here anymore.

We talked to a realtor who said we would be lucky if we could sell with a $25k-$50k loss.I know for some that is peanuts when looking at how far upside they are on their mortgage. We would stay if the area was safe for children and suck up the private school cost but it is not.

I would consider selling at a loss but to even get that price we would need to make the place "pretty" meaning new paint etc. The loss would mean a personal loan to cover the difference as we do not have $20 plus K sitting around.

So, our problem is. We can afford the payment and the help I have looked into we are not eligible for since we are not financially in trouble.

You wise mammas, is there an option I have not thought off.

[eirual]

Is there any chance of renting it out?

Any chance at doing anything to help the neighbourhood?

[shayinme]

I am from Chicago, where exactly are you located as far as neighborhoods. I used to live in Wicker Park and Bucktown back in the early 90's before they got gentrified and I am thinking you might be able to rent it out for a decent price especially of someone else thinks there is potential.

Knowing Chicago the way I do, I know you are in a bad area it can be really bad.

[Eman'smom]

Do you have to be in finacial trouble to short sale? Honestly I'd take out the loan or whatever to move from that. I know 20+ grand is huge but I'd try to find a way to pay it to stay safe.

[RiverSky]

I think short sale is a reasonable possibility. Renting out is iffy, only because if it's such a bad neighborhood, you might find that repairs are constant and the tenants won't take as good care of the property as you would, therefore it might become even more of a target. It sort of depends on how much your mortgage/tax/insurance is and how much rent you could get for it, too.

Otherwise, there is the option of giving the keys back to the mortgage company, but I don't know what the laws are like, what sort of financial (tax?) repercussions there might be for such a thing. Personally, I'd probably take a big hit on my credit just to get into a safer neighborhood.

Make sure that no matter what you do, you keep insurance on the place until you are absolutely POSITIVE that you would no longer be liable for anyone being hurt on your property.

[Pernillep]

Originally Posted by shayinme

I am from Chicago, where exactly are you located as far as neighborhoods. I used to live in Wicker Park and Bucktown back in the early 90's before they got gentrified and I am thinking you might be able to rent it out for a decent price especially of someone else thinks there is potential.

Knowing Chicago the way I do, I know you are in a bad area it can be really bad.

We are in West Humbolt Park/ East Garfield Park depending on who you ask.

I doubt anyone will think it has potential.

[shayinme]

Originally Posted by Pernillep

We are in West Humbolt Park/ East Garfield Park depending on who you ask.

I doubt anyone will think it has potential.

Yikes. I know Humboldt Park and that always struck me as an area where gentrification might never happen. I know how bad it was in the 80's and 90's and yeah, you might be hard pressed to rent to anyone. Though and I admit its been 7 years since I lived in Chicago but having spent 30 years there and still having family there I know the city. Is it possible you might be able to find young folks (artists) or those without kis who might be want to rent it?

Like others have said short of a short sale or walking away both which I imagine have their own issues, I would probably take out the loan and do whatever to just leave.

[maciascl]

Call a real estate agent & talk to them about a short sale!! Just because you talk to someone doesn't mean you have to do it, but atleast get soem honest answers about how it might be able to help you.

[SleeplessMommy]

Short sale

[Paxjourney]

I think at some point you'd have to put personal safety over finanical security. I'd pick whatever option does the least to my financial security to increase my (and my childrens) personal safety.

[Pernillep]

I am surprised that so many are recommending shortsale. When we discussed it previously we were told it would not be accepted by the mortgage company as we are well within our ability to pay the monthly mortgage. Maybe it is time to try asking the question again.

An

[BetsyS]

A couple of years ago, we wanted to get out of our house (my dh was transferred for work, but it was conditional on selling our house, because he needed to live close to the new job), but the mortgage company didn't consider that a good reason for a short sale. They wouldn't approve us for a short sale at all. FWIW, we are about $60,000 upside down on our house. When we asked about the short sale (2 years ago), we thought we were about $30,000 upside down.

Our circumstances have changed in the last two years (as a result of turning down that transfer, dh's income has fallen by 1/3, housing prices in my neighborhood are continuing to fall), but we're still not eligible for a short sale.

The mortgage company has said that if we are several months behind on our mortgage (we are current, by the skin of our teeth, but still current), they'll talk to us about deed in lieu of foreclosure, but I'm not really holding my breath on being approved for that.

Our bank seems to have pie-in-the-sky ideals that no one is really all that desperate to get out of their house (for whatever reason), and that we'll all continue to stay in our houses/mortgages and make it work.

[SleeplessMommy]

Originally Posted by Pernillep

... as we are well within our ability to pay the monthly mortgage...

