Poll: Underwater

[matt770]

comparing to a mutual fund is a little disingenuous. their investment was a contract with you for a fixed return. yes, this investment carries with it the risk that you will bail on your debt and leave them holding the bag.

 

in any case, I'm not casting speculative investment returns as "their money". I am counting the cash they loaned you to buy a house as "their money".

 

Conservatively estimating what they can sell this place for at auction, plus what I've paid them in mortgage payments since '06, they clear around $21,000 profit. And they have the legal option to come after me for the difference between what they sell it for and what I owe.

[Azazello1313]

Conservatively estimating what they can sell this place for at auction, plus what I've paid them in mortgage payments since '06, they clear around $21,000 profit. And they have the legal option to come after me for the difference between what they sell it for and what I owe.

 

are you counting taxes and insurance in "what you've paid them"? if not, then it seems like you really can't be that badly in the hole right now. have you looked into any short sale options?

[matt770]

are you counting taxes and insurance in "what you've paid them"? if not, then it seems like you really can't be that badly in the hole right now. have you looked into any short sale options?

 

Yep, minus taxes and insurance.

 

I am badly in the hole, I've double- and triple-checked. Selling this house would cost me money I don't have. I don't qualify for a short sale because I don't have a "hardship". Renting it out is a losing proposition, not only for the monthly shortfall between the mortgage payment and the rent I could get for a house next to a bunch of degenerates with two loud dogs that bark all day, but for the repairs this place is going to need in the next 1-5 years.

[sundaynfl]

I have not read the entire post, but being in the mortgage industry I see this played out time after time and it really pisses me off. Here is a video (may have already been posted, que Big John) that does a great job of explaining why it is so hard to renegotiate or short sale a mortgage!

 

 

 

This is done by a couple of mortgage guys...

[redrumjuice]

Selling this house would cost me money I don't have.

 

So there is a dollar amount you determined that is what your wife's safety is worth?

 

Interesting.

[matt770]

So there is a dollar amount you determined that is what your wife's safety is worth?

 

Interesting.

 

I don't follow you. I'm saying that I couldn't sell this house because the amount I would get plus all of my assets is less than what I owe.

 

And don't get me wrong, there aren't bullets whizzing past our heads. Yet.

[Ursa Majoris]

I don't follow you.

Don't worry, no-one does.

[westvirginia]

Here's the bottom line Matt: Don't try to justify this, because there's really no justification for it. That being said, if you anticipate THAT great an upward adjustment to your quality of life, knowing what's out there for you as a worst possible case, then it might be worth it. This is, at best, morally ambiguous. But if you simply can't live there and keep your mental health intact, then leaving is the answer. Believe me, all of us married guys know how much truth there is to the phrase "If Momma ain't happy, ain't NOBODY gonna be happy." If you think the net result, even with the worst-case scenario of what the bank might do, is a large boon to your mental health then it might be worth it.

 

Also, I would try missing a payment or making it 2 weeks late. The bank will view things much differently and actually listen to you. It's funny how money does that.

[keggerz]

1st and foremost let me say good luck with however this plays out for you.

 

2nd I can understand looking for advice and such but to be honest in a situation like this I don't think anyone can actually say well I would do this or you shouldn't do that if they have never been in a situation like this where your family and home are in jeopardy (i have not)...stress, especially surrounding money can be a very bad bad thing....so while I can understand the views of people on both sides of this I really don't think either can speak to how they would handle this situation unless they were in it or have been through it...sorry but that is just my opinion on it.

 

again good luck to you and your family

[keggerz]

comparing to a mutual fund is a little disingenuous. their investment was a contract with you for a fixed return. yes, this investment carries with it the risk that you will bail on your debt and leave them holding the bag.

 

in any case, I'm not casting speculative investment returns as "their money". I am counting the cash they loaned you to buy a house as "their money".

actually it was probably your money and my money etc

[Azazello1313]

actually it was probably your money and my money etc

 

yeah, as sundaynfl's video makes quite clear

[matt770]

1st and foremost let me say good luck with however this plays out for you.

