Might walk from my mortgage in Michigan?
Aug 14, 2009 mortgage loan lenders
In summary: We are 0K upside down on our mortgage. My wife is losing her hours at work, we have a 2nd child due, I work for GM and may lose my job altogether by October, we have 60K in wifes student loan debts, mortgage lender will not help or modify the loan and the stress of it all is driving my marriage to the ground. We are looking into buying a forclosed home at a firesale price under my wife’s name/credit and letting me fall on the knife with the foreclosure to ensure we have a home for our family. If I do not walk, by year’s end we wont be able to keep up with current payments regardless if I am still employed or not because of my wife’s situation with work and need to be home with children to save on daycare costs.
Does walking away at this point make sense, or am I dilussional here? I can’t see any way out, and a bankruptcy attorney I know said i don’t need to pay him for anything, I just need to walk. I live in Michigan to boot, so that sure doesn’t help anything.
Comments, thoughts or advice..PLEASE!!!
A quick note about wife’s income: At the present time, she does earn a strong salary and her credit should stand strong enough to by somewhere in the 130-150k range. At that price, we could literally buy our neighbor’s foreclosure which is the same model as ours..at 100 thousand dollars less than what we currently owe. Now, I didn’t major in Finance, but doing the math on this doesn’t require much cognitive ability to understand that we are on the losing end of the deal anyway we go. Thank you Wall Street. We didn’t overspend, we put good money down, got a 30yr. fixed, a good interest rate, etc., and still we fall because everyone and everything around us has taken the plunge. My fear in this of course is blowing my credit up after 20 years of excellent history. But, need I fear an intangible like a credit score? Wouldn’t remaining current on every other account I have help to rebuild what was so easily destoyed?
August 14th, 2009 at 10:55 am
I live in Michigan, and I know a lot about this, and if you will change your profile to accept email and email me I will discuss this with you more fully. If not, all I can say is that if your wife is not on the current mortgage on your house and if she has a decent credit score, your plan will work. You absolutely must consult with an attorney before doing this so that you can protect yourself. Also, when you buy another house, don’t change your address at the post office to the new address. Get a post office box and have the mail sent there. Don’t get a land line. This will prevent collection calls. Don’t change your address on your driver’s license either until the home has been sold at sheriff’s sale and is owned by the bank. I can tell you more about the process and what to expect if you email me. I just don’t want to post my personal email publicly.
Regarding your credit score, there is good news. The laws have changed. If you have an an otherwise good credit history but one major black mark, such as a foreclosure or repossession, the credit bureaus must take that into consideration when calculating your score. Your credit score will take a hit for seven years, but it will not be destroyed like it used to be. I know a foreclosure is embarrassing, but it doesn’t carry the stigma that it used to, and yes, keeping current on your other accounts will help to rebuilt it.
You really need to consult with an attorney because when you go into foreclosure there is always a possibility that the bank will turn around and sue you for the difference between what you owe and what they made at the sheriff’s sale. It doesn’t happen often, but some people in Michigan are being sued for as little as $50,000. This is a major life decision and should not be entered into without knowing all the facts. If you email me I will be able to recommend an attorney with reasonable rates in metro Detroit for you and give you other information that I will not post here.
Also, you may be offered the option of a short sale. This is not a good idea because the new government program requires that you submit your bank account records, pay stubs, and other personal information to the government and the lender in order to qualify for the short sale. DO NOT ever voluntarily provide your personal information to the government. As for the loan modification, this is a joke. Only a little over 300 people have qualified for this government program since it was instituted in December of 2008.
You and your wife will be fine. These are difficult times and they call for drastic measures sometimes, but your priorities are in the right place: Marriage and children first. Everyone else stand in line.