An

You could sell and bring cash to the table :-( Or you could rent it out at a loss each month. Either way moving sounds like a good idea.

Real estate standards may be very different for bad-neighborhood houses. You may need to paint just the 1st floor, or skip paint entirely and offer cash back at closing.

You might be able to find lender-specific advice here, to see if anyone had gotten a modification in a similar situation:

http://www.loansafe.org/forum/

[honeybunmom]

Just wanted to send you some hugs. I can relate, kind-of. We live on the west side - we're still pre-cute neighborhood name. It's just the west side, still. We bought 5 years ago, but just moved in last month. We've been rehabbing, rehabbing, rehabbing. You know where the cops shot at a drug dealer (I'm sure this is descriptive of more than one west side news story, but, stay with me) last week when he tried to mow them down with his car and ran into a traffic light? In the alley right across the street from us. My husband could see what was going on because there is a vacant lot adjacent to where this all happened so, no house to block his view.

There are open drug deals going on on the block behind us multiple times a day. There are nice neighbors on our street, though. We do send our daughter to preschool outside of the neighborhood, though and plan to enroll her in the new waldorf school the preschool feeds into.

I do hope you are able to get out. The vacant new house down the street from us has dropped in value by at least $100,000. They were initially asking close to $400K and have dropped it to $299,999.

Yet, the property taxes have gone up about 500% since we bought the place. This second installment for this year showing the greatest hike of all.

Again, obviously no real advice here, just wanted to send you hugs and good luck.

[Dingletwitz]

I was in your position last year--owed 120K still on the 130 mortgage, and the real estate person I consulted with did one of those neighborhood estimates and came in about 70k....I also lived in an area that originally had potential, but hit the skids while I was there...lots of meth and gang activity, drive by shootings, etc. etc. So, after much back and forth about it, I decided to foreclose and join the (gasp) other over 100 home owners within the square mile. I was able to save a lot over the months I squatted (for lack of a better term) and came out of the other end having made the decision to have crappy credit for 10 years as opposed to paying off 50k for 10+ years. Either way there's no mortgage in my future, but that's not such a bad thing either. The neighbor on one side foreclosed on 200k and it auctioned for 50, the other one foreclosed on 500k and just went to auction.
I hope something works out for you to get your family safe. Shoulda coulda woulda, eh?

[jeliphish]

...I've always wondered if people in your situation would have any way of suing the city for allowing conditions to stay so poor. ...like due to their inability to properly and efficiently deter crime as well as allow the public school systems to deteriorate...your well being is jeopardized. I’ll see if I can find some case studies.

I'm sorry...I know this is stressful

[mnnice]

I guess I would ask the question of if you could afford rent in a place that is safer and meet the monthly payment on a personal loan? If the answer to this is yes then I would do the legwork to get out (looking for a personal loan, a real estate agent, a new place to rent). Bring $20,000 grand to the table is only a couple years of private school.

I don't know if both you and your partner WOTH, but if one person was a SAHP I would seriously consider stopping even if just for the short term to either make or pay off the money you need to bring to the table (especially if your property taxes are going up like in honeybunmom's situation).

[excitedtobeamom]

I would find a way to get a loan for the difference and sell immediately. Good luck!

[Pernillep]

Originally Posted by jeliphish

...I've always wondered if people in your situation would have any way of suing the city for allowing conditions to stay so poor. ...like due to their inability to properly and efficiently deter crime as well as allow the public school systems to deteriorate...your well being is jeopardized. I’ll see if I can find some case studies.

I'm sorry...I know this is stressful

That is a good one for my hubby to research He has already been arguing if you could sue the city for allowing sunday church goers to violate parking laws

But what they would say is .... sucks to be you.. you should have known better moving in with a bunch of (insert racial slur)

[Fuamami]

Originally Posted by mnnice

I guess I would ask the question of if you could afford rent in a place that is safer and meet the monthly payment on a personal loan? If the answer to this is yes then I would do the legwork to get out (looking for a personal loan, a real estate agent, a new place to rent). Bring $20,000 grand to the table is only a couple years of private school.

That's an idea.

I would call your mortgage company and explain to them. And I would research your state's laws on foreclosure. We are trying to avoid it and I've been looking at this site:

www.loansafe.org

There's a lot of good stuff on there. I've heard that many banks won't consider a short sale until you are 90 days late, but they might. Also, according to myfico.com, the reporting and hit on your credit score are exactly the same for foreclosure and short sale, BUT I've heard a lot of people say that when it came down to it the hit was only 100 points for short sale vs. 200-300 for foreclosure. And, of course, you probably won't be able to get a mortgage for at least 5 years if you just let it go to foreclosure, but I've heard short sellers have better luck getting mortgages sooner.