Comments on: Should You Walk Away From Your Home? http://www.mint.com/blog/finance-core/should-you-walk-away-from-your-home/ The blog of the free, simple personal finance solution. Track all your spending automatically, find the best deals, save more money. And save the world. Fri, 19 Mar 2010 18:26:43 -0700 http://wordpress.org/?v=2.8.6 hourly 1 By: Lynn http://www.mint.com/blog/finance-core/should-you-walk-away-from-your-home/comment-page-1/#comment-44040 Lynn Sat, 09 Jan 2010 03:25:13 +0000 http://blog.mint.com/blog/?p=940#comment-44040 Me and my husband have been using our credit cards to pay for our food. We have a 30 year fixed loan. My husband got laid off from his job about a year ago. He got rehired in another posion making about 31% less a year. We filled out the Hardship morotage paper work. Never got a response about a modifcation loan. Soon we will be having to stop Credit Card card payments and pay about $250 less monthly on the house. If they furclose on us, we will be homeless people, even though my husband has a job. The morotage companies will not work with you. Me and my husband have been using our credit cards to pay for our food. We have a 30 year fixed loan. My husband got laid off from his job about a year ago. He got rehired in another posion making about 31% less a year. We filled out the Hardship morotage paper work. Never got a response about a modifcation loan. Soon we will be having to stop Credit Card card payments and pay about $250 less monthly on the house. If they furclose on us, we will be homeless people, even though my husband has a job. The morotage companies will not work with you. ]]> By: Terrin http://www.mint.com/blog/finance-core/should-you-walk-away-from-your-home/comment-page-1/#comment-28954 Terrin Sun, 15 Feb 2009 16:07:52 +0000 http://blog.mint.com/blog/?p=940#comment-28954 I resent most people who say things like people thinking about ditching their houses are ducking their responsibilities. First, many people are in the mess they are in because of so called professionals. For instance, mortgage companies would sell ARMs by saying , "Hey, you can just refinance in three years if the rate goes up." However, three years later you go back to the same company and try to refinance and they say, "Sorry, but you don't have any equity in your house to refinance." They forget to mention that possibility when they were selling you the loan. Second, many banks appraised the value of the house at whatever you offered to buy the house at. An appraisal is NOT supposed to be based on your offer price, but the overall market and condition of your house. Third, big banks lobbied the Republicans to allow them to change your interest rates around for any reason at all including if you fall behind on another creditors bill. I had a friend recently who American Express cancelled her car even though she has never been late and has always paid significantly more then the minimum. Moreover, it upped her Interest rate for the balance. Fourth, if you combine these shady practices with the State governments allowing over building (reducing everybody's ability to sell) and the Federal Government allowing so called Free Trade Agreements (allowing the shipping of jobs to where the labor is cheap because the workers are essentially slave) you can see the reason we are in this mess has very little to do with regular folks. I resent most people who say things like people thinking about ditching their houses are ducking their responsibilities. First, many people are in the mess they are in because of so called professionals. For instance, mortgage companies would sell ARMs by saying , “Hey, you can just refinance in three years if the rate goes up.” However, three years later you go back to the same company and try to refinance and they say, “Sorry, but you don’t have any equity in your house to refinance.” They forget to mention that possibility when they were selling you the loan. Second, many banks appraised the value of the house at whatever you offered to buy the house at. An appraisal is NOT supposed to be based on your offer price, but the overall market and condition of your house. Third, big banks lobbied the Republicans to allow them to change your interest rates around for any reason at all including if you fall behind on another creditors bill. I had a friend recently who American Express cancelled her car even though she has never been late and has always paid significantly more then the minimum. Moreover, it upped her Interest rate for the balance. Fourth, if you combine these shady practices with the State governments allowing over building (reducing everybody’s ability to sell) and the Federal Government allowing so called Free Trade Agreements (allowing the shipping of jobs to where the labor is cheap because the workers are essentially slave) you can see the reason we are in this mess has very little to do with regular folks. ]]> By: Terrin http://www.mint.com/blog/finance-core/should-you-walk-away-from-your-home/comment-page-1/#comment-28953 Terrin Sun, 15 Feb 2009 15:52:37 +0000 http://blog.mint.com/blog/?p=940#comment-28953 I'd say there is very little benefit with renting. First, you probably aren't