thinking about letting house go

[ddeennis]

hey all i filed chapter 7 12/04 and my discharge date was 6/2005. i filed on my credit cards and a personal signiture note. i didnt have no truck payment or nothing and i kept my house. i did sign a reaffirmation paper then i found out a few weeks later(while in the bankruptcy process) thru my mortgage company that all my house payments for the last 1 1/2 years(made on time mind you) was nothing but interest payments and that really ticked me off and they said it would be about another 4 years before my princ. will start being paid on. because they put all my late charges and interest in front of the note (when they was "helping" me to make my note current year and a half ago from the time i found out about this )and the extra money i was sending in was going for those fees and nothing was going to princ. (they was paying my monthly interest and the 40 bucks or more extra i sent in that would have gone to princ. went to the back interest and late charges that was incurred)so i REVOKED the reaffirmation thru my lawyer.

after my discharge the mortgage company would keep asking me if i would sign a reaffirmation agreement and i kept telling them no. and they asked me what my plans are with the house. i would tell them i would just keep on making house payments. so they would say your just going to make volintary payments i would say yes.

towards the end of my bankruptcy i had to come up with 4200 bucks to pay to the trustee so i skiped two house payments and used a few checks from work to come up with the money. (they took my tax return but i spent it on house insurance and property taxes before i found out about what was happening to my house payments and had to turn that amount overlater) my lawyer didnt act like they was going to take my tax return and told me to do what i do every year. so i spent it on the house to catch up those things and i bought a truck and sold the one i had.

anyway i have been paying my house payment before the 26th of each month and running two month behind since discharge date because i was trying to figure out what i was going to do with the house.

my house is a variable interest rate and has been climbing every 6 months and is now at just over 14% and they wont touch my loan for 2 years to help bring my payments down.(thats what they told me while i was in the bankruptcy process).

well now i have figured out what i want to do with the house. let it go.

im getting another house to buy and i will know tomorrow the 22nd if all is well as long as the house appraises for more then the selling price its a done deal. which the lender and the realitor is pretty positive that the house is under market value.

so i am wondering if i walk away from the house if i would have to owe anything they come up short on (mortgage company) i let the fire ins. go since it was due the 18th of this month. it was just a loan ins policy with nothing fancy on it just enough to satisfy the lender. and i still owe for this years taxes and last years taxes. last year i paid 2 years worth of taxes just keep the county from interacting on the property.

whats your opinions? thanks dennis from kansas

[AllFundBevHills]

Don't walk away

Dennis,

Based on what you have written, "walking away" from this house to buy another one isn't in your best interests. With your Ch 7 discharge so recent, something doesn't add up with the financing of the new house. It sounds like the realtor is telling you the house will appraise for more than the seller is asking. While this may be true, there is no lender anywhere that will allow a buyer to use the difference between an appraised value and the sales price as a sort of virtual down-payment. If you were to get 100% financing now (not possible until 2 yrs after 7 is discharged) some lenders will allow you to refinance using the appraised value instead instead of the sales price after 6 months (the norm is 12 months), but never immediately, or on a purchase. I'd be happy to share some ideas with you on your current situation.

Scott

[ddeennis]

why not walk away? the house im getting is with my fiance the lender got us the house based on her credit not mine. but without my income the lender wouldnt have gave us the loan. without her credit we would have not gotten the loan. the lender knows that i filed bankrupt. and only used her credit line for the house. but he wouldnt have approved the loan if it was just her income to repay it. he said he got us a loan based soley off her credit for repaying the loan and didnt invovle her income because it wouldnt have been enought to repay. our cost of the home was 500 earnest money already paid and 1750 closing cost with another 150 for home inspection. i should know in a few hours if the house appraised ok. if the house appraises for less then what we are borrowing then we just have to pay the difference. which all seem unlikely.