 

2nd I can understand looking for advice and such but to be honest in a situation like this I don't think anyone can actually say well I would do this or you shouldn't do that if they have never been in a situation like this where your family and home are in jeopardy (i have not)...stress, especially surrounding money can be a very bad bad thing....so while I can understand the views of people on both sides of this I really don't think either can speak to how they would handle this situation unless they were in it or have been through it...sorry but that is just my opinion on it.

 

again good luck to you and your family

 

Thanks much Keg. I am confident this is going to work out and am looking forward to putting this behind us.

 

I've come here for advice at times but in this case I just wanted to see what posters' opinions were because I respect most regs here, and wanted to give anyone in a similar predicament food for thought. Doing this is not something I ever took seriously until I researched it really thoroughly. And I should mention, I have a meeting with a lawyer next week and don't plan on making a final decision until then. Thus far everyone who is familiar with the situation is telling us to walk away and don't look back. I'm still looking for a compelling reason to stay here, or any other alternative. Any article I've read from an economic point of view says it makes no sense not to walk away.

[bpwallace49]

Matt, best of luck in whatever you do that is best for your family. Everyone can throw in their two cents, but at the end of the day we arent walking in your shoes and have to deal with what you are dealing with.

 

I hope everything works out for you.

[MojoMan]

Yep, minus taxes and insurance.

 

I am badly in the hole, I've double- and triple-checked. Selling this house would cost me money I don't have. I don't qualify for a short sale because I don't have a "hardship". Renting it out is a losing proposition, not only for the monthly shortfall between the mortgage payment and the rent I could get for a house next to a bunch of degenerates with two loud dogs that bark all day, but for the repairs this place is going to need in the next 1-5 years.

 

I thought you said that you're in the top 5% of income in an early post. You cannot afford to handle this difference of $60K or so?

[keggerz]

Thanks much Keg. I am confident this is going to work out and am looking forward to putting this behind us.

 

I've come here for advice at times but in this case I just wanted to see what posters' opinions were because I respect most regs here, and wanted to give anyone in a similar predicament food for thought. Doing this is not something I ever took seriously until I researched it really thoroughly. And I should mention, I have a meeting with a lawyer next week and don't plan on making a final decision until then. Thus far everyone who is familiar with the situation is telling us to walk away and don't look back. I'm still looking for a compelling reason to stay here, or any other alternative. Any article I've read from an economic point of view says it makes no sense not to walk away.

the only thing that I will say is that I sorta disagree with Azz a bit about is not comparing this to an investment...I think the issue at hand is that many homeowners did make bad investments but they are "physically and emotionally" attached to those investments because they live in it...if it were just a investment vehicle (stock, mutual fund etc) that was in the crapper it would be much easier to walk away because there is no emotional attachment...and I am not saying that signing a contract doesn't change it some but just trying to shed light as to why it isn't easy to walk away for some...we all make errors in our lives and it is how we learn and grow from them that matter most...that and making sure our family is safe and provided for at all costs, imo

[keggerz]

I thought you said that you're in the top 5% of income in an early post. You cannot afford to handle this difference of $60K or so?

I am not sure where he lives but money goes much farther in some parts of the county and not so far in others and then there is also the old adage that goes something like this: make a million a year, live on a million a year....make 20K a year, live on 20K a year.

[Ursa Majoris]

yeah, as sundaynfl's video makes quite clear

And there you have it. QED.

[Puddy]

yeah, as sundaynfl's video makes quite clear

I'm not sure if they are right or not but I'd take them more seriously if they didn't have short-sleeve rayon shirts on and matching Lance Armstrong bracelets

[Scooby's Hubby]

Eff 'em all and do what you want to do. Live where you please and be happy. I would not look back, either, you only live once. Not to mention you may sleep better at night. Just because you may end up owing a lender some money doesn't mean it has to be re-paid all at once the next day, so later with them and let those problems work themselves out at a pace comfortable to you. The only way to get out of the hole is to start climbing.

 

Good luck and live happily.

[wiegie]

I'm not sure if they are right or not but I'd take them more seriously if they didn't have short-sleeve rayon shirts on and matching Lance Armstrong bracelets

I'd take them a lot more seriously if they knew that the FDIC doesn't use taxpayer money and that, because only a relatively small number of banks have actually failed, the scenario they describe does not apply to the vast majority of mortgages. (Note that I am not saying that the banks that buy up failing banks should be allowed to "double-dip".)