going to get enough through the rental to pay the cost of owning it. Second, if the renters don't pay, you have to deal with that. Third, with renters you are responsible for maintaining the home. Fourth, renters will undoubtedly treat your house as if it were a rental: namely badly. I'd say screw it and walk away. Currently, there is no better time to walk from a house. The main reason is the IRS until not too long ago treated a loss to a creditor as income. In other words, if you walked from a home, and the mortgage company suffered a loss, you would get 1099'd for that amount. For some people that could be many thousands of dollars. For instance, I knew somebody who had to claim a $75, 000 loss to the bank on his taxes as income. He made $40, 000 a year. Since, it is tax debt, that'd follow you around a while. Currently, if you walk, you do not have to claim that loss as income. You write, "My husband and I lost our jobs and are behind in our mortgage. Our lender didn’t care, they just wanted to know who was going to pay the note. What are the benefits to renting out our house for a year and then when the market gets better (If ever) sell the property. Are there advantages to this so the mortgage get paid and we dont take that huge of a loss? Or do we just say “Screw it” and walk away?" I’d say there is very little benefit with renting. First, you probably aren’t going to get enough through the rental to pay the cost of owning it. Second, if the renters don’t pay, you have to deal with that. Third, with renters you are responsible for maintaining the home. Fourth, renters will undoubtedly treat your house as if it were a rental: namely badly.

I’d say screw it and walk away. Currently, there is no better time to walk from a house. The main reason is the IRS until not too long ago treated a loss to a creditor as income. In other words, if you walked from a home, and the mortgage company suffered a loss, you would get 1099′d for that amount. For some people that could be many thousands of dollars. For instance, I knew somebody who had to claim a $75, 000 loss to the bank on his taxes as income. He made $40, 000 a year. Since, it is tax debt, that’d follow you around a while. Currently, if you walk, you do not have to claim that loss as income.

You write, “My husband and I lost our jobs and are behind in our mortgage. Our lender didn’t care, they just wanted to know who was going to pay the note. What are the benefits to renting out our house for a year and then when the market gets better (If ever) sell the property. Are there advantages to this so the mortgage get paid and we dont take that huge of a loss? Or do we just say “Screw it” and walk away?”

]]> By: Gondia boy http://www.mint.com/blog/finance-core/should-you-walk-away-from-your-home/comment-page-1/#comment-28819 Gondia boy Fri, 06 Feb 2009 11:47:14 +0000 http://blog.mint.com/blog/?p=940#comment-28819 Fred, I don’t think I could have said it better myself. I have a stable income, good job, I have a FICO over 800, but I find myself with no real reason to stay in my home. On top of the irreversible loss I foresee in my home, the property taxes are ludicrous. When buying my house I could not get a straight answer at any point from the Bank. The taxes ended up being $2000($6000 total) a year more than the bank estimated and even though the values are dropping rapidly I have gotten no reprieve from riverside county. The assessor doesn’t seem to know how to do his job. I paid 372k for my home on a fixed 40 year mortgage. The bank tried to push my into an interest only to which I refused. Now similar homes around me are going up on the market listed at 145k (auction I think which means 170k sell price). I can make the payments though it is a slight bit of a stretch, but I could be retiring 10 years earlier with a house at 175k. Why would I want to work an extra 10 years to pay off debt to a mortgage industry that caused this crisis. Not to mention why should I pay property taxes to a county that lies about the value of your home to keep taxes high? I really would like to find a reason or incentive to stay… I guess keeping my 800 FICO is a slight one, but I rarely use credit these days. I have 0 debt in cc’s and my auto loan is nearly paid off. I feel no moral obligation to pay a bank that had no problem giving me a no money down loan on something they had to know was grossly overinflated. Fred,
I don’t think I could have said it better myself. I have a stable income, good job, I have a FICO over 800, but I find myself with no real reason to stay in my home. On top of the irreversible loss I foresee in my home, the property taxes are ludicrous. When buying my house I could not get a straight answer at any point from the Bank. The taxes ended up being $2000($6000 total) a year more than the bank estimated and even though the values are dropping rapidly I have gotten no reprieve from riverside county. The assessor doesn’t seem to know how to do his job. I paid 372k for my home on a fixed 40 year mortgage. The bank tried to push my into an interest only to which I refused. Now similar homes around me are going up on the market listed at 145k (auction I think which means 170k sell price).
