| What to do with underwater house |
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LottomagicZ4941
Senior Member
Cash: $ 7.91
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Joined: 02 Dec 2004
Location: Earth
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| Re: Default |
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quote:
Originally posted by Jade456
The only moral way out is to pay down the debt. You got into the mess, you'll have to get out. If your credit is still good, you're best bet is to refinance it yourself and put a lot down. Get rid of her credit cards, pay them off and close them.
Was it moral for the banks to over loan? Since the banks will not shave the 10% I wouldn't say it is less then moral for this guy or anyone else to do what is legal and teach the banks to be more ethical.
Banks are professionals and the people who take on loans are less responsible. Had the banks not okayed zero down loans we wouldn't be in this mess. Had the banks not been greedy and educated consumers to take on less debt. They were greedy and said yes when they should have said no. They deserve to get burned giving money to a spend-a-hollic.
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Fri Sep 23, 2011 3:05 pm |
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littleroc02us
Moderator
Cash: $ 205.35
Posts: 1015
Joined: 09 Feb 2009
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| Re: Default |
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quote:
Originally posted by LottomagicZ4941
quote:
Originally posted by Jade456
The only moral way out is to pay down the debt. You got into the mess, you'll have to get out. If your credit is still good, you're best bet is to refinance it yourself and put a lot down. Get rid of her credit cards, pay them off and close them.
Was it moral for the banks to over loan? Since the banks will not shave the 10% I wouldn't say it is less then moral for this guy or anyone else to do what is legal and teach the banks to be more ethical.
Yes banks are idiots, (sorry if anyone is) but I put a lot of blame on the person who signed the promisary note to pay back the loan knowing the terms and possibilities that the rate could worsen. Not knowing 1st grade math is no excuse. You should know what you can afford and what the costs will be. (Income - Bills = money left over)
Romans 13:8 “Owe no man any thing, but to love one another: for he that loveth another hath fulfilled the law.”
Last edited by littleroc02us on Fri Sep 23, 2011 5:34 pm; edited 1 time in total |
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Fri Sep 23, 2011 3:10 pm |
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Offshore-Wealth.com
Senior Member
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| Re: What to do with underwater house |
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quote:
Originally posted by DJSal
Years ago my wife and I were going to divorce and I basically sold her the house for $1, in order to get my name off the mortgage and title so I could purchase my own home. We both worked and have always made about the same salary. As it turns out we reconciled after a few years and are together now in the same house. Over the course of the years she has consolidated her credit card bills into a second mortgage and said this was great because she would now be able to deduct the additional interest at tax time. Well, she is a spendaholic and did this about three times, burning through all the equity and bringing the mortgage balance up to about $220k, which was the home value before the housing meltdown. Now a few years later the house value has tumbled to around $150k and the neighborhood is changing. We would like to move elsewhere but cannot sell the house since it is worth much less than what is owed, and the mortgage holder (Citifinancial) won't even modify the loan from an unheard of 10% (due to her poor credit) to a more reasonable 5% or somewhere close to the going rate. We are paying about $2k per month and are barely making a dent in the principle. I have enough savings to put 20% down on a home purchase and have excellent credit but I don't know what is best for both of us in the long run. Should I buy a home by myself and have her walk away from her mortgage? This doesn't sit right with me as we were raised to pay our debts but I don't want to be stuck here if the town turns into a ghetto. What to do? Sorry for my long first post.
Interesting,
Being in the industry, I hear this exact story over and over, and as with most, they had tapped into their equity for what seemed like logical reasons, as in paying off credit card debt, but sadly, as in your case, most just keep on spending and run those credit cards back up and then find themselves in a reverse equity position, plus overloaded with credit card debt.
Most banks are not even looking at loan modifications knowing most people have no equity and with tighter credit, most cannot get refinanced at all, so the loan modification come on is at best, a joke, at worse, a scam banks are pulling on homeowners.
Given you wife has the dents in her credit, and you are clean, the decision should be easy. And yes, most do not want to walk away, but markets have changed, situations have changed, and with the known fact banks and their greed are the reason for the housing collapse and loss of equity for homeowners, there is enough blame to go around for this dilemma millions are going through.
Having worked with hundreds in this same situation, here is the reality you and others must face, either let them foreclose, file bankruptcy or evaluate renting your home and hope for a market turn around. With high interest payment of 10%, no way will you ever see equity again, so if the market in your area can demand a rent to cover your expenses, this would be the best option in my experience. If not, and say you are negative of a few hundred a month, then the decision is this, is your wife's credit which is already damaged worth saving by renting and then rebuilding her credit over time. Only you can decide this, but thank goodness your credit is in tact or your would really be in a jam.
I don't advocate walking away, just as I don't advocate bankruptcy in most cases, but given the collapsed economy and knowing the banks are the reason for it, I am seeing more people justify walking away every day. It is never an easy decision for sure, but being $70K in the hole with reverse equity, sorry, but you will never see this homes value return to former value of what it was before collapse.
Good luck,
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Fri Sep 23, 2011 4:59 pm |
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