so why should i keep feeding a dead duck with my house . i have given more interest to the crooked mortgage company all these years. then if i was on time and never fell behind when i lost my job back in 2002. company shut down. which started my whole mess. i went from almost 40000 a year to 10000 total income the next year. for all of 2003. and the home mortgage lender didnt do me any favors with there "help". just paying my monthly mortgage i would have another 4 plus years going to pure interest. all the years together im looking at almost 40 years to have it paid off. a 50000 dollar home is not worth all this money. and a interest rate at over 14% right now.and it will just go up til the 18% limit. and they wont touch my loan for another 2 years. i can not see any good in keeping this big old money hole.

ever since i have found out about what the mortgage company was doing to my monthly payment i have been doing alot of finicial reading and to learn more about this kinda thing.
i have been hoarding my money into a saving account i have been making better money then ever before. my job has taken off just before i came out of bankruptcy (before my discharge date) and the money is there. i have been putting away about 500 bucks every two weeks into my savings. i spend under 1000 a month to live in this house with my 3 kids. even tho my mortgage is 612.00 , no truck payments no loans no doctor bills nothing just phone cable and utilities and my insurance on my cars.And i did get one credit card after my discharge no fees to get it just signed for it a visa card. not one of those cards where you pay like 275 bucks in fees to get a 300 credit limit. yicks!

i had thought about spending some of my saving on the mortgage on this house but what those crooked no good ........i would rather not waste anymore money. and for me it would be just fine to sit back 10 years and wait for all the bad stuff come off my credit report. we get this house im not going to want anything else for a long time that would require credit. and every every mistake i made on my credit i will make sure it dont happen to my fiance. we worked hard to get hers cleaned up better and improved before we went house shopping.

[AllFundBevHills]

Dennis,

The Fiance info makes alot more sense of the story. I have two questions for you. It's great to see your saving money now, and were approved for a real credit card.

1. How come you've ruled out refinancing into a better situation with a different lender, it can be done based on Fiance's credit?

2. If you're set on buying the new house, you might want to consider renting out your current house to someone who in effect will be paying your mortgage for you. If your house is in good condition (doesn't need any expensive repairs or work done to it) this can be an excellent way to build for the future. Especially when combined with a new loan with better terms.

Best,

Scott

[ddeennis]

house to small, it was never intended for me and the kids. i was renting it out when i first got it. i have paid into this house for a long time and my princ. has only moved 200 bucks since i have had it for the last 4 years and they want more money yet. about 3500 bucks. im tired of it. the mortgage company took advantage of me during a hard time. taking all my money for interest. and they wont even redo my loan til 2 years. and to be stuck paying more on the house forget it. they keep jacking my house payment. my house use to be 400 bucks a month and for it to be 612 now thats unreal. you have to remember here in kansas things are cheaper and when you live your whole life knowing what 350 rent gets you (really nice big place) this house wont pull in 612 a month to cover mortgage. i was lucky to have it rented out for 400 a month. even 450 is maybe all i can get for it now. i would rather just let it go. and move on. i have learn so much with this house for none of it will be forgotten. and this mortgage company is as crooked as they come to me.

so my original question was if i walk away from this house will i owe anything?

[AllFundBevHills]

Dennis,

Are you tallking about doing a Deed In Lieu of (foreclosure) with the lender? This is better than a pure foreclosure by not paying the mortgage for 3 months. You're on the path to rebuilding things, and it's always better to do the least bit of damage possible. Sounds like you've got one of the worst lenders I've heard of. Do you know what you owe the lender now, and what the market value is? If your local market hasn't appreciated much since you bought the house, and we know the principal hasn't come down, you might be able to get the bank to agree to a short sale where they take a little less than is owed. Have you asked your realtor what your house is worth?

[ddeennis]

the house is appraised at 32000 by county i bought it for 51000 and appraised at 59000 but it was inflated to get me in with no money down. the house has a bad roof on it. ins. company wont ins the house with regular ins. til the roof is fixed. im not doing it.

i have pretty much made up my mind that im going to let it go. the 26th will be my 3 months late payment. or the 13th of march if you include the grace period. the houses around here like mine are selling for about 40000 just to get them off the market quicker. maybe if i hold out i might get 50000 for it. but that is still less then i owe by they figure i have 50 800 princ. and another 3500 of back interest and late fees and such.

the house is all ready in my credit report as "chapter 7 bankruptcy" so no more damage i think will be done to my credit report. i would be very happy not needing my credit for another 10 years. buying this other house gives me all i can ask for. and my ego does not require me to drive the newest stuff im happy with my old crew cab dually and my hot rods.

im sure your trying your best to show me another route but it would require more work then i want to do for a house that is not worth keeping and im tired of giving to the loan company for what they have done just wasnt right in my books.