I can make the payments though it is a slight bit of a stretch, but I could be retiring 10 years earlier with a house at 175k. Why would I want to work an extra 10 years to pay off debt to a mortgage industry that caused this crisis. Not to mention why should I pay property taxes to a county that lies about the value of your home to keep taxes high? I really would like to find a reason or incentive to stay… I guess keeping my 800 FICO is a slight one, but I rarely use credit these days. I have 0 debt in cc’s and my auto loan is nearly paid off. I feel no moral obligation to pay a bank that had no problem giving me a no money down loan on something they had to know was grossly overinflated. ]]> By: Dan http://www.mint.com/blog/finance-core/should-you-walk-away-from-your-home/comment-page-1/#comment-28779 Dan Tue, 03 Feb 2009 20:58:33 +0000 http://blog.mint.com/blog/?p=940#comment-28779 Stopped paying as of 1/1/09. I recently found I live in one of the 10 worst zip codes for negative equity in the entire country. I'm interested to see if the bank tries to get me to deal, the only mod I'd accept is debt forgiveness down to the current value of the home. The funny thing is that would still save the bank all the costs of foreclosing. They are already going to lose the 200k in negative equity either way. In the end I suspect they'll lose 70% of the money they lent if they foreclose versus about 50% if they deal. Stopped paying as of 1/1/09. I recently found I live in one of the 10 worst zip codes for negative equity in the entire country. I’m interested to see if the bank tries to get me to deal, the only mod I’d accept is debt forgiveness down to the current value of the home. The funny thing is that would still save the bank all the costs of foreclosing. They are already going to lose the 200k in negative equity either way. In the end I suspect they’ll lose 70% of the money they lent if they foreclose versus about 50% if they deal. ]]> By: Johnny Ola http://www.mint.com/blog/finance-core/should-you-walk-away-from-your-home/comment-page-1/#comment-28681 Johnny Ola Wed, 28 Jan 2009 23:08:49 +0000 http://blog.mint.com/blog/?p=940#comment-28681 As a home inspector who also owns rental property I can tell you that I strongly believe the banks are to blame for this. They charge thousands in closing costs ($500 for title insurance? Come on!)and then sell the loan to another bank who then requests more information as if you work for them. And all of them are going off a propped up appraisal. Because they made bad loans to people who don't have enough income or credit to afford them, we pay the price as our housing values decline from this house of cards. My business is doing well. I typically do inspections for buyers but, increasingly, I'm doing inspections for banks. They don't care because they pass on the costs to the buyer. My rentals do alright because my tenants live off the dole (my tax dollars) and I get my rental income each month from Uncle Sam. If they were a pain, I'd walk away from my rentals today. My credit is good (score of 798) but why should I care (they give car loans to anybody). I have a nice home but, as one who has inspected thousands of homes, I'm questioning why even own one. You can rent a nice place for about the same amount as the mortgage would be on it. You don't have to pay property taxes and you don't have to fix anything. Even with a good lease, renters can move out when they wish with the landlord having little recourse. People dream about owning a home but it really is overrated. I guess I'm just tired of being a responsible individual when so many companies are getting bailed out. If I could convince my emotional wife, I would sell my house today and just rent. As a home inspector who also owns rental property I can tell you that I strongly believe the banks are to blame for this. They charge thousands in closing costs ($500 for title insurance? Come on!)and then sell the loan to another bank who then requests more information as if you work for them. And all of them are going off a propped up appraisal. Because they made bad loans to people who don’t have enough income or credit to afford them, we pay the price as our housing values decline from this house of cards. My business is doing well. I typically do inspections for buyers but, increasingly, I’m doing inspections for banks. They don’t care because they pass on the costs to the