Severe Negative Equity Mortgage - Modify or Forclose?

[NotWorthAsking]

Hi All,

Our home was purchased in Dec 2006 for $334,000, and we just received this year's appraisal from the assessor's office (determining CA property tax) showing it valued at $130,000. We only have $10k paid in principal at this point, so the value to loan amount ratio is approximately 249%.

Does anyone believe our lender (Wells Fargo) will be able/willing to modify our loan to the extent that it would make sense for us to stay in the home?

We have not yet missed any payments, and are able to continue doing so (although the budget is fairly tight).

Also we would appreciate any advice as to whether you think it makes more sense to stay in the house, or get out of the loan (foreclosure/shortsale) and just rent for a few years, saving up all the money from the difference between our mortgage payment vs. rent.

[TrappedFL]

My understanding is that the only consequence if you walk away in CA is credit damage. The lender can't come after you for the balance after the home is sold. If they will not reduce your principal, walk away.

[Moe Bedard]

If you look at most mortgages and just like this one, it is technically a lease option from the bank. Yeah, they say you own it, but you are making payments for years.

With that said, when you rent you don't own it and you are at the mercy of a landlord and or neighbors in apartments. If you own, you don't deal with that.

Making sense may be seeing if you can get a loan modification down to what you could rent a home for that is comparable. Being underwater is similar to renting if you think about it.

Maybe play poker with Wells and see what you can do to get a loan modification and if it is no good or you cant, short sale and rent...