Walking Away-Need help in Florida

[patmck]

My husband and I have excellent credit but could not longer afford Countrywide mtg. payments plus equity loan (Bank Of America). Tried for loan mod three times, no help. This is my first late payment in 4 years. The house is seriously underwater worth about 50% less than we owe.

We decide to move before our credit goes bad so we now have a place to live but are still in our house.

My questions:

1.Do I call Countrywide and try to "Give back the house?"

2. or would it be better to rent it out short-term just to maintain the property (rental wouldn't cover mortgage payment but someone would be here)?

3. Are forclosures taking longer now?

4. As for equity loan. I have an interest only loan for 6 more years than the principal kicks in which I will not be able to afford. I am still paying the interest so it is current. It makes no sense to me to pay the equity loan but I don't have a clue as to what to do about it. Do I approach Bank of America at some point?

5. I owe lots on credit cards to B of A but I intend to pay those. Will defaulting on my B of A equity loan affect those cards? I owe money on a low interest promotion. Can they raise the rate if I default on the equity loan or are they separate things?

I know I can't save my credit but I don't want to file bankruptcy in the hopes of a future recovery.

I would appreciate any help you can offer because I am losing lots of sleep over all of this.

[The Professor]

The problem in your situation can be identified with a single word. That word is Florida. Unfortunately for homeowners in that state there is no anti-deficiency protection, effectively meaning you have the potential of owing after the house is no longer yours (usually through foreclosure).

The idea of giving the house back to Countrywide won't work since if they were to take a deed-in-lieu their ownership interest would be subject to Bank of America's loan. They won't do this.

While I understand your desire not to file bankruptcy, nevertheless I would encourage you to talk to a bankruptcy lawyer because that may be one of your options (at least threatening a filing may be a useful tool in negotiating. I would also recommend that you look towards the possibility of a short sale, although they are certainly challenging where you have two lenders.

Daniel