buyer. My rentals do alright because my tenants live off the dole (my tax dollars) and I get my rental income each month from Uncle Sam. If they were a pain, I’d walk away from my rentals today. My credit is good (score of 798) but why should I care (they give car loans to anybody). I have a nice home but, as one who has inspected thousands of homes, I’m questioning why even own one. You can rent a nice place for about the same amount as the mortgage would be on it. You don’t have to pay property taxes and you don’t have to fix anything. Even with a good lease, renters can move out when they wish with the landlord having little recourse. People dream about owning a home but it really is overrated. I guess I’m just tired of being a responsible individual when so many companies are getting bailed out. If I could convince my emotional wife, I would sell my house today and just rent. ]]> By: sgrad http://www.mint.com/blog/finance-core/should-you-walk-away-from-your-home/comment-page-1/#comment-28568 sgrad Wed, 21 Jan 2009 13:30:48 +0000 http://blog.mint.com/blog/?p=940#comment-28568 Oh and Sarah...If you do walk...As long as you entered into that home with the intent of doing right by it an making the payments. You are not breaking the law by walking away. You are surviving....It's Not "Screw it" It's suviving. God Bless Oh and Sarah…If you do walk…As long as you entered into that home with the intent of doing right by it an making the payments. You are not breaking the law by walking away. You are surviving….It’s Not “Screw it” It’s suviving.

God Bless

]]> By: sgrad http://www.mint.com/blog/finance-core/should-you-walk-away-from-your-home/comment-page-1/#comment-28567 sgrad Wed, 21 Jan 2009 13:26:36 +0000 http://blog.mint.com/blog/?p=940#comment-28567 Walk...we did - we pay 1/2 of what our mortgage was in rent. Have a nice place....and our quality of life is better. Left the state for a promotion & transfer in the company in 5 years I can buy a house now Cash. Plus my husband can stay home with the baby. Stop thinking about what will they think..It's not about them the banks, industry...don't you have enough to worry about? Take it from this cancer survivor.Life is brief live it while you have it....I was not about to jeapordie my family's well being by living on $50.00 each month after the Mortgage was paid and I had less than 20g in Misc debt. Sometimes you gotta know when to hold them. Know when to fold them, know when to walk away and know when to run. The 209 g home I bought is now surrounded by forclosures and some are selling for as little as 79g...Bye see ya....My 80/20 Mortgage was sucking up 2000.00 1200=80% mort 400 20% mortg. HOA fees 175.00 month and I didn't have Homeowners insurance in FL!! Because I couldn't I am done. I made 30,000 year and a High score when I bought this home. No MOney down...who would approve a 210,000 mortgage for someone making 30g a year and not take any money down? The answer...The bank that has since closed and went our of business...And now thr FDIC..It's comical. I make 70g a year at my new job live in a different stat. Paid off a credit card I still have for emergencies....everything else. done. And I don't care what anyone thinks except my family so judge all you want. I am eating, my baby has prepay college and we eat out once a week and live in a gorgeous townhome we rent for 1g a month. Life is Good!...What are you doing!!?? At the end of the day who is going to tell you and your family...Hey I am proud of you for sticking it out?? Seriously if you gave someone 2500 a month to invest for you under the terms you would never get anything in return? Would you invest it? Would you hand over your money and say here...well thats what your doing. My House was a bad investment. And they thought I was a good investment giving me the loan. Its all business they don't care about you!! Your an investment. Take the Personal out of your home...and look at it for what it is...an investment! Stop picturing the picket fence...Its an investment. If there is no return possible what are you doing....I'll tell you- you are making a bad investment and poor business decision....Walk SG Walk…we did – we pay 1/2 of what our mortgage was in rent. Have a nice place….and our quality of life is better. Left the state for a promotion & transfer in the company in 5 years I can buy a house now Cash. Plus my husband can stay home with the baby. Stop