or Connect
Mothering › Mothering Forums › Natural Living › The Mindful Home › Frugality & Finances › Walk away at this point?
New Posts  All Forums:Forum Nav:

Walk away at this point?

post #1 of 91
Thread Starter 

Update as of 11/19/11...just wanted to update my thread...we closed on the sale of the house yesterday.  It is over & turned out to NOT be a Short Sale.  We didn't walk away with much but we didn't have to bring any $ to the table.  We are renting back near my hometown & getting settled in...the timing ended up being kind of crazy.  Our buyers delays ended up putting us in a situation to rent my Dad's old place.  His renters were skipping out on the last months rent at the end of October so he offered it to us for a very reasonable amt.  It's not in a great area but nothing we can't handle.  We did end up having to keep paying our mortgage & taxes for almost 2 months longer than we planned which combined with the moving expenses wiped out most of what we had but being near family & renting from my Dad will take the pressure off for awhile.  

 

The last few weeks were interesting for us...never a dull moment!!!  A blizzard came through before Halloween (unheard of) and a town owned tree on our street knocked a pole out, damaged one of our vehicles, ripped all the utility connections & their casings off our home & left us without power for 7 days...7 days, no power, while trying to pack up the house, with 2 little ones...FUN!!!  BUT when I finally got someone in the town to listen to me, they paid the electrician directly to fix the damage to our home & did it without any of the normal "red tape" since the closing was in jeopardy & they didn't want anyone moving in or out of the town with a bad taste in their mouth.  (they were getting so beat up over the response to the tree damage all over the town so I guess they saw it as a good deed)

 

Then the night before our move, my DH went out to grab sandwiches & a gal who fell asleep behind the wheel rammed into our car messing it up nicely, but she did admit she fell asleep & was issued a summons so we should hopefully not have insurance impact on our end.  DH was fine & just shook his head & said hopefully, 2012 will be a little more fun for us.  lol

 

Thx again for all the kind words, support & those who shared their similar stories.  Good luck to everyone struggling to hold onto their homes, sell their homes right now & just get by.  

 

 

 

 

 

 

 

 

 

 

I am going to try & provide as much relevant info as possible...I am looking for a "WWYD"

 

We have been trying to sell our house for a year-1st 6 months we were with a realtor who had us priced too high.  We had lots of showings but no offers.  In Feb, we went FSBO & paid the flat fee for full listing rights on realtor.com & the MLS.  We also dropped our price dramatically.  Showings continued & within a month we had our 1st offer but it was very low & we got them up a little but when they came back for a 2nd look, they wanted too many new things. (new furnace & central air-which both worked great & have detailed service records with no issues).  Then another offer came in & we agreed on a price but they walked because they decided to stay in their current town.  Last week, we finally settled with a cash buyer who put us through the ringer.  Really low price & taking many personal belongings of ours.  But we have the house we want to buy an hour away where my family all live & didn't want to lose it to another offer so we decided to go ahead with the cash buyer.  Yesterday, she backed out of a signed contract for personal reasons relating to her divorce.  Our lawyer says we may have a breach of contract suit but those things can't even be evaluated until you sell & have damages & we aren't the lawsuit type. 

 

Our situation is this-DH was laid off from a great job 2 years ago.  My father in law is putting our new house in his name because our income has become so low & much of it off the books.  I watch another little one everyday & DH has been consulting in his field of sales/marketing.  We are both looking for better work & have tons of resumes out & feelers out, are college grads with long term experience in our fields, but it is a crazy job market.  I may do daycare in the new house & even try & do housecleaning, waitress a few nights/ week etc.  We will be making the payments but we know he will offer to help too.  We will also have a garden, chickens & my family a mile away.  More resources, more contacts, cheaper living etc.

 

The new mortgage & taxes will be a 50% reduction of our current.  A huge drop.  If we continue to pay our current mortgage, we will be dipping into the 20% down payment (my 401k plan from my pre-motherhood career). 

 

We are seriously considering moving fwd with the purchase of the new house in my hometown & stopping our mortgage payments on this house effective July 1 or Aug 1.  We would pay our 3rd 1/4 tax bill since they are not included in our mortgage.  We would use a lockbox on our empty house for sale so realtors can get in & out, check on it a couple times a week & continue to market the heck out of it hoping we get another offer within 2-3 months so the damage to our credit isn't dramatic.  Worst case, once we are 30 days behind, we would even consider a super low price & ending up in a slight short sale situation. 

