Recently, it seems I have been speaking to families and close friends who are contemplating giving their home back to the bank because they are still unemployed, facing a loss of employment, hours have been cut at work, and/or other hardships are taking a serious financial toll. With County wide unemployment rate still extremely high, and the State is no different, it is no surprise that walking away from a home seems like the only option too a huge problem. Creditor phone calls, threatening letters, and notes posted on the front door just accentuate the feelings of hopelessness that surround being behind in mortgage payments.
In a recent comment from SCUBA Diver, on All About Washington State Foreclosures post, he said “I am considering sending GMAC a “jingle letter” with my house keys and simply walk away”. Approaching retirement, SCUBA Diver just can’t afford the increase in monthly payments and knowing that his home is worthless than he owes, walking away appears to be the only solution. But what can happen if you do just walk away from a home? Does a bank just say “thanks for the keys” or could there be other repercussions?
What is the Cost of Walking Away?
Walking away from a home seems like it would be a simple deal. Give the keys back, vacate the home, and move on with your life. Right? Yes, but there are a few things to consider before walking away:
- Will I be able to rent a home after walking away from a home?
- How long will it take to get my credit back in order? Longer than it takes for the economy to recover?
- Will the Lienholder(s) come after my personal assets to make up for the difference between what is owed and what the property sales for? – How long is a deficiency judgement last?
- Will I have to file bankruptcy in additional to walking away?
Instead, Sell the Home as a Short Sale
Short sales are a excellent alternative to just walking away and can have less of a credit and financial impact. A short sale is when the lienholder(s) agree to accept less than the mortgage amount for the sale of a home. In a conversation with a friend who has been out of work, I explained to him that he is in hardship situation and there is a good probability of his lienholders approving of a short sale on the property.
But like many he is stalling to see what is going to happen. Foreclosure is what will happen and if he sold short then he would actually be free of the debt and move on with his life. In addition to being free of the home, if he has a second lienholder and he is pursing a short sale then that second lienholder maybe willing to take less on their loan just to get some money. Because of the foreclosure process, the second lienholder can sometimes be left with nothing. A short sale is proactive approach to under water mortgage.
Related Page: Short Sale Assistance
Sort of Related Post: Buying a Short Sale
Please consult with an attorney (as I am not one nor do I play one on TV) and a real estate agent to see what the best option is for you and your family’s future. These are changing times and the way our government acts – eh hem, only in their best interest – you need to obtain the most knowledge about your personal situation.
Related posts:
© 2003-
Recent Comments