Potential AZ Walker

[StuckInAZ]

Allow me to start with a thank you for the stories that are shared in this forum. I've read many over the course of the last couple weeks and they have not only informed me, but helped me come to terms with the potential reality of walking.

Arizona
House purchased at peak for 255k.
Owe 220k to Citi - Initial loan, no refis, no helocs
House might sell for about 120k-140k based on recent sales in the area.
I am the only one on the loan and title.

I've wrestled with the idea of walking for probably 3 years now, off and on, but it hasn't been until recently that it really sunk in that the house would not recover in 5 yrs, or 10 yrs, or maybe even 15 yrs. I've waffled back and forth between sucking it up and putting all available savings into paying it down vs cutting my losses and walking away. Like many in this forum, I just can't fathom to continue to feed the blackhole and still be stuck here with no options to sell for at least the next 5-7yrs.

I was recently married and to start off our lives 100k in debt does not seem to be the best choice when there are other options available. Additionally, we will be starting a family soon and we would like to have the option (see it's all about options) to have my wife stay home or work part time.

So why not walk away? Financially it seems to be a no brainer. The loan should easily qualify as a non-recourse loan. Ya the credit hit sucks and there are some questions as to how much poor credit will affect insurance rates and future job hunting, but overall it seems like a slap on the wrist to get out from under this albatross.

So maybe here is a reason... I can afford to pay. I do not have a hardship which basically eliminates short sales and deed-in-lieu from the conversation. However if I did lose my job (which is possible), we would not be able to afford the house on my wife's salary alone and I would hate to be in the situation where I would have to start throwing my savings into the blackhole or go into foreclosure anyway. The way I see it, I would rather control going into foreclosure and be part of the herd of people also going through it instead of hanging on as long as I can. Safety in numbers right?

An attorney and tax accountant are next on my list of people to talk with but I would love to hear any comments or advice from people here. Although I do take them with a grain of salt, anecdotal accounts go a long way with me.

Here are some thoughts / questions that I am currently working through:

1. Verify that my now wife's credit will not be affected at all in a foreclosure of this property.
2. If my wife were to buy a property in her name only and with her income only how can she do this while staying on the right side of the law (i.e. no buy and bail).
3. How does being married and the fact that AZ in a community property state affect #1 and #2 above, specifically when my wife goes to get approved for a loan.
4. Can I be primary on our current home and my wife be primary on another home at the same time? How does this affect tax filing.
5. Can my conscience deal with the deadbeat connotation of a foreclosure? ... This is pretty much all that is keeping me hanging on.

[Irish Gal]

Welcome StuckInAZ!

I recommend you read the thread by cactus77727 Walking in Arizona - My Journey. It's an excellent read and details an AZ walker who tells it like it is. Smart, funny guy. He actually foreclosed in April 09, I think. He shares his experiences and feelings throughout the process. Actually, if I were you, I'd read up on the whole Deed in Lieu/Foreclosure thread. Excellent info about walking. Pro's. Con's. Prof Shays posts there a lot (on vaca right now) and he's a foreclosure expert (prior attorney, currently a professor teaching foreclosure classes in CA comm college system). He's a great support to help people to stay focused on the "business" end of all this, and to keep emotions out of the process (just like the lenders do ) i.e. your struggle w/ your conscience about "deadbeat homeowner" stigma. EVERYONE here seems to initially struggle w/ that issue. Most of the people here who are distressed homeowners are NOT deadbeats and had every intention to honor their mortgages and bills. We had no control over the Wall St. crooks who sold mortgages guaranteed to fail to the masses so they could pocket short term billions and gain unconscienable bonuses, despite their failed business model. Econ tanked. Mass unemployment. Don't have "survivor's guilt" because you are still employed, have some income and "seem" solvent at this point. No one is econ safe, today. No one. The banks took dangerous risks, tanked the econ and then got bailed out. Distressed homeowners got nothing and are left to flail by themselves. THAT'S why many people are walking. The lenders are NOT providing long-term, sustainable mods w/ principal writedowns, which is the only sane reason to do a mod, IMO. Many people are still very emotionally attached to their "homes" which are really not theirs, but their banks. The banks play on that emotion and try to offer the worst mods possible. Many desperate homeowners take anything. Less emotional homeowners who are thinking long-term seriously consider foreclosure and quicker credit damage repair. The market is expected to tank for another few yrs. So, post foreclosure (esp non-recourse folks ), when your credit is better in a few yrs., you can buy a bigger, nicer home and have half the mortgage you have today. Tons of info. here. Read, read, read. The more you reach out and educ yourself, the quicker you will treat this as a business process. Not emotional. You will soon resolve the "deadbeat homeowner" unproductive thinking. You're not a deadbeat. That's lender talk. To keep you throwing good $$$$ after bad. While your family goes further and further into mortgage debt slavery. The damn deadbeats are the banks!!!!! Consumers are smarting up. You're a smart consumer who has to put his family FIRST. Not the damn predatory banks that will suck you dry! IMO save, save, save your $$$$ for family needs. The econ is expected to be dead for yrs to come. Good luck. Keep us posted, Stuck! Enjoy cactus77727's thread. He's a hoot! I miss having him around.

