Walking Away From Your Home
We have all heard it before, you are upside down in your home due to having negative equity. Why should you have to suffer through another several years in a home that is not worth it while waiting on a mortgage recovery. Not to mention, the economy still has not recovered yet. If you are unable to do a repayment plan, a short sale, a deed-in-lieu of foreclosure, a refinance, or a loan modification with your lender or a financial institution, yet you do not want to file for bankruptcy in order to hold onto your home, then you are not alone. Walking away from your home might seem to be a viable choice for you. There are millions of struggling homeowners all across the country facing this dilemma. Some might think the answer is simple, or they might believe your choice should be based on pure moral and ethics. Unfortunately it can come down to more than your decision just being a moral or ethical choice. Mortgage companies and banks do the same thing, they make decisions not based on just morals or ethics, but they decide based on what is good for their bottom line; homeowners must think that too at times.
With our many years of dealing with lenders, servicers, attorneys, clients, foreclosure attorneys, among other real estate professionals, we can walk you through the steps of walking away from your home the right way. It might seem somewhat complicated, you may wonder if you are missing some important step during the process, and that is where we will guide through this whole process that we have completed all too often. We will hit on some of the main concerns, and the important and correct step that will show you how to finally walk from your home and your mortgage permanently.
Homeowners that stay in their homes that are under water and there is no equity when there should be equity, they are literally wasting their money on something that does not have the value they are paying for. These buyers are paying the price of other property owners that might have made an irresponsible decision to buy a home when some of them clearly knew that they could not sustain the long term payments without refinancing it shortly after the purchase was completed. This practice occurred regularly during the biggest mortgage boom this country had every seen in the early 2000‘s. We would still be in the boom if companies were still refinancing homeowner that were hard up for cash. However, it was virtually impossible for homeowner to continually expect for their mortgage loans to be refinance over and over again with no end to the refinancing of their loans.
First of all, lets start out by telling you that your credit will be affected negatively for years to come. A foreclosure will last on your credit for an average of about 7 yrs, so it will not go on forever. During this 7 yr period you will be denied for virtually every kind of credit that you apply for. So my advise would be to not apply for any credit until a few years down the road. At that time you should begin to apply for secured credit cards to start to rebound or level off your credit decline, if you are approved for any other credit your interest rate will be outrageous during this period. Make sure that before you walk away from your home and end up with a foreclosure on your credit report that you have carefully considered your options. Knowing that having your credit severely damage should prepare you for living a “cash payment for everything life.” With that being said, you should have taken care of the important purchases already such as your vehicle, clothing, shelter, etc. if you have not already done so. You might need to make some of your purchases on existing or new credit cards, but try to pay them off as quickly as possible. In addition, make sure you have paid down your credit card balances as low as possible and do not add any additional unnecessary purchases on credit, especially on high interest credit cards. You will likely see your interest rates on your credit cards begin to rise, due to you being a perceived risk of being a credit liability.
You should also send each one of your lenders a cease and desist letter to stop them from calling you, you may subsequently send cease and desist letters to any, and all of your creditors so that they will stop any harassing phone calls to you. You can use a generic cease and desist form, or simply type up a letter to each of your creditor telling to them to not call you regarding any of your outstanding debt. Sent your cease and desist letter to your creditor certified, and get a return receipt for each letter you sent. That way you have a record showing that they did get your legal document to not contact you by phone regarding the debt. However, they may still write your letters.
