Walk away? Refi, buy, rent? Chp 7 help...

[newtobkforum]

We discharged and closed on all debt in 10/2010. We did not reaffirm anything. We are current, never late on mortgage. Mortgage was sold from BofA to Greentree last year.

Not sure what our options are.

The payment is too high. So we need to do something.

Can we refinance? Doubt it cuz we owe like 135% of its value.

If we walk away any tips on maximizing time living there without paying?

If we walk away a new foreclosure process begins even though we were forgiven of debt 2 years ago?

When could we buy again?

Anything else?

Thanks...

[btbeme]

If you did not reaffirm, you have no personal liability if you walk away.

Refinance is likely not possible, but the possibility for a loan modification exists via federal programs. Whether or not you get an in-house refi or some sort of loan modification, it is highly doubtful that you will get "right-sided" on your value, as very very few loans ever get the principle reduced. In most cases, refis or modifications simply change the terms of the loan (lower interest rate, longer term to repay, create a large balloon payment on the back end of the loan, etc). That might make it a lower and more affordable payment, but you will still probably owe the full amount.

Since you are current it would not hurt to approach your bank about a modification - if you want to stay with the house long-term.

As far as staying as long as possible. I do know that foreclosures in CA are coming down into the 9 month range, so if you stop paying and use a few delaying tactics (applying for a HAMP loan modification, attempting a short sale, etc) then it is more likely that you will be in the house for a longer period of time...but I would not bet on the full 9 months. Look at every month beyond 4-5 months as a gift.

It would be 2 years from your Ch 7 close, or three years from your foreclosure (or short sale) before you would qualify for a federally backed loan again. That does not mean that you will get one, but figure a minimum of 3 years after the last shoe drops before you will be able to even file paperwork for another mortgage.

[newtobkforum]

If you did not reaffirm, you have no personal liability if you walk away.

Refinance is likely not possible, but the possibility for a loan modification exists via federal programs. Whether or not you get an in-house refi or some sort of loan modification, it is highly doubtful that you will get "right-sided" on your value, as very very few loans ever get the principle reduced. In most cases, refis or modifications simply change the terms of the loan (lower interest rate, longer term to repay, create a large balloon payment on the back end of the loan, etc). That might make it a lower and more affordable payment, but you will still probably owe the full amount.

Since you are current it would not hurt to approach your bank about a modification - if you want to stay with the house long-term.

As far as staying as long as possible. I do know that foreclosures in CA are coming down into the 9 month range, so if you stop paying and use a few delaying tactics (applying for a HAMP loan modification, attempting a short sale, etc) then it is more likely that you will be in the house for a longer period of time...but I would not bet on the full 9 months. Look at every month beyond 4-5 months as a gift.

It would be 2 years from your Ch 7 close, or three years from your foreclosure (or short sale) before you would qualify for a federally backed loan again. That does not mean that you will get one, but figure a minimum of 3 years after the last shoe drops before you will be able to even file paperwork for another mortgage.

Great info! Thanks!

I was told the income tax waiver is expiring in 2012, since the debt was written off in BK, if the foreclosure is complete in 2013 can I avoid the taxes either no matter what?

[btbeme]

Great info! Thanks!

I was told the income tax waiver is expiring in 2012, since the debt was written off in BK, if the foreclosure is complete in 2013 can I avoid the taxes either no matter what?

You will likely receive a 1099 from the bank once the foreclosure or short sale is complete, typically in January of the following year. When you do your taxes, you will file a Form 982 and fill out lines 1a and 2. Done. No tax liability.