thinking about what will they think..It’s not about them the banks, industry…don’t you have enough to worry about? Take it from this cancer survivor.Life is brief live it while you have it….I was not about to jeapordie my family’s well being by living on $50.00 each month after the Mortgage was paid and I had less than 20g in Misc debt. Sometimes you gotta know when to hold them. Know when to fold them, know when to walk away and know when to run. The 209 g home I bought is now surrounded by forclosures and some are selling for as little as 79g…Bye see ya….My 80/20 Mortgage was sucking up 2000.00 1200=80% mort 400 20% mortg. HOA fees 175.00 month and I didn’t have Homeowners insurance in FL!! Because I couldn’t I am done. I made 30,000 year and a High score when I bought this home. No MOney down…who would approve a 210,000 mortgage for someone making 30g a year and not take any money down? The answer…The bank that has since closed and went our of business…And now thr FDIC..It’s comical. I make 70g a year at my new job live in a different stat. Paid off a credit card I still have for emergencies….everything else. done. And I don’t care what anyone thinks except my family so judge all you want. I am eating, my baby has prepay college and we eat out once a week and live in a gorgeous townhome we rent for 1g a month. Life is Good!…What are you doing!!?? At the end of the day who is going to tell you and your family…Hey I am proud of you for sticking it out?? Seriously if you gave someone 2500 a month to invest for you under the terms you would never get anything in return? Would you invest it? Would you hand over your money and say here…well thats what your doing. My House was a bad investment. And they thought I was a good investment giving me the loan. Its all business they don’t care about you!! Your an investment. Take the Personal out of your home…and look at it for what it is…an investment! Stop picturing the picket fence…Its an investment. If there is no return possible what are you doing….I’ll tell you- you are making a bad investment and poor business decision….Walk

SG

]]> By: Sarah http://www.mint.com/blog/finance-core/should-you-walk-away-from-your-home/comment-page-1/#comment-28408 Sarah Thu, 08 Jan 2009 14:29:42 +0000 http://blog.mint.com/blog/?p=940#comment-28408 My husband and I lost our jobs and are behind in our mortgage. Our lender didn't care, they just wanted to know who was going to pay the note. What are the benefits to renting out our house for a year and then when the market gets better (If ever) sell the property. Are there advantages to this so the mortgage get paid and we dont take that huge of a loss? Or do we just say "Screw it" and walk away? My husband and I lost our jobs and are behind in our mortgage. Our lender didn’t care, they just wanted to know who was going to pay the note. What are the benefits to renting out our house for a year and then when the market gets better (If ever) sell the property. Are there advantages to this so the mortgage get paid and we dont take that huge of a loss? Or do we just say “Screw it” and walk away? ]]> By: PoMan http://www.mint.com/blog/finance-core/should-you-walk-away-from-your-home/comment-page-1/#comment-28406 PoMan Thu, 08 Jan 2009 14:22:42 +0000 http://blog.mint.com/blog/?p=940#comment-28406 What are the benefits of renting out your house vs. walking away from it? My husband and I both lost our jobs and now are living only on unemployment. Our mortgage company only was interested in how we were going to make our payments, not how could they help. Family is helping with the payments now, but doesn't that just put off the ineveitable? I don't want them to have to suffer for our problems. We could move in with family and rent our house out to cover the mortgage until the market gets better (If it ever does) then sell. But are there advantages? What are the benefits of renting out your house vs. walking away from it? My husband and I both lost our jobs and now are living only on unemployment. Our mortgage company only was interested in how we were going to make our payments, not how could they help. Family is helping with the payments now, but doesn’t that just put off the ineveitable? I don’t want them to have to suffer for our problems. We could move in with family and rent our house out to cover the mortgage until the market gets better (If it ever does) then sell. But are there advantages? ]]>