Go ahead, foreclose me.

[Dan.Linehan]

Here's a great article I read today about a tipping point in the housing bubble.

Los Angeles Times: A tipping point? "Foreclose me ... I'll save money"

I am one of these people. My condo has dropped in value from $520K in 5/06 when I bought it to $350K now. My ARM payment will probably go up $900 per month in June.

Despite all this, I would be willing to stay if the bank would refi the loans to a 30 year fixed, but since I'm not a 'hardship' case they'd apparently rather foreclose. I guess the only way I could qualify for loan mitigation is to get my boss to fire me, stop making payments, and wreck my credit. In fact, my bank won't even talk to me until I miss a couple of payments.

I have purchased a cheaper place in a nearby area now, while my credit is good, and will stop making payments on house #1 after house #2 closes. I know the foreclosure will be on my credit for 7 years, but I will have saved a lot of money.

I realize I agreed to the deal when I signed the mortgage papers, but I am within my rights to walk away from a bad deal and suffer the consequences, just as many corporations write down billions of dollars of debt, lose money for their shareholders, and lay off people as a result of their bad decisions.

I don't really understand why people view a business decision by a homeowner as a terrible moral lapse. However, when large lending institutions, with access to more sophisticated information than any consumer could imagine, make mistakes affecting thousands of people worldwide, they are not excoriated and vilified with the same righteous zeal."

Good for him.

[mustard76]

Is it really a good idea to walk away from your home?

My understanding is that the bank can still come after you for the difference between the money owed on the loan and the price it gets for the home at auction.

[Matthew Shea]

That's truly a desperate act and I share mustard's concern about being held responsible by the bank, but if he's willing to live with the consequences of trashing his credit and possibly having to re-pay the money anyway, then so be it. I wouldn't want to be that guy the next time he walks into a car dealer.

[Lola]

Originally Posted by mustard76

Is it really a good idea to walk away from your home?

My understanding is that the bank can still come after you for the difference between the money owed on the loan and the price it gets for the home at auction.

Actually (most cases) the bank is going to sue the borrower for the full amount of the loan balance regardless if they sell the property. Either way the ding can only stay on your credit report for seven years.

I was in this exact situation years and years ago when the oil bust in Oklahoma caused real estate values to plummet. A home I paid $90,000 for appraised at $52,000 (!!!) when I needed to sell it three years after I purchased it. I was better off taking the foreclosure hit than I was selling it at nearly half-price and maintaining responsibility for the balance. It was, in my specific situation at the time, the far wiser thing to do long-term as my immediate need was to get out from under the mortgage, and I was in my 20's and had lots of years ahead to rebuild my credit.

[Zombie]

It makes me glad I have bad credit! I was pre-approved for a credit card when I was 18 and..well..it didn't work out so well Been a 90% cash buyer ever since.

Unfortunately the banks are the ones who screwed up the most and they're punishing the customer for it. Any other time in history you could have refinanced your existing mortgage to a more favorable fixed rate either through the same or a competing institution. But now the lenders have all gone gun-shy not realizing that in many cases it's not the overall debt of the mortgage but the individual monthly payments that are the problem.

Sure, it's stupid to pay $1 million bucks for a tiny generic house in the suburbs (the customer shares the blame here) but I'm pretty sure if you crunch the numbers it's better to take a reduced payment schedule (that still pays interest on the loan) than to be saddle with thousands upon thousands of simultaneous foreclosures.

Basically, they're banking on a government bailout rather than resolve the issue themselves. Business - the American way

[localman]

yikes! tough times ahead.

[Dan.Linehan]

On that note,

YouWalkAway.com: Educate Yourself On Your Rights If You Face Foreclosure.

When you purchase a Walk Away Protection Plan & Kit we commit to helping you through the entire process. You will get over 50 years of combined Real Estate and Law experience to help you know and understand your rights. If You qualify for our Plan, your lender WILL NOT be able to call you in attempt to collect. Your lender WILL NOT be able to collect any deficiency or loss they may receive by you walking away. You WILL be able to stay in your home for up to 8 months or more without having to pay anything to your lender. It's important to act now before it's to late.

To stop the calls, fax your mortgage company a cease and desist letter, and list all numbers for them not to call. By law they have to obey or they can be sued.

To figure out how much time you can stay in your house, call the mortgage company and ask for the foreclosure sale date, in states like new jersey, it can take as long as 230 days after foreclosure starts. AFTER the foreclosure sale, ask how long of a redemption period there is. AND after that, ask how long before eviction (depending on the new owner at the sale.)

There, I just saved you $995.