[SinkingFast]

Nobody can be worse than our Lender. We are in breach. We've been trying to sell the house for 8 months now and just cannot continue to make double payments between the Mortgage and Rent. They have these lovely little comments in their mail and at their website, "Call us if you need assistance of any kind." Yeah right. All I need for them to do is WAIT for my approved buyer to sell his home, or us get another offer activating his kickout, and we can sell. The Lender will get payment in full, with no legal hassles. But our calls fell on deaf ears.

Our Real Estate Agent contacted a friend of hers inside our Lender. He did a little digging and said nothing can be done to stop the Foreclosure. We have to cough up the funds to Cure the breach or we are SOL. He said sell assets, cash out savings, whatever we have to do. Well excuse me Bud, but the savings are already gone. The only thing we have left is vehicles, and we owe the IRS $8K. So, OK, we pay the Lender and then we can't pay our rent, and we wind up on the streets. Hummm Tough choice there.

We offered to fax them all the documentation to prove the hardship and the offer. They weren't interested. So much for the friendly Lenders that will work with you when you need their help.

So all this pandering by "Lenders" in disguise is just that. An opportunity to prey on folks in dire circumstances to suck the last little drop of blood from desperate people looking for any port in a storm.

Pahleezzee!! Take it elsewhere!!

[BassBoy]

So all this pandering by "Lenders" in disguise is just that. An opportunity to prey on folks in dire circumstances to suck the last little drop of blood from desperate people looking for any port in a storm.

Pahleezzee!! Take it elsewhere!!

Sickening, isn't it?

[ddeennis]

so do you folks think i will have to pay anything if i just walk away from my house?

[Jenny]

How can you get a mortgage using your income but not your credit? I thought both or neither went into it when it's a joint loan.

[ddeennis]

the lender we got has "special programs" which he can lend money on pure credit only and does not involve the income. thats what he told us and we are very happy. he said if it was just her on the note and only income to repay this loan back he would not approve it but since he knows my income is there he approved it. he told us it took both of us together to get this loan cause i could not have gotten it with out her and vise versa, my income her credit.

[SinkingFast]

Personally, I'd be kinda wary of this whole situation.

Lenders can spue all kinds of stuff in an attempt to get your business. An underwriter is the one who is gonna look at everything and decide the risk of the borrowers.

Sounds like your lender is strearing you toward some type of non-conforming type of financing. When non-conforming is low downpayment that's one thing. The buyer might get caught short if they have to sell quick. There are all sorts of non-conforming real estate financing that have some very hefty rules the borrower has to follow. Be sure to get a copy of the loan well in advance of the closing day so you have plenty of time to read thru it and understand exactly what you'll be signing. And don't rely on the Lender to explain things to you if you have questions. Get an unbiased 3rd party to answer your questions. The Lender wants your business and will tell you what you want to hear to get you to sign. Even brush things under the rug like it's really not important or anything for you to worry about when it can be a huge issue.

Be very certain you know exactly what you're getting into before you sign on the dotted line.

Wanted to add,............. Your Lender is gonna be making bucks off you that you don't even know about. Non-conforming lenders such as Countrywide, pay Loan Broker companies a referral fee to bring customers to them. Be very careful about this whole deal. If it works for you great! But go in informed about what you're getting into.

[seanpwarren]

Judgement against you

The bank has the right to file a judgement against you, or file a 1099 against you and make you pay taxes on the amount owed as a forgiveness of debt. If you are going to let the house go anyway, I would find an investor who will do a short sale contingent on no judgement against you, I think that would be your best bet.

Sean

[BassBoy]

Best way for you to be well informed is to request for FULL DISCLOSURE! If they can't, then WALK AWAY! If they are not willing, then WALK AWAY!