Foreclosures?

My feeling is he is a d!ck and if he goes through with this should end up in the cell next to Vick from LOC.

Walking away from one's obligations is not a good thing.

 

Russell

 

 

Listen, I don't think it's right either. I think the banks royally screwed our country, and gave money they shouldn't have given. I do believe though, if we feel that this guy should be in jail for screwing the banks, all the people who worked in the dirty banks (which were almost all of them) should be in jail too. I don't believe it is all the banks fault as people were stupid enough to apply for the loans. My friend Joey is a good guy, and honestly, when everyone he knows is doing it and coming out clean, many would probably do the same in his situation. He also does real estate on the side, and knows the ins and outs of the market pretty well. I don't believe everything I am told, so I ask here. When he told me his story, I thought of my own situation.

 

 

Here is my situation:

 

I bought a nice house in a nice neighborhood about 45 minutes outside of Miami. During the housing boom, this was our only option as we weren't making great money, and the home values were astronomical. My wife and I moved there in 2005. Paid $230,000 for the place, and put 20%+ down on the townhome, so we werent one of the people who did a 0 down no interest loan. That brought the loan value down to $181,000. We lived in the place for 2 years, and the area started getting really bad, and the wrong people started moving in. Gas prices were going through the roof, and I got a promotion to another area in Miami, and my wife recieved a promotion to the same area. We both get promoted again in this timeframe, and make good money now. We decided to rent our townhouse out for a $430 loss every month as we would be paying that in gas driving to and from work.

 

So we rent out our place, and we rent a place closer to work. The economy really takes a dive, and now our place that we bought for $230,000 is now worth $60,000. We now owe $170,000 5 years later. The neighborhood is now FULL of section 8 households, and my tenant has had his identity stolen 2 times while living there. He found out it was a guy down the street and called the cops on him. My own car was stolen from in front of my home right before I left the place.

 

So my current situation is this. Move back to my old place, have to walk my wife to her car every morning with a gun, have security cameras everywhere, and be afraid that my wife will be killed or worse on the way to get groceries, and not be able to have kids due to the school system in the area being one of the worst in Florida.

 

OR

 

Buy a nice house that I can easily afford in a good neighborhood, with good schools, well under market value. Let my townhouse go with either short sale or foreclosure, and joining the millions of South Floridians, Southern Californian's, and Las Vegas Residents who are doing this. Have my credit screwed for 7 years, but have the security that my family is safe, and that we are in a good area.

 

 

 

So I ask my LP brothers. What would you do in this situation?

So I ask my LP brothers. What would you do in this situation?

 

Wait so your "Friend" is not a doctor??

Listen, I don't think it's right either. I think the banks royally screwed our country, and gave money they shouldn't have given. I do believe though, if we feel that this guy should be in jail for screwing the banks, all the people who worked in the dirty banks (which were almost all of them) should be in jail too. I don't believe it is all the banks fault as people were stupid enough to apply for the loans. My friend Joey is a good guy, and honestly, when everyone he knows is doing it and coming out clean, many would probably do the same in his situation. He also does real estate on the side, and knows the ins and outs of the market pretty well. I don't believe everything I am told, so I ask here. When he told me his story, I thought of my own situation.

 

 

Here is my situation:

 

I bought a nice house in a nice neighborhood about 45 minutes outside of Miami. During the housing boom, this was our only option as we weren't making great money, and the home values were astronomical. My wife and I moved there in 2005. Paid $230,000 for the place, and put 20%+ down on the townhome, so we werent one of the people who did a 0 down no interest loan. That brought the loan value down to $181,000. We lived in the place for 2 years, and the area started getting really bad, and the wrong people started moving in. Gas prices were going through the roof, and I got a promotion to another area in Miami, and my wife recieved a promotion to the same area. We both get promoted again in this timeframe, and make good money now. We decided to rent our townhouse out for a $430 loss every month as we would be paying that in gas driving to and from work.

 

So we rent out our place, and we rent a place closer to work. The economy really takes a dive, and now our place that we bought for $230,000 is now worth $60,000. We now owe $170,000 5 years later. The neighborhood is now FULL of section 8 households, and my tenant has had his identity stolen 2 times while living there. He found out it was a guy down the street and called the cops on him. My own car was stolen from in front of my home right before I left the place.

