home mortgage upside down/ short sale?

**LynnLC** · 11-14-2011, 08:38 AM

I go coo coo for cocoa puffs when I hear..." Let the bank have it back."

**FrugalKate** · 11-14-2011, 12:01 PM

Originally Posted by mh3rdwheel

My DH and I had to walk away from our home in 2005 because of health problems, we let the bank have it, our loan was an FHA? and now 6 years later our income tax has been withheld to pay toward that house. The house was sold for $28000 and the balance we owe, plus interest.

If your niece and her DH walk away, they will probably not be able to get another loan.

There are probably millions of people out there that don't realize that those homes they "let the bank have back" that were FHA Loans they got real cheap with just 3% down WILL be paid back one way or another, just the way yours will be via your tax refund year after year.

Same goes for conventional loans IF the particular bank involved decides to sue for the spread between what they were able to get for the house and what the mortgage holder who gave it back to the bank owed on it.

**GirlBoyGirl** · 11-14-2011, 02:41 PM

Originally Posted by LynnLC

I go coo coo for cocoa puffs when I hear..." Let the bank have it back."

You would absolutely lose your mind if you say some of the things on this other forum I was on! It is FULL of very wealthy people who have decided to "walk" away from their homes, that they can very well afford but just don't want to pay for them anymore. And what is even worse is that they then RENT those pre-foreclosure homes out to unsuspecting tenants so the house can net them "positive" cash flow until the bank takes it back. Crazy!

**pcaltman** · 11-14-2011, 04:48 PM

They are not "wealthy". They are completely upside down in debt. If they can afford the payment they should stay. Tell them to put the difference of what the house is worth and what they bought it for on the snow ball and pay it off. Then no more underwater. If they did a short sale they would get sued for the difference from what the bank could get for it, then good luck getting another house. Just don't panic and work throught it. It's their moral obligation.

**jd68** · 12-18-2011, 06:09 PM

I don't understand the problem. In this case you didn't mention anything about them being out of work or otherwise having difficulty making payments. That being the case, why in the world would they want to short sale or otherwise "walk away". They chose a home to live in, they're currently able to live in it from a financial side and the fact that it's apparently a decent house because they're living there. Who cares what anyone else values it at? They agreed to a price they though was fair with the previous owner, and couldn't have been unhappy with the deal or they would have passed and kept shopping. They made a deal with a bank who let them borrow the money to buy it. I don't see the problem.

If they want to sell now, they'll either be unable to or they'll lose money. So don't sell now unless there's something real promising on the horizon (house they like better, relocate for much higher paying job, etc.). In the case of the latter, renting is always an option until the market rebounds or they have equity in the house and can sell in this market. I just don't understand why act so irrationally about home values. Don't buy a home as an investment, you buy a home as a place to live. Values change over time, that's life.

**mndtrp** · 12-19-2011, 10:02 PM

As long as they are able to pay the bills, what difference does it make if their home is worth less? If nothing else, it lowers the taxes paid each year. I guess if something happens to the house, and insurance has to pay out, they wouldn't get as much. But, again, if they get enough to put in a new comparable house, what difference does it make?

**sue s** · 12-20-2011, 07:32 AM

Originally Posted by mndtrp

As long as they are able to pay the bills, what difference does it make if their home is worth less? If nothing else, it lowers the taxes paid each year. I guess if something happens to the house, and insurance has to pay out, they wouldn't get as much. But, again, if they get enough to put in a new comparable house, what difference does it make?

I wouldn't count on the taxes going down. Our property taxes have continued to go UP regardless of the housing crisis and the fact that the values have dropped by at least 25%.

**kimmy4433** · 12-29-2011, 07:19 PM

My house is now currently worth 60K and I bought it for 130K. I am $70k upside down and I never once thought about "Giving it back to the bank" either by foreclosure or short-sale.

In fact I did a modification to my loan to lower the monthly payment when both DH & I were out of work so I could KEEP my home. The Mod did not lower the balance either it increased it by $5k.

So your advice is really Sh!ty advice IMHO. Sounds more to me like you want them to walk away from their house, so they will rent your house out because you can't find anyone to rent it. Shame on you!

**Telephus44** · 12-29-2011, 08:36 PM

My house is also down about $30K since we bought it. It has never occurred to me to walk away. I love my house and we can easily afford it.

Besides hassle of "giving it back" (LOL) would cost me a HECK of a lot more than 30K in the long run.