Exactly. By not paying and surrendering the house, you are merely exercising your rights on the contract with the lender. This housing mess has years to go before it fully unwinds. Banks are still loaded up to their
in toxic, non-performing assets. And years from now, when housing finally bottoms and starts to recover, it will never appreciate the way it did during the bubble. We will go back to home appreciation that is more in line with historical inflation levels, 1.5% to 2% a year. Bottom line, your house may never again be worth what you paid for it. What you have in the house up until now is "sunk cost", you need to put that aside and look at it from a business decision from this point forward. If you really like the home, at least play hardball and have the loan modified. Home values in Arizona have not bottomed, expect another wave of defaults/foreclosures when the next round of liar loans (Alt-A) reset in 2011. Banks are not lending, nor will they be anytime soon. $80 billion in potential "put backs" and the Basel III increase in tier 1 capital requirements will force banks to continue to hoard cash. Don't let your conscience get the best of you, these banks would throw you, your wife, your kids, and your dog to the fucking curb without batting an eye, and use unverified robo-signed documents to do it. Play hardball and get your loan modified if you like the house and plan on staying.
im 100% sure the bottom scenerio is a 15-25K+ guaranteed BANKABLE income for u...
scenerio... -. (ONLY if your debt to income ratio exceeds 50%) -
does all your (on credit report bills exceed 50% of your gross income) (cars/house/taxes/insurance(house)/cc bills.....does this exceed 50% of your monthly gross income????)\
my guess is NO ur well under the 50% threshold (based on how comfy u are in ur payments)
if not .. ur forced into continuing and paying it or foreclosing it are only two options, however the difference that the house sells for when the bank takes it over U WILL OWE to the debtors.
u owe 250.. house sells for 175.. u will owe 75K (tax liability)unless u can file bankruptcy (which according to question 1 (u cant because ur debt to income ratio is LOW) - most times u will get taxed on this 75K like it was extra income to u. so u will pay roughly 20% (depending on tax bracket) so u owe the government - roughly 10- 15k for taxes... lose lose in other words.
if u are OVER 50% debt ratio... there is a GREAT chance that if u fall behind 3 months on your payments (u can contact the bank and negotiate for a lower payment and/or less owed on the house) - the reason why banks will do this negotiation is because the government gives them TAX INCENTIVE to do so and its almost like writing off a loss on their billions in profit each year.
also... absolute worse case scenerio u wont even actually have a sherrif sale for foreclosure until 6-18 months in most cases because the market is sooo backed up in certain areas especially in yours i am sure (hence why u lost 50% equity)
BEST SCENERIO IF U ARE GOING TO FORECLOSE AND LIVE RENT FREE ANYWAY...
*IMPORTANT - keep credit perfect by keep making ur payments perfect... find a new house (this is if ur debt ratio is low).. buy new house....90% of government loans will let u buy the next house while ur waiting to sell or RENT the old one IF u have a low enough debt ratio
(FHA / Fannie Mae / Freddie Mac loans). get renter for old house(for any money, because u are goign to stiff the bank anyway and they will forclose in 6m,onths -18months.)
NOW - stop making payments on old house.. and the 6-18month clock will start till foreclosure (during which u BANK 1000-1500 a month on ur mortgage payments + house bills/insurance..etc
so basically ur new renters pay your new mortgage payment for you for up to 1.5 years and u sit back and BANK 1000-1500 a month in payments in a CD/401k/Roth IRA...etc under your kids or relatives name (and/or store the cash in a safe in house)
1500 X 18 months = 27,000 u will have saved up when the bank kicks you out of the old house.. and u will have a new contract with a different lender on the NEW property.. they cannot touch that property AT ALL whatsoever.(expecially if there is no equity
)
File bankruptcy now.. because with two mortgages bankruptcy is possible because your debt to income ratio will be way over 50% at this point(especially if ur rental was under the table )
enjoy and CONGRATS ON THE NEW HOUSE AND 27K in da BANK!