 

So my current situation is this. Move back to my old place, have to walk my wife to her car every morning with a gun, have security cameras everywhere, and be afraid that my wife will be killed or worse on the way to get groceries, and not be able to have kids due to the school system in the area being one of the worst in Florida.

 

OR

 

Buy a nice house that I can easily afford in a good neighborhood, with good schools, well under market value. Let my townhouse go with either short sale or foreclosure, and joining the millions of South Floridians, Southern Californian's, and Las Vegas Residents who are doing this. Have my credit screwed for 7 years, but have the security that my family is safe, and that we are in a good area.

 

 

 

So I ask my LP brothers. What would you do in this situation?

 

Why not keep renting like you are doing currently?

 

Wait so your "Friend" is not a doctor??

 

I believe he is a cardiologist. He works at a local hospital here in Miami, and did real estate on the side for many years. He was one of the guys who would buy 30 units and flip them during the boom.

Why not keep renting like you are doing currently?

 

What happends if the tenant leaves, and I cant find a new one due to the current situation there? Also, My wife wants to have kids in the next 2-3 years, and also wants to buy a place close to her mother to have her mom watch them when they are little.

 

Plus, would you want to keep it?

 

If I buy another place, I may have the money to afford both with a tenant in my first home, but when they decide to leave, I see no point in paying for a place that I can/will not want to live in again.

The guy's a deadbeat, plain and simple.

 

The bank will foreclose on the mortgage, buy the house back at auction, put it on the market, sell it, and then sue him for the difference and legal fees. Plus his credit will be wrecked.

 

Really bad move.

 

 

The guy's a deadbeat, plain and simple.

 

The bank will foreclose on the mortgage, buy the house back at auction, put it on the market, sell it, and then sue him for the difference and legal fees. Plus his credit will be wrecked.

 

Really bad move.

 

Everyone's credit is already wrecked in South FL. Most would sacrifice their credit to get rid of $600,000 of bad debt.

 

Not sure about the legal implications though.

Well Mike...The problem is, the bank will ask the same question "what happens if you cant rent the old house out". You need to be able to show you can support both mortgages by yourself just to get approved on a new loan for the new house. If it doesn't have at least 20% equity in it they will NOT accept rental income at all anyways cause they know people have the tendency to buy a new house and let the other go to foreclosure cuz it has no value (just like your buddy). If you can show you can afford both great, buy a new one. If not, well....

 

I would say maybe rent with the option to buy down the road. Rent a kick-ass house!!! Nothing wrong with that. I was looking at rental prices in Miami just this week and I'm astonished at what you can live in for the price (compared to here in SoCal). Live well, in comfort in a gated community on one of those man-made islands . And sell your old house at your leisure (value nothwithstanding). Or wait until you can eventually get some more value out of it. The main point being for you, that you don't want your family there, so who cares about what renters have to deal with in the neighborhood just rent it and hold out till the timing is right.

Pike... what are your option in a proactive manner;

 

1. What is the section 8 value of the property? If you're into the place for $170k I'm guessing your mortgage payment is ~$1100 with taxes etc.

 

Can you rent it out for that? Yes renters come and go, when they go, you find new ones, it's the cycle. Using the argument that they will one day leave is a moot point, they will, and there will always be someone to replace the people who leave.

 

You might be surprised what it will rent for, even on section 8. And beyond that not ALL section 8 people are scum of the earth so try to not be overly judgmental.

 

One thing to remember is rents will go up over time and realestate will come back, so look at the long term effects. Even if you're losing $100/mo for the next year, you're only out $1200 and some headache. Plus you haven't hosed your credit in the process. Yeah it's only worth $70k now but in a year it will probably be back in the low 100's.

 

I would just be wary of the long term ramifications of walking away from this as the debt could track you down, via lawsuit, 1099c, or w/e.

Well Mike...The problem is, the bank will ask the same question "what happens if you cant rent the old house out". You need to be able to show you can support both mortgages by yourself just to get approved on a new loan for the new house. If it doesn't have at least 20% equity in it they will NOT accept rental income at all anyways cause they know people have the tendency to buy a new house and let the other go to foreclosure cuz it has no value (just like your buddy). If you can show you can afford both great, buy a new one. If not, well....