[StuckInAZ]

Spoke with an attorney and everything is a go from the legal and tax perspective. It was suggested that I try to obtain a Short Sale to save credit, but I am pretty pessimistic of the chances of it working based on what I have read on this forum and elsewhere.

Has anyone ever seen or heard of a successful short sale without documented proof of hardship as defined by a lender? Maybe I will just fill out the packet and in the hardship letter document the lenders hardship if I go into foreclosure.

Lastly, on the moral issue, I've done a lot of reading and have come to terms. I don't think I've seen someone anywhere post that they are at least 50% underwater and still making payments due to morality.

My favorite quote on the subject that I read went something like this:
"If I look someone in the eye and shake their hand on a deal, then I am honor bound to make good on that contract.

If I sign a contract in 20 places - a contract written by a large corporation with an even larger legal department, I am honor bound to do absolutely what's in my best interest within the legal limits of that contract."

[Kimbly]

Hi! I'm not an attorney; nor do I play one on tv so I won't attempt to answer your specific questions listed above. But, I am in a similar situation in that I'm WAY upside down, stuck in a financial nightmare but *able* to pay. I'm able to pay to the detriment of my life however, and I am ringing up other debt because I'm paying and can't cover both the mortgage(s) and repairs to the house and cars.

Well, I should said "paid" rather than "paying" now. We've officially stopped paying our mortgage(s).

I know the moral battle of which you speak. That is the only thing that has kept us here, and paying, for the past couple of years. Everyone has to make the decision that is right for them and theirs. However, ultimately for me, it comes down to having more respect for myself than I do for the corporation with which I signed a contract. They helped create this mess by over-extending credit and encouraging alternate loans; I'm helping fix it by walking away. One more house that can be sold for a reasonable amount; an amount closer to it's true value.

I hope you find peace with your decision. You are in the dream position of having only a 1st, and it only being purchase money. You are golden if you decide to move forward (once you've gotten the answers you need as respects your wife's involvement, of course).

Good luck!

[AZchick2]

This moral battle people keep talking about is over blown and over rated. Who in their right mind would continue to pay when you are more than 100K underwater? When you try to call and ask for help you get a bunch of bull. Should we all keep our houses and lose all abilites to support our families? Here in AZ things are hard, so many jobs have been lost. Think the lender cares? Trust me, those of us that have walked are not getting away scott free. Our credit is ruined and we are forced to plan very carefully because we have no credit to fall back on anymore.

I had to put on my big girl panties and admit I was in trouble and begin to dig my way out. If it meant letting a car get repossessed or letting a house get repossessed, well then so be it. Life will go on, I am sure breathing a lot easier now than I ever was before in my life.

[azpoor]

AZchick2 - How long were you able to stay in your house before you had to move out?