 

We have no car payment & a toyota prius with almost 70,000 miles on it.  We have a backup vehicle-my paid off jeep wrangler with 130,000.  We have no debt & would continue to pay everything else on time. 

 

WWYD?  I think what we keep coming back to is that we don't want to lose this great house, in the perfect location, at a fantastic price while continuing to dump money into the house we know will sell eventually anyway.  The big "if" is how long before we sell it & therefore, what hit will our credit take????


Edited by ellairiesmom - 11/19/11 at 1:38pm
post #2 of 91

I would interview three "busy" local realtors about the pricing of your current place and their expectations of it selling by august. Ask for offers with a large escrow amount ($3000 or more)  - if you receive an offer with a low escrow amount, counteroffer asking for a higher escrow. (We were burned once by a $500 escrow  buyer. you have so much more at stake since this is not a hot market.)

 

You would like to walk away with the mortgage paid off, but should consider a short sale. Is your current pricing a short sale?

 

At any time, you could receive a job offer which would require relocation (away from your family) I would suggest you stop making payments on the current house (or make a reduced payment) continue to live there, and list at short sale pricing. After that, my suggestion is renting - then you can move easily when a job opens up.

 

You may want to ask about your mortgage holder at creditboards (creditforum?) .com... there may be advice re: your specific mortgage holder.

post #3 of 91

First off, I don't think what you are planning is ethical.  You HAVE 20% as a down payment in savings...which you could be using to pay for your current house.  As far as I'm concerned, you're considering stealing from your bank and breaking your contract so that you can buy the perfect house at the perfect price in the perfect location.  You agreed to pay them back when you signed the contract.  If you were in a situation where you didn't have the money laying around, I would say you should walk away, but what you're talking about doing is putting yourself in the best financial position with complete disregard for the fact that you have the money and would be breaking a contract and not paying back what you owe.  It is not the same as not having the money and walking away.  I don't give a crap about the banks...but it is people who make these sorts of decisions who have added to, if not caused, this huge housing mess which is ironically affecting you right now as you try to sell your house.

 

Completely unrelated to the fact that I disagree with this idea ethically, short sales are complicated and you could easily end up in foreclosure.  My uncle does credit type counseling and counseling for those in foreclosure and said that the banks are starting to really come after people who walk away.  This is a relatively new development, and is a direct result of banks realizing there are plenty of people out there walking away from their mortgages not because they have to and don't have the money, but because they feel like it is financially advantageous to them.  They're getting smarter and you may well find yourself in court being forced to pay your bank back a huge amount of money on top ruining your credit.  And yes, it will ruin your credit for several years and if the house you're in now doesn't work out for whatever reason and you want to move and buy a new one...you're not going to be able to.  You're also going to have a real tough time if you need to buy a new car, etc. 

post #4 of 91


 

Quote:
Originally Posted by APToddlerMama View Post

First off, I don't think what you are planning is ethical.  You HAVE 20% as a down payment in savings...which you could be using to pay for your current house.  As far as I'm concerned, you're considering stealing from your bank and breaking your contract so that you can buy the perfect house at the perfect price in the perfect location.  You agreed to pay them back when you signed the contract.  If you were in a situation where you didn't have the money laying around, I would say you should walk away, but what you're talking about doing is putting yourself in the best financial position with complete disregard for the fact that you have the money and would be breaking a contract and not paying back what you owe.  It is not the same as not having the money and walking away.  I don't give a crap about the banks...but it is people who make these sorts of decisions who have added to, if not caused, this huge housing mess which is ironically affecting you right now as you try to sell your house.

 

Completely unrelated to the fact that I disagree with this idea ethically, short sales are complicated and you could easily end up in foreclosure.  My uncle does credit type counseling and counseling for those in foreclosure and said that the banks are starting to really come after people who walk away.  This is a relatively new development, and is a direct result of banks realizing there are plenty of people out there walking away from their mortgages not because they have to and don't have the money, but because they feel like it is financially advantageous to them.  They're getting smarter and you may well find yourself in court being forced to pay your bank back a huge amount of money on top ruining your credit.  And yes, it will ruin your credit for several years and if the house you're in now doesn't work out for whatever reason and you want to move and buy a new one...you're not going to be able to.  You're also going to have a real tough time if you need to buy a new car, etc. 


Very wise words.

 

I would think long and hard before doing something with such questionable moral and legal issues attached to it.

