On June 22, the sirens blared in our town indicating that the river had over topped it banks and over 4000 homes were going to be flooded. Sadly, most of us didn't have flood insurance because the city had made the flood plain the river because they were so sure that we would never have flood problems again (last flood was over 40 years ago). We could have purchased flood insurance and had as a matter of fact the last 2 years. Anyway, that is neither here nor there. We made the decision not to purchase it because we listened to the "wisdom" of the city officials and now we have to pay the price for our mistake.
So we owe $193,000 on our home and it would cost us about $150,000 to fix it. It would need to be gutted down to stud walls and the roof. Nothing else is salvageable. The foundation is shot (bowing and shifting). Besides all of this, I don't feel safe going back there after all of this. It may never flood again, but we can't risk putting the money into the house for it to flood again. They will be doing no new dike work for at least 2 years so we will not be any better protected next year.
Our options from what I can tell are to foreclose on the house and walk away or wait for a possible buyout. Our house is very close to the river and there is a pretty good chance that the city would have to buy our house to tear it down for the dike. This could be 2-3 or more years in the making. We have only owned the house for 2 years and the payment is $1400 per month. If we walk away, we could save that money per month and hopefully be able to buy again in the next few years. If we wait for the buyout and keep paying on the mortgage, we have little to no money left for rent on something else (besides there is nothing to rent here) and we risk not getting a buyout and having to foreclosure anyway.
FEMA helped a little bit, but there is very little money for any help. We are pretty much on our own to figure this all out. We have stellar credit right now, almost no debt besides our house, and we are just so uncertain about what to do. It worries me to ruin our credit by walking away, but we have to do something so that we can afford to live.
Does anyone have any information on foreclosures in natural disaster situations? What would you all do in this situation?