Was wondering if anyone here has any insight on this. My neighbor who has been out of work (yeah, i know, “my neighbor”, but like my man ripley said, believe it or not…) for about 5-6 months said he might just walk away from his mortgage. I told him I thought that there would be some penalty against him, be it bad credit, liens on future assets, whatever. He seems to not think so. That he’s the one losing money, based on what he put down and any principal to the property. He thinks that the bank will be on the hook for dealing with the property. So who knows what the deal on this is?
[QUOTE=geeosphere;399814]Was wondering if anyone here has any insight on this. My neighbor who has been out of work (yeah, i know, “my neighbor”, but like my man ripley said, believe it or not…) for about 5-6 months said he might just walk away from his mortgage. I told him I thought that there would be some penalty against him, be it bad credit, liens on future assets, whatever. He seems to not think so. That he’s the one losing money, based on what he put down and any principal to the property. He thinks that the bank will be on the hook for dealing with the property. So who knows what the deal on this is?[/QUOTE]
Bad credit is the least of his worries, but he will definitely have that. He might have a bigger problem getting a loan in the future, but there will still be fringe mortgage companies dying to have his business. Bottom line is that the safer mortgage companies will be much less likely to give him a loan in the future. That could be a problem depending on who the seller is and what house he is trying to buy.
[QUOTE=geeosphere;399814]Was wondering if anyone here has any insight on this. My neighbor who has been out of work (yeah, i know, “my neighbor”, but like my man ripley said, believe it or not…) for about 5-6 months said he might just walk away from his mortgage. I told him I thought that there would be some penalty against him, be it bad credit, liens on future assets, whatever. He seems to not think so. That he’s the one losing money, based on what he put down and any principal to the property. He thinks that the bank will be on the hook for dealing with the property. So who knows what the deal on this is?[/QUOTE]
It will ruin his credit for awhile (7 to 10 years). The bank, if it doesn’t get its money back through the foreclosure sale of the home, may possibly go after him but it really depends on the laws of that state.
[QUOTE=geeosphere;399814]Was wondering if anyone here has any insight on this. My neighbor who has been out of work (yeah, i know, “my neighbor”, but like my man ripley said, believe it or not…) for about 5-6 months said he might just walk away from his mortgage. I told him I thought that there would be some penalty against him, be it bad credit, liens on future assets, whatever. He seems to not think so. That he’s the one losing money, based on what he put down and any principal to the property. He thinks that the bank will be on the hook for dealing with the property. So who knows what the deal on this is?[/QUOTE]
In addition to the the lack of ethics involved, his credit will be ruined for several years.
He should try to negotiate a deed-in-lieu with his mortgage company. If there is as much equity as he says, they should agree pretty quickly. It’s the best of the bad options.
If they’ll work with him, he should try to keep paying.
If they won’t work with him, then screw it, have sh*tty credit for 7 years, & let them eat the loss.
What gets me is company’s walk away from bad debts all the time, but people can’t.
If a company closed today, & re-opend tom. under a different Tax Id, their credit is new credit, not bad credit. Let a person try to open up a new SSN, & they go to jail.
The whole system is rigged for these billion & trillion $ companies.
It’s all a scam by the rich, & the poor & middle class get screwed.
he’ll suffer terrible credit at best and face a lawsuit and garnished wages at worst. depends on the laws of the state. advise him to seek a short-sale. its much less harmful than a deed in lieu of or foreclosure.
that said, he may be better off to miss a payment or two. banks like countrywide won’t even route you through to their mitigation department if you’re current. there are reports of families trying for short-sales and the bank dragging its feet and they lose their buyer to a neighbor down the street because that neighbor, with the same bank, were behind on their payments and the bank moved that short-sale through faster.
i’m reluctant to call anyone unethical in this market. there are a lot of people out there who are really doing the best they can.
He’s probably considered this, but can he get make enough leasing it out to cover his payments? That beats the crap out of walking away from a mortgage.
Didn’t the Recovery & Reinvestment Act just kick in a clause that allows homeowners with over 80% LTV on their homes renegotiate for a lower APR and payment? He should look into that.
It’s not like he is going to live on the streets, right? He has to pay someone…might as well be the bank he owes money to instead of a rental company.