 

post #5 of 91

OP - our house is currently on the market & has been for about the same amount of time as yours, so I really feel for you about that.  I'd hate to tell you how many great-for-us homes I've seen disappear.  mecry.gif  It kinda sucks.  

 

Personally, I wouldn't do what you're thinking of.  I think it's risky and is just likely to have major repercussions that you just wouldn't be able to anticipate.

 

 

Have you looked into renting your house out, or offering it rent to own?  It depends on your area, but both of those are still doing pretty well in ours and if we hit a certain point (mentally, probably, IYKWIM) we're considering those.  Any of those realtors around that do the "I'll buy your house" thing?  I'd try to brainstorm some other solution?  

post #6 of 91

Oh, and OP, I just have to add.... I know my post sounded really harsh and I didn't mean it that way.  I've been where you are.  It took 2 years to sell our house and we lost a TON of money on it...money which we did not have to lose.  We now live in a home with a cheaper mortgage and I'm happy as a clam.  I am glad we took the high road.  It was really hard for me to see and hear that a huge part of the reason we lost as much on our house as we did and spent so much time trying to sell it was because lots of people in our neighborhood walked away.  And not because they had to, but because it was good for them financially as they were upside down in their mortgages and the neighborhood was going to crap.  So their selfish choices really negatively impacted us as we tried to make the ethical decision, hard as it was.  So, if I sound bitter, it is because I guess I am.  I  didn't mean to come off as a total B though. 

post #7 of 91

Yeah, that sounds incredibly unethical to me.  Just because you *can* do something doesn't mean you should.

post #8 of 91
And not only is it unethical but I am not sure that you really "can" do that. Banks make it a lot harder to foreclose or short sale nowadays, since "everyone is doing it." If you HAVE the money and/or assets and CHOOSE to walk away, they can come after you pretty hard. If you are flat broke and just can't afford to live there anymore, they may still come after you but (and probably will) but will be much more willing to actually allow the foreclosure and short sale process to go through a little more smoothly.
post #9 of 91

A payment made more than 30 days late will impact your credit. How much is hard to say. Why not rent it out? Most property management companies only charge about 10% of the rent if you're concerned about doing it yourself. But also, if you're only an hour away, it should be pretty easy to manage.

post #10 of 91

Renting it is a good idea.  If your area is anything like mine, LOTS of people are selling their homes and renting.  The rental market is crazy-competitive.  Everyone I know is always asking if anyone knows of a good rental for this cousin or that friend or this niece who just sold her house. 

post #11 of 91

Are your parents going to get the loan for you on your second house? Or will you have to get a loan yourself?

post #12 of 91
Thread Starter 

It was very unethical for both parties to walk away from signed contracts on our home for the reasons they did.  Unfortunately there isn't much a seller can do when that happens.  Legally, you can't really hold their deposits.  We were so far along in our current deal that we already had the accepted offer in on the new home & that family was already planning their future as well. 

 

The 20% we have saved is a very little bit of $ and will only take us 4 more months in this home.  We exhausted everything else to continue to pay all our bills on time for 18 months.  DH accepted a horrible temp job to get off unemployment because we felt it was the right thing to do as to not extend unemployment.  So we gave up all assistance early on & did old fashioned hard work to stay afloat.  Temp job ended & we burned up everything to stay here & have nothing left except enough to live for the next 4 months.  The other home is less than half he value of our current home.  I am not going to share the actual #s on a message board but we are going to be downsizing dramatically.  And we have done everything we can to do something with our lender.  They have flat out told us that without enough income on the books, they can't do any sort of modification.  And then they said that as long as we are making our payments, there is no other assistance they can offer.  We have Chase & our attorney told us they are the absolute worst to deal with when in a crisis.  We have looked into every option possible for working with Chase.

 

We will prob sell without it being a short sale, but we will walk away with nothing.  The advice we got from an attorney & a credit consultant was that for a short sale to be accepted by the bank, you need to be 30 days behind.  And that if we want to accept the next offer that comes in & can't get them up enough to not have it be a slight short sale, the bank will deny it if we are all paid up.  We are also being told that if we pay everything else on time, our credit won't take such an awful hit. 

 

SleeplessMommy-here is where we are at on some of the things you mentioned.  Thx for that feedback. 

We consulted with 3 realtors in our area who believe we are now at the right price.  We also got a copy of the current comps in the area & it looks like we are right where we should be.  We are also offering a cash bonus to the realtor who closes by 9/15 and we are stating on every website & my weekly flyers that we are motivated, motivated, motivated.  Relocating anywhere but my hometown isn't an option.  It is where our family is & where we are going to be able to regroup, get some temp work going, have free help with childcare when needed so we can both work & all the other support that comes with having family right there.  It is also still within a doable commute to NYC for job market considerations.  And all of Northern NJ.