Once you are ready to walk away from your home, find out when your property will go to sale. The easy and free way to find out your property’s sale date is by calling your mortgage lender, loan servicer, or your foreclosure attorney that represents your mortgage company. Once you are aware of the sale date of your property it will make you aware of when the property will go to sale which is a huge advantage to always be aware of that date. A property’s sale dates can changes and be extended at times. Now 1 of 2 things will happen at the sale of your property date, your property will either be sold to an independent 3rd party, or it will not get the necessary bid at the auction for it to be sold, and it will end back up in the hands of your mortgage company. It if sells to a 3rd party you will get a notice placed on your door with your move out date, if your state does not have a redemption period. For example the state of Alabama has about a 12 month period for a homeowner to try to redeem or pay up what they owe before they can even be removed from the property, not to mention the whole foreclosure process for that state’s resident can take up to 3 months to complete, that‘s a potential 15 month that a homeowner could be living for free in their home and saving up lots of cash before they have to move out; I hope you see the big picture by now! Real estate attorneys charge big bucks for this kind of information because it can be so valuable to a borrower! Please see 2 very important charts that gives you a lot of helpful information about the length of time it takes to complete a foreclosure, the length of time it takes to get you out of the property while you are squatting on it, the expenses to get back the home, among other helpful information at http://www.mortgagecrisistips.com/foreclosureinformation.html and http://www.mortgagecrisistips.com/REO-FeeAnd-information.html . If the property does not sell at the local auction, your lender will remain in possession of the property until it is eventually sold at an auction. While your lender has possession of the property, the property is called a Real Estate Owned(REO) or bank owned property. You lender will market the property in various ways until it is sold. However, before they market the home while it is a REO property they will try to get you out of the property. They do this by offering you cash, this is often called “cash for keys.” They will offer cash for keys in most cases. A typical cash for keys program will offer any homeowner an average of $1200 to $3000 to get them to vacate the property as quickly as possible. It is in your mortgage company’s best interest to vacate any occupants of the residence as quickly as possible so that the can start to market the property right away, and avoid paying the expenses of holding on the property. Most lenders want the home to be in fair to good condition when they decide to make a cash for keys offer to the occupant of the residence. Cash for keys is not just for the homeowner, it can be for anyone living in the home, take the case of a rental property. It might not make good financial sense for them to pay you up to $3000 to move out, and spend more money fixing your property up if your property needs a lot of repairs. Doing the cash for keys program will benefit you, if can put some extra money in your pocket around the time of move out that will most likely come in handy for your move, plus any additional money you might have accumulated.
When you know what your move out date is, you should have a strategy of how much money you could save up before moving out. Remember, you will not be making your payments before you have to leave the house. If you see that you can set up a repayment plan with your lender to get some additional time in your home you might want to consider it. It can help you to save up more funds. There are many ways to get more time in your home for free or at a discounted rate until you are ready to leave permanently. A repayment can certainly buy you more time. Fore example, lets say you call up your lender and you work out a repayment plan with them; say your mortgage payments are $2,000/mth and you owe for 6 months and you have other fees such as late charges, expenses, attorney fees. In all you owe $2,000 x 6 =$12,000 on payments + other fee of $3,000 for a grand total of $15,000. You might work out a repayment plan where you put a down payment of $1,500 since you are struggling. So your next payment would starts 30 days later, and you would now be paying $3,125/mth for 12 months until you are caught up. Lets say you paid the $1,500 down payment to start your repayment plan above, and 30 days later you missed the 1st of your repayment plan of $3125, and you are back in default once again. The next thing that would occur would be that your mortgage company with it maze of loans would eventually discover that you have missed your 1st of 12 months of repayment, and you loan would go into or go back into foreclosure which could take weeks or longer, therefore giving you more time to not make your mortgage payments. Then the foreclosure attorney goes back to court for the hearing and another foreclosure sale date is established. You the homeowner now have a new extended sale date where something would have to be worked out again in order to stop the sale of the property such as another repayment plan, among other work outs types. This whole process can give a homeowner additional months on the property not making payments while building up their funds.
A homeowner who has just gone through a foreclosure can save up months or even years of mortgage payments before the foreclosure is showing up, and use their proceeds towards moving out of their home and into another residence of their choice with ease. Having bad credit can be a curse, but having a healthy cash supply where you are able to prepay 6 months of rent will be a landlord’s dream tenant.
Once you are aware of your final move out date, pack and move out before your move out date. If you have not vacated the property by the move out date, by law the sheriff can physically remove you from the property, and hire a moving company to pack your items up at your expense. Make sure that you do not leave any valuables in the home, because it can be auctioned off, and the proceeds kept.
If you have considered all of the options and have decided that moving out is in your best interest. Please do not hesitate to move out and start over. Consider all of the possible ways to get extra time in your home before moving out by using the charts at the links above, they are very helpful. All the extra time will certain prepare you better for being financially able to move out of you home with no hang ups. Even though your credit will be damaged temporarily, having enough cash amassed will certainly ease some of the pressure of walking away from your home. We have discussed some of the most important things to consider before walking away from a home; use it wisely and you will be better able to handle the next 7 yrs of living virtually on all cash with no major regrets. Good Luck and follow http://www.mortgagecrisistips.com for regular mortgage updates and trends!
Use the professional mortgage advice given to you by industry professionals to create the financial future for you and your family for many years to come. Be secure in your decision and good luck!
