What to do with house. 13 ends in May

[frustrated51]

Even after 5 years of payments totaling 50% of our mortgage debt at time of BK we still owe more than the original loan amount (thanks to the predatory loan and the BOA modification). Housing prices here have not recovered and we are underwater by about 1/3. In addition, the house needs major structural work plus new septic and new well totally 1/3-1/2 of the mortgage balance. If we added the amount of repair to the mortgage the mortgage would be about 25%-50% more than we could sell the property for.

We don't want to live here anymore, but we don't want a foreclosure or short-sale on file. Getting through these 5 years has been a struggle, but we made every payment and I don't want a bad mark at the end here.

I have talked to the mortgage company the only thing they might offer is a lower interest rate, but that really does not solve our problem. When I went through the list of what needed to be done and documented that they wouldn't get their money out I was told they didn't have any options. Do they really not have any options or do I just need to keep moving up the line? He did say he would take it to the managers meeting and ask about options.

We would like to sell the house or rent it out, but it needs to be fixed to do either one.

Thanks.

[LadyInTheRed]

It sounds like you would be better off getting rid of the house. I don't know if Washington is a recourse state. If the loan is a recourse loan, I would talk to my attorney about modifying the plan to give up the home so that the debt will be discharged. It may be too late at this point, but you should ask your attorney anyway. If the debt is discharged, you can walk away at any time without worrying about a discharge. I wouldn't worry so much about a foreclosure or short sale being on your record. That is better than being stuck with an underwater home that needs so much work.

[sophieanne]

Hi..Washington is NOT a recourse state. Does that make a difference to what the OP should do?

[LadyInTheRed]

Hi..Washington is NOT a recourse state. Does that make a difference to what the OP should do?

If the loan is no recourse*, then even if it is not discharged, the OP can walk away later without worrying about a deficiency judgment. But, the deliquencies would be reported on the OP's credit report instead of just having a foreclosure or shortsale as a public record.

*Check WA law to determine what mortgages are no recourse. Some may be excluded.

[valentcm]

how are you able to complete the chapter 13 seven months early?

[Drazil65]

People hang on to the homes they clearly can not afford as a matter of pride, cut bait and run. Renting is a beautiful thing and as you can see, you worked so HAARD to do the RIGHT thing and make the payments and what??? They just cannot do anything for you, welcome to the world of "the banks make you feel like you are doing the right thing by paying them then boom...in trouble and ask for help....and they have no other options...BUT thank you for struggling to make those payments to us for the last 5 yrs....sorry this is your problem..."


Typical and predictable....get down to the business of what is best for your FAMILY...not what is best for the banks. But of course if you want to suffer because of the hit to your credit score (ok...you already have a chp 13) then go ahead. You have choices you just need to make them on your own and not let the bank make them for you, you handed them over an awful lot of power???? But that is what happens when you owe banks anything at anytime, you relinquish power over your own finances.

[mynameainttracy]

We walked away from our house mid 13 and our only regret was that we didn't do it earlier. Our decision was strictly strategic and it was right for us. We are now 2.5 years post discharge and less than 2 months away from closing on a new home in another state. We wanted to be in a better place at the end of our 13 and that house was an obstacle for us.

You need to consult your attorney and do what is best for you.