 

Also, everyone should keep in mind that Matt's mortgage is very likely not actually being repaid to the bank itself. Most likely his mortgage was securitized and is now owned by all sorts of institutions and investment funds (perhaps Matt actually owes some of us on this board money) and the bank is only servicing his loan. If your retirement money is on the line, do you want the bank (acting on your behalf) to tell someone who can afford to repay a loan that it is ok for him not to repay it?

Edited October 14, 2010 by wiegie

[keggerz]

I'd take them a lot more seriously if they knew that the FDIC doesn't use taxpayer money and that, because only a relatively small number of banks have actually failed, the scenario they describe does not apply to the vast majority of mortgages. (Note that I am not saying that the banks that by up failing banks should be allowed to "double-dip".)

 

Also, everyone should keep in mind that Matt's mortgage is very likely not actually being repaid to the bank itself. Most likely his mortgage was securitized and is now only by all sorts of institutions and investment funds (perhaps Matt actually owes some of us on this board money) and the bank is only servicing his loan. If your retirement money is on the line, do you want the bank (acting on your behalf) to tell someone who can afford to repay a loan that it is ok for him not to repay it?

Yukon has a long lost brother

[wiegie]

Yukon has a long lost brother

two typos fixed (my excuse is that my 4 and 3 year-olds were jumping all over me, I was holding my 6 month old, my wife was yelling at me in the background, and the Toshiba laptop I am using has a very sensitive mouse-pad which causes the cursor to jump around for no good reason

[i_am_the_swammi]

i deal more in the commercial end of real estate, and my job is now about 60% performing advisory work for lenders who need help evaluating hotel assets, and whether or not they are worth the current mortgage, if the borrower is running the asset poorly, if the brand is working, or if its just the market that is hampering the hotel's performance.

 

Matt, one thing to consider: my clients (Wells Fargo, B of A, Susquehanna, to name a few) all readily admit that the current situation is NOT entirely the borrower's fault. When they look at the notes, they completely understand that while the borrower may have made a bad investment....the lender also made one in providing the debt.

 

And as others have pointed out, there are times when I advise my clients to miss a payment or two so they get the banks attention, at which point they will address the loan via a special servicer. In most cases, if you do everything you can to make your payment, the bank won't budge until all your options are exhausted. While it does do some damage to your credit score...it is a small price to pay for you being able to re-work your loan, and eventually get yourself to a place where you can sell the house and move on.

[TimC]

And as others have pointed out, there are times when I advise my clients to miss a payment or two so they get the banks attention, at which point they will address the loan via a special servicer. In most cases, if you do everything you can to make your payment, the bank won't budge until all your options are exhausted. While it does do some damage to your credit score...it is a small price to pay for you being able to re-work your loan, and eventually get yourself to a place where you can sell the house and move on.

 

Swammi is giving some good advice. Back around 1990 during the savings & loan crisis, I was the commerical foreclosed property accountant for the largest bank in Virginia. We would set up subsidiaries of the bank and move the entire property in it when it went to non-accrual status and eventually foreclosure. We'd run the entire business from these subs. It was legally completely separate from the bank. We never knew your loan even existed until you went into non-accrual status - this is basically when we stopped accruing interest on your loan and prep for foreclosure. Once we started servicing the loan, it was basically out of the hands of the loan officer. We could do things with your loan that a normal accruing loan couldn't have done to it. Our first step was usually to appraise the property and write off the loan to fair market value. We'd work with the customer to do everything we could before foreclosing. Now, true, these were commercial loans worth millions but you get the gist of this simplistic version. One day I'll tell the story of the huge car wash from hell.

 

Bottom line is, if you are serious about this, you will want to stop making payments. You will get kicked to a different area of your mortgage department that doesn't know you currently exist. I'm assuming it still works the same as 20 years ago....I don't know for sure.

 

Fair warning though: Of course, I don't know your financial situation at all, but if you still have tangible assets that they want and it's worth their time, they will come after you very hard for the difference. They will do everything legally they can to make up that difference. Now, if it's a little bit, you may get off easier. Either way, your life will be a living hell for awhile from a debt collection and legal standpoint. I just don't want you to think it's a simple easy process. Best of luck to you, my friend. As everyone else says, do what's best for your family and the rest of the world can suck it.