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Under water and walking away
Just wondering if there is anyone out there that has done a Deed in Lieu of Foreclosure, or a Foreclosure. How long was the process, and what were the consequences in the end (specifically how much did it affect your credit).
We own a 2bd, 1 bath condo that my husband purchased a month before we got married in 2006 (so just his name on the mortgages). We paid 195k, currently owe 183k between the two mortgages. If we could sell, we could get 110k, and there's foreclosures in our community going for 70k. We've also put a lot of money in our unit since being here, renovating the bathroom, kitchen, and just bought new carpet in June. We met with lawyers back in the spring to talk about our options, but they seemed to be trying to talk us into bankruptcy to get away (which we aren't comfortable with). We also met with some realtors back in the spring about short selling, but our mortgage wouldn't call us back to even discuss approving us for a short sale.
Financially we have the means to pay our bills, and we've never been late. We want to walk away because we are outgrowing our place since having a child, but living here has honestly been a nightmare. In 2007 I fell on the exterior steps to our unit while they were being repaired; when the workers were finished they just left the rusty metal framing exposed and I fell and bruised my tailbone. We also had an ongoing roof leak for 3 years that the condo association never fixed properly; the result was discovering mold in the kitchen and having to completely renovate the kitchen and have mold specialists come in (which my association only paid about 1k, we were left paying 4k). We also have a hoarder living in the unit under us, which has gotten worse since she fell and injured herself last year. We can smell her place IN ours sometimes, and our building is infested with roaches. I'm tired of complaining to the condo association and the health dept about it and nothing being done. So basically we are just sick of living in this hole, and we want out.
Re: Under water and walking away
I didn't read the giant thread that erupted on MM, but have you considered renting your condo out instead of foreclosing? If you can make back the cost of your mortgage, you won't have to kill your credit. That's what we did last year with our underwater home, and I'm so happy we went that route. The rent brings in enough to cover the cost of the mortgage on our new home (so basically, we pay our old mortgage for a bigger home!), plus a little bit extra that we've been putting away to keep the house updated and maintained.
I second the idea of renting but you will have to get the bug issues under control ... otherwise, you could face issues there as well.
I don't know the whole story but I heard that banks are now suing people for the difference of foreclosure. You don't just get to walk away with a damaged credit report anymore. You can be sued for the difference between what you owe the bank and what the home is actually sold for.
Financially we have the means to pay our bills, and we've never been late. We want to walk away because we are outgrowing our place since having a child.
You REALLY want to look long and hard about renting your condo- even at a monthly loss- before you walk away.
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Thinking of doing cosmetic updates to a dated home? These were our costs.
Maryland is a recourse state, so if you walk away, the bank can file a deficiency judgement against you. If they win, you will have to pay them the difference between what you owed and what they sold the house for. You will also have to pay your court fees and possibly the bank's as well. Even if the court were to side with you, you don't really win. The foreclosure will be on your credit report for 7 years, your score will drop by a good 150 points and it will be at least 2 years before your score will even begin to rebound.