 

I would say maybe rent with the option to buy down the road. Rent a kick-ass house!!! Nothing wrong with that. I was looking at rental prices in Miami just this week and I'm astonished at what you can live in for the price (compared to here in SoCal). Live well, in comfort in a gated community on one of those man-made islands . And sell your old house at your leisure (value nothwithstanding). Or wait until you can eventually get some more value out of it. The main point being for you, that you don't want your family there, so who cares about what renters have to deal with in the neighborhood just rent it and hold out till the timing is right.

 

Already have an approval letter to buy new home. Buying another one would not be an issue. Wife wants to buy a new home too.

Pike... what are your option in a proactive manner;

 

1. What is the section 8 value of the property? If you're into the place for $170k I'm guessing your mortgage payment is ~$1100 with taxes etc.

 

Can you rent it out for that? Yes renters come and go, when they go, you find new ones, it's the cycle. Using the argument that they will one day leave is a moot point, they will, and there will always be someone to replace the people who leave.

 

You might be surprised what it will rent for, even on section 8. And beyond that not ALL section 8 people are scum of the earth so try to not be overly judgmental.

 

One thing to remember is rents will go up over time and realestate will come back, so look at the long term effects. Even if you're losing $100/mo for the next year, you're only out $1200 and some headache. Plus you haven't hosed your credit in the process. Yeah it's only worth $70k now but in a year it will probably be back in the low 100's.

 

I would just be wary of the long term ramifications of walking away from this as the debt could track you down, via lawsuit, 1099c, or w/e.

 

Mortgage/tax/Assn=$1630/month. Rents in are are about $900-$1100.

 

What is the up/down on renting it for $1k and taking the loss on your taxes? Do you have enough to deduct and come out even?

 

You might talk with an accountant or title attorney and try to look at some creative ways to make this break even. In the end I believe you will come out ahead.

What is the up/down on renting it for $1k and taking the loss on your taxes? Do you have enough to deduct and come out even?

 

You might talk with an accountant or title attorney and try to look at some creative ways to make this break even. In the end I believe you will come out ahead.

 

 

If I paid in full at the end of the year it is about $3k. Mortgage and association alone are roughly $1,375/month. If I were to break even on the place monthly, and could keep a tenant there, I would keep it until its paid off 25 years from now.

I was speaking to a friend of mine that is relatively well off. He is a cardiologist, and his wife is an RN at a hospital here too. They make good money, and had purchased several homes in the last couple years.

 

In my last conversation he mentioned he basically stopped paying for 2 of his homes, and has no intention of calling the bank to let them know he is foreclosing. He makes enough money to pay for them, but simply doesn't want to waste money on a depreciating asset. He also said that many of his friends which are Doctors and millionaires are doing the same thing on recently purchased vacation homes.

 

My questions are:

 

-What can the bank do to you for non payment other than trashing your credit?

-Will they garnish wages?

 

 

 

This seems to be a regular occurence as of late, and I am considering buying a property on the cheap and walking away from my other townhouse I own. Not because I can't pay for it, but it is SEVERELY undervalued, and underwater.

 

Any feedback from people with experience on this?

 

I am sorry to say it but your friend sounds like he's a bit of a scumbag, if you enter into an agreement honor it!

 

What happened with doing the right thing, honesty, decency? lost virtues I guess.

 

I bet he pays the rent or mortgage for his place of business if he's self employed.

 

He's not only screwing the banks he's is screwing himself and all of you in the process.

 

What a douche!

 

I think it is time for me to buy some RE in the states.

 

 

FYI... I have been doing some reading on FL RE Law. The banks can go after your assets. They usually dont though as the cost of serving you and going after those assets generally do not make sense for them unless you have a good amount of assets they can file deficiency judgement against.

 

http://www.foreclosurelawfirms.com/regiona...fl/florida.html

 

Deficiency Judgments

In Florida, the lender may obtain a deficiency judgment against the borrower for the difference between the sale price and the amount owed on the borrower’s loan. Lenders do not usually pursue deficiency judgments against the borrowers, unless the borrower has substantial assets, because lenders realize that the costs involved are more than they can probably collect against a borrower with no assets. Also, the lender does not want to spend time and money finding the borrower to serve them after they have moved out of the house.