-murph
scenerio... -. (ONLY if your debt to income ratio exceeds 50%) -
does all your (on credit report bills exceed 50% of your gross income) (cars/house/taxes/insurance(house)/cc bills.....does this exceed 50% of your monthly gross income????)\
my guess is NO ur well under the 50% threshold (based on how comfy u are in ur payments)
if not .. ur forced into continuing and paying it or foreclosing it are only two options, however the difference that the house sells for when the bank takes it over U WILL OWE to the debtors.
u owe 250.. house sells for 175.. u will owe 75K (tax liability)unless u can file bankruptcy (which according to question 1 (u cant because ur debt to income ratio is LOW) - most times u will get taxed on this 75K like it was extra income to u. so u will pay roughly 20% (depending on tax bracket) so u owe the government - roughly 10- 15k for taxes... lose lose in other words.
if u are OVER 50% debt ratio... there is a GREAT chance that if u fall behind 3 months on your payments (u can contact the bank and negotiate for a lower payment and/or less owed on the house) - the reason why banks will do this negotiation is because the government gives them TAX INCENTIVE to do so and its almost like writing off a loss on their billions in profit each year.
also... absolute worse case scenerio u wont even actually have a sherrif sale for foreclosure until 6-18 months in most cases because the market is sooo backed up in certain areas especially in yours i am sure (hence why u lost 50% equity)
BEST SCENERIO IF U ARE GOING TO FORECLOSE AND LIVE RENT FREE ANYWAY...
*IMPORTANT - keep credit perfect by keep making ur payments perfect... find a new house (this is if ur debt ratio is low).. buy new house....90% of government loans will let u buy the next house while ur waiting to sell or RENT the old one IF u have a low enough debt ratio
(FHA / Fannie Mae / Freddie Mac loans). get renter for old house(for any money, because u are goign to stiff the bank anyway and they will forclose in 6m,onths -18months.)NOW - stop making payments on old house.. and the 6-18month clock will start till foreclosure (during which u BANK 1000-1500 a month on ur mortgage payments + house bills/insurance..etc
so basically ur new renters pay your new mortgage payment for you for up to 1.5 years and u sit back and BANK 1000-1500 a month in payments in a CD/401k/Roth IRA...etc under your kids or relatives name (and/or store the cash in a safe in house)
1500 X 18 months = 27,000 u will have saved up when the bank kicks you out of the old house.. and u will have a new contract with a different lender on the NEW property.. they cannot touch that property AT ALL whatsoever.(expecially if there is no equity
)File bankruptcy now.. because with two mortgages bankruptcy is possible because your debt to income ratio will be way over 50% at this point(especially if ur rental was under the table
)enjoy and CONGRATS ON THE NEW HOUSE AND 27K in da BANK!
-murph
"if not .. ur forced into continuing and paying it or foreclosing it are only two options, however the difference that the house sells for when the bank takes it over U WILL OWE to the debtors.
u owe 250.. house sells for 175.. u will owe 75K (tax liability)"
Arizona is a non-recourse state. If you turn the keys over to the bank, they can not pursue you to recoup losses nor is it considered a taxable event.
u owe 250.. house sells for 175.. u will owe 75K (tax liability)"
Arizona is a non-recourse state. If you turn the keys over to the bank, they can not pursue you to recoup losses nor is it considered a taxable event.
Stealing is exactly what it is. So long as people can get away with it, very few have many moral codes that will stop us from doing so
(to me, the likely consequences of this are no way close to worth it, so I wouldn't go ahead with it. But for anyone who doesn't have a problem with the likely results, it would be in their best self interest to steal housing for the next 12 months or so)
Im just trying to help the guy out - this bank would fuck him over in 2 seconds - he and the bank both made bad decisions - he's in a better spot then them - he borders on moronic if he keeps paying unless he has some personal attachment to this particular house - they both entered into an agreement - the banks recourse was foreclosure if he does not pay - as long as he's on the title he can do whatever he wants (rent that mother fucker!!!)
I'm moral with friends - I would fuck a bank over without blinking