 

Renting it out or renting to own is something we are currently looking into as well.  It looks like straight renting won't come close to covering the monthly expenses. 

 

So anyway-in 4 months we are done financially in terms of this house.  It has bled us dry.  One way or another, we will end up out.  Our thoughts were move forward while we can.  And from what every realtor is telling us, this house will sell well before anything happens.  If we wait though, we will have nothing left.  It's a gamble, it's a sucky situation & we are trying our best to navigate it.  I realize now that in my defeated, depressed etc state, I should never have posted this...I definitely can't handle the moral judgement. 

post #13 of 91
Thread Starter 
Quote:
Originally Posted by laura163 View Post

Are your parents going to get the loan for you on your second house? Or will you have to get a loan yourself?


My father in law has been kind enough to put a new mortgage in his name for us.  He does not want us to rent & said he would put the new house in his name.  We would give him the 20% down.  The house we are looking to move to is a very good deal because the family needs to relocate South.  So the 20% down isn't really a tremendous amount of $ but it is all we have left.  The little bit we are both hustling to make now pays all our other bills...car insurance, home owners insurance, electric, taxes (our taxes are not in our mortgage so will have to keep paying those until we sell the house) etc.  But there isn't enough left over for the mortgage payment.

post #14 of 91

ellairiesmom- I don't think you have a moral obligation to bleed yourself dry before you lose your house anyway.  You need to have a little savings when you leave because a short sale or foreclosure will seriously damage your credit.  If you are going to lose the house anyway, I wouldn't make another payment. 

 

I lost my home in foreclosure two years ago.  After that we moved to my husband's hometown 15hrs away from our old home.  We have a great community here and are so happy to be here.  Life is short.  Move along and be happy.  Try to ignore the moral judgement and do what is best for your family.

 

People like the OP absolutely did not create this housing crisis.  The banks did.  Watch The Inside Job if you care to learn more.

post #15 of 91

Sounds like you're doing a lot & have been talking to all the right people.  I really hope things work out relatively smoothly for you.  Wish I knew of some other great option. . .  hug.gif

post #16 of 91

Contracts have NOTHING to do with morality. they are contracts. Legal documents. Your credit would not be that damaged. Most credit agencies, while they note you are not paying, if you are paying all else on time, will not completely ruin your credit. It will go down some but not terriblly.  A mortgage is a contract and a contract can be rendered null and void.  People seem to have a mystical idea that because its a HOUSE, its different. Nope, its a financial decision ONLY. Now be aware, if you walk away, that shortsale/foreclosure process will take a minimum of a year if not most of two. And you will be required to keep trying to sell it which means still paying the utilities and such though not the taxes. 

 

Its your decision but use cold rational judgement and financial calculations which include the stress AND the fact that you will still need to pay some things to try to sell.  But do not fall into the "thats unethical" trap of thinking as it clouds your judgement with unnecessary emotionalism.  Think like a corporation. Is the contract still giving you what you want? If not, dissolve it.

post #17 of 91

We did a short sale with Chase, and they were awful. First we tried a modification until we realized they were just yanking our chain. Luckily for us, our house had lost so much of its value that they didn't really have a choice. Since you aren't quite underwater, I think you're doing the right thing. It will be much easier if you can get it sold for just what you owe on it rather than trying to do a short sale. If you are close, and you have some savings, Chase may require you to make up the difference, which would suck big time. Have you staged it as much as you can? Are you getting showings?

post #18 of 91

Also, I totally agree with Rani. When we first decided to stop paying our mortgage, I felt like a total failure with no principles. My sister, who is an attorney, told me that the law does not view contract law as moral in any sense, and that made me feel a lot better. It is just like Rani said, a financial decision. If it's not working, you have no moral obligation to fulfill your end of the deal. Your mortgagor has repercussions available to them, of course, but you are not a lesser person because you decide to risk that.

post #19 of 91
Thread Starter 
Quote:
Originally Posted by Fuamami View PostHave you staged it as much as you can? Are you getting showings?
 

 

Staging has been tough but it is somewhat staged.  We have a 3.5 yo & 16 mos old & I watch a 21 mos old M-F all day.  I had to keep the toys out & we have to live here (esp being on the market this long) but the house shows really well.  But I wonder if moving out & leaving just a few rooms staged might help sell it since it is very "young child staged". 

