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Originally Posted by sarajoy  We have not experienced a serious financial hardship, but I can not see the reasoning to continue throwing every penny we make into it. We are not able to put any money into savings and at this point we are so upside down in our loan it could take 10+ years before we begin to touch the principal. |
You should read through some of the other threads to determine if your lender can sue you for non-deficiency. If the house resides on 2.5 acres or less, is your primary residence and the loan was used to purchase the home then I
believe you are safe from a deficiency judgment. The professor will probably chime in and clarify those points.
I was in your shoes for quite some time but finally took the plunge last month. I owed $160k on a house worth $70k. Chase terminated my HELOC during major renovations leaving me with no kitchen, a partial living room, missing plumbing/electrical and no flooring. I did not have a 'hardship' (plenty of income) but my primary residence was worth so little that it would take a dozen years to recover (if it
ever recovers). If I invested another $15k for a kitchen then I would owe close to $180,000. I contacted my first and second, made it clear that we needed to negotiate a principal reduction or 2% interest loan but neither would come to the negotiation table. In fact Chase threatened to
raise my interest rates. I stopped making payments this month.
If you are planning to try for a loan modification then I can only tell you what I went through with Citi and Chase. Citi (primary - nonrecourse) told me they would not even discuss a loan modification unless I was more than 3 months behind. They also said I make too much money to qualify for their loan modification program. When I explained that the house was worth only 50% of the loan balance and did not have some basic necessities (like a kitchen and flooring) they said it was my problem and not theirs. If I failed to make my payments they they would foreclose.
Chase (2nd - recourse loan) told me they would not negotiate a settlement until after Citi foreclosed and auctioned off the property. Once we have both lost everything in their scortched-earth policy.. then we can talk about a settlement.
You should read the 'Buy & Bail' thread. I bought a foreclosure a couple of months ago. I made this decision while my credit was still worth something and ended up with a $75000 house that was worth $220,000 in 2006.
My plan was to rent out the house and use the income as a hedge against a job loss. At the time I just could not believe that the bank would prefer to foreclose rather than negotiate an equitable settlement. If the banks won't settle then I will have to move into the rental. I won't have much of a choice.
I will say that I feel a huge weight being lifted off my shoulders. I may not owe $520,000 but I can only imagine the stress that kind of mortgage payment creates. My suggestion is to sit down with your wife / kids, figure out how much you have, figure out how much you can save if you stop making payments, start looking at the local housing/rental market to decide what is right for you, lean on friends/family that can help, talk to an attorney, find out what the legal ramnifications are for your decision then make a decision.
Don't feel strained to make your payments right away. Most banks will not report a late payment until 29-31 days after your payment is due. This means if your next payment is due on 5/1 then you have until 5/30 to decide. Take the time to make the right decision. Don't let them bully, con or threaten you into making a payment. Thankfully I had a good attorney who clarified this point for me.
If you need to vent or have any other questions then there are plenty of people who frequent these forums who are in your shoes. We'll give you all the help we can..
Good luck!
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Re: Looking for guidance - where to begin - Upside down in Corona, CA 
Re: Looking for guidance - where to begin - Upside down in Corona, CA 
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