 

Here is my situation:

 

 

 

. The economy really takes a dive, and now our place that we bought for $230,000 is now worth $60,000. We now owe $170,000 5 years later.

So I ask my LP brothers. What would you do in this situation?

 

IF your house is only worth 60k, there is no need to rationalize, agonize, or seek advice on Lpower, y'all are fucked, walk away and start over.

well there is always...

 

and

 

 

 

Kidding....kidding....

IF your house is only worth 60k, there is no need to rationalize, agonize, or seek advice on Lpower, y'all are fucked, walk away and start over.

 

Thats what I was planning on doing. I just need to figure out the best sequence of doing it, to avoid as much collateral damage as possible.

 

 

Oh, and there are homes in the area where my old house is that are selling for $30,000 that are 3/2 townhomes! Mine is in a gated community with a pool, so it is a little more, but god knows what they will get for it.

 

It is NUTS down there. Would be a good place to pick up rental properties if you are cash heavy.

$30k townhome that rents for $800/month, that is gold!

$30k townhome that rents for $800/month, that is gold!

Agreed. Problem is there is a lot of rental inventory. If you can pay cash, it is worth it.

Thanks to the greedy bankers for this mess. It's a business decision, so his best financial interest is to walk away. It's about the bottom line... right guys? Here are some interesting articles PM.

 

NPR: Walking Away From Your Mortgage

http://www.npr.org/templates/story/story.p...p;f=5&sc=17

 

NPR: Homeowner Wants To Walk, Despite New Loan Terms

http://www.npr.org/templates/story/story.p...002&sc=emaf

 

Yahoo Finance: Mortgage lenders pursue homeowners even after foreclosure

http://finance.yahoo.com/news/Mortgage-len...909798.html?x=0

 

Indymac/OneWest: How George Soros and Michael Dell Are Working to Kick HomeOwners To the Curb

http://onewestbankfail.com/how-george-soro...rs-to-the-curb/

could the upside of this be the fact that all these people that are walking away from their mortgages will have a bad credit rating therefore at least for the next 7 years they will not be given loans that they can't afford to repay?

 

one of the articles says 10,000,000 home owners are in trouble, how much of a blow with that be to the already weak economy?

are you really screwing the bank or the tax payers?

 

huge dilemma, I am glad that I don't have to deal with it.

 

I do feel sorry for the people that genuinely can't afford their mortgage but I do not feel sorry for the people that are running away from their responsibilities, running 10 credit cards, up to they eyeballs in debt living it "large" and now they throw their hands in the air saying sorry can't pay back anymore.

You really need to check your local laws. I'm all the way out in Oregon and deal with shortsales/foreclosures in Oregon and Washington. What goes out here could be very different than what happens in Florida.

 

Just a quick answer based on MY locale, to the OP, you would be fine as it was purchased as a primary residence as long as you structured things right. IN MY AREA they don't allow judgements or liens for deficiencies on properties that were purchased as a primary residence, even if you eventually moved out of it and assuming you didn't take a ton of cash out at some point. Even if you did, there are still a ton of ways around it and 9 out of 10 people will just escape with a mark on their credit. Which really only screws you for about 2 years, though it will report for 7.

 

Your doctor friend on the other hand would be screwed as investment properties are fair game for lenders to pursue you in any manner they please. Generally what they do is obtain a deficiency judgement against you, then sell that judgement for pennies on the dollar to collection agencies who will then spend the next 7-10 years hounding you. If he has hidden his assets well, the most annoying thing will simply be his phone ringing off the hook and a lot of junk mail. Assuming he manages the rest of his debt properly, it will be around two years to get back to average credit and about 5 to get back to stellar.

I'm with you PikeMike. All the B.S. about having your fried "do the right thing", what a joke. The mortgage contract is not moral, it's financial. You pay "x" you get to use the property and keep all financial gains if you sell it for more than owed. If you don't pay "x" they take it back. Nobody questions or holds the banks and big corporations responsible for having a "no morale obligation attitude toward their financial responsibilities". Big banks are making millions off the foreclosure crises, all paid with free gifts from the Obama administration, courtesy of middle americas and our children's pocketbook. Your friend needs a savvy financial planner that practices "own nothing, control everything" with regard to assets. (all this being said without knowledge if any other assets are pledged as collateral or how notes are guaranteed)