 

We are getting a decent amount of showings considering the market.  We have showings when others don't...Christmas Eve, Easter Morning, rainy weekends.  We have had 3 offers that fell through due to mortgage issues, personal reasons etc. 

 

On renting & renting to own-we discussed it in depth with our attorney yesterday, another local realtor & I did a massive amount of online reading.  Becoming "landlords" doesn't seem like a good idea for us.  We are not diy'rs & have no money to put anything else into the house from a maint perspective which would concern me with renters in here-especially with the age of the home.  And the rent to own is scarier than foreclosure to me.  To wait a couple years & then have the person not be ready to buy or not want to buy would be too much to handle.  I am also being told the houses in our town don't have great rental potential.  We are surrounded on the outskirts by a couple of colleges (Caldwell College, Montclair State U & Bloomfield College) so most of the rental potential are college students which we definitely do not want to get into. 

 

Chase is already giving us the run around again for the 2nd time in the year.  When we 1st tried to tell them we were struggling they told us they couldn't help us until we were behind.  They said the same thing yesterday.  I reminded them that we did that back in Jan & then freaked out on us & told us they couldn't help us until we were caught up & as soon as we made the payment the cycle started again.  We only bought 4 years ago so a straight refinance-even if our income level could make that happen-wouldn't lower our payments much.  And this modification & help for people that you keep hearing about doesn't actually seem to exist...not if you are with Chase at least.  Maybe it's different with other lenders. 

post #20 of 91



I don't care that the law doesn't view breaking a contract in a moral sense.  When you agree to pay money back to someone, even if that someone is a bank, it is unethical to fail to do so when you have the means to do so.  OP--from your second post, it looks like you might just be delaying the inevitable and I am withholding judgement on your situation entirely.  Perhaps you don't have the means to do so.  Seems like a sticky situation that only you can judge.  But, I do want to correct the idea Rani and Fuamami and ShellyD that because it is a bank, you don't have an ethical obligation to pay them back.

 

And ShellyD-- That is ridiculous and simplistic to say people didn't cause this mess. The banks did. Watch some slanted documentary.  Certainly the banks were slime balls, but INDIVIDUALS made the choice to accept mortgages that they did not know they could pay back in many cases.  Yes, there are a billion sob stories about people losing their jobs, etc, and I feel terrible for those people.  There are also people, who I know very well, who "walked away" because they were initially very very greedy and willing to accept however much the bank was willing to lend, and then decided it would be more convenient to not pay the money back.  There are lots and lots of people like this, and they have contributed massively to the housing bust.  I have a "friend" who has her MBA, and in fact is a professor at a large and well known business school.  She holds several advanced degrees, like three or four masters and a PhD and just "loves" learning.  For a job, she chose to move to a different city than her partner, build a ridiculously huge brand new home, and take out a balloon loan (pretty stupid for someone with an MBA who should know better).  Payments "ballooned" per the contract, and she decided she didn't like that university as much and missed her partner, so after a few years, decided to quit paying her mortgage, live "rent free" in her brand new home for almost a year, and then when the bank came to take the keys, went back to her old job and her old life.  Because that was what she wanted.  She makes six figures and supports only herself.  No kids.  That makes me want to puke.  She walked away less than a year ago.  You should see how she spends her money and what she buys.  It is absolutely positively disgusting.  And, she is planning on buying a new house soon.

 

Those who stick their heads in the sand and foolishly believe that there aren't a whole lot of other people in similar situations to her that have added to this mess need to wake up.  I am not so high and mighty as to think that it isn't possible that my family's financial situation could change tomorrow and we could be left having to foreclose.  That would suck and I obviously wouldn't feel like I was doing anything unethical.   However, those who make the choice not to pay because it is financially in their best interest, despite having the means, and having signed a contract which essentially promises return payment, are fooling themselves if they think what they are doing isn't unethical and doesn't have a cascade effect on the rest of the housing market, and on real people and their lives. 

Quote:
Originally Posted by Fuamami View Post

My sister, who is an attorney, told me that the law does not view contract law as moral in any sense, and that made me feel a lot better. It is just like Rani said, a financial decision. If it's not working, you have no moral obligation to fulfill your end of the deal.

New Posts  All Forums:Forum Nav:
  Return Home
  Back to Forum: Frugality & Finances
Mothering › Mothering Forums › Natural Living › The Mindful Home › Frugality & Finances › Walk away at this point?