[Irish Gal]

Originally Posted by AZchick2

This moral battle people keep talking about is over blown and over rated. Who in their right mind would continue to pay when you are more than 100K underwater? When you try to call and ask for help you get a bunch of bull. Should we all keep our houses and lose all abilites to support our families? Here in AZ things are hard, so many jobs have been lost. Think the lender cares? Trust me, those of us that have walked are not getting away scott free. Our credit is ruined and we are forced to plan very carefully because we have no credit to fall back on anymore.

I had to put on my big girl panties and admit I was in trouble and begin to dig my way out. If it meant letting a car get repossessed or letting a house get repossessed, well then so be it. Life will go on, I am sure breathing a lot easier now than I ever was before in my life.

I agree, totally! I think everyone pretty much "gets" by now that the lenders are blood sucking sharks who will put families in tent cities if that's what it takes to stay afloat or make a profit. They're like circling sharks ready to kill their next victim . Actually, I think it's immoral for a family to throw good $$$ after bad to predatory lenders instead of spending on food, med, or educ. for their family, first. It's called common sense. Lenders will take your last dime and breath, if you let them. We live in a time where there are no morals left in business, in America. But, broke homeowners who have lost everything due to being set up to fail by their lenders should continue playing by the shady rules of unscrupulous lenders ? As Bill Cosby would say: C'mmmmoooooooooooon, people!

[StuckInAZ]

Originally Posted by Kimbly

Hi! I'm not an attorney; nor do I play one on tv so I won't attempt to answer your specific questions listed above. But, I am in a similar situation in that I'm WAY upside down, stuck in a financial nightmare but *able* to pay. I'm able to pay to the detriment of my life however, and I am ringing up other debt because I'm paying and can't cover both the mortgage(s) and repairs to the house and cars.

Well, I should said "paid" rather than "paying" now. We've officially stopped paying our mortgage(s).

I know the moral battle of which you speak. That is the only thing that has kept us here, and paying, for the past couple of years. Everyone has to make the decision that is right for them and theirs. However, ultimately for me, it comes down to having more respect for myself than I do for the corporation with which I signed a contract. They helped create this mess by over-extending credit and encouraging alternate loans; I'm helping fix it by walking away. One more house that can be sold for a reasonable amount; an amount closer to it's true value.

I hope you find peace with your decision. You are in the dream position of having only a 1st, and it only being purchase money. You are golden if you decide to move forward (once you've gotten the answers you need as respects your wife's involvement, of course).

Good luck!

Thanks for the response. You are right about me being a "dream position", which is nice to hear someone else say as I kind of see it that way myself. Between the purchase money loan, the fact that we weren't able to refi due to being underwater, the anti-deficiency law in AZ, the fact that the change to that law was repealed, and the tax relief loophole that was opened up, how could I not use the rules of the game to my advantage and get out while I can? The writing is certainly on the wall as they say.

Re: the moral battle... It is certainly an easier decision to make if you have to choose between paying the mortgage and putting food on the table / supporting the family. However for me it is a choice (right now) between living comfortably while paying underwater mortgage vs living even more comfortably and building up the savings. This is why the moral issue keeps creeping in for me. Although I didn't mention it in the previous post, I actually have a medical condition which, according to the available data, will leave me disabled sooner then I would prefer. That, for me, is the equalizer in all this and quiets any moral issues now due to the potential for a long term hardship... now if I can only convince the lender to do a short sale because of it.

[StuckInAZ]

Here are some partial answers for the questions I posed above:

Originally Posted by StuckInAZ

1. Verify that my now wife's credit will not be affected at all in a foreclosure of this property.
2. If my wife were to buy a property in her name only and with her income only how can she do this while staying on the right side of the law (i.e. no buy and bail).
3. How does being married and the fact that AZ in a community property state affect #1 and #2 above, specifically when my wife goes to get approved for a loan.
4. Can I be primary on our current home and my wife be primary on another home at the same time? How does this affect tax filing.
5. Can my conscience deal with the deadbeat connotation of a foreclosure? ... This is pretty much all that is keeping me hanging on.

1. Yes, credits are completely separate. Knew this but had to bring in the professional to convince the wife.
2. There really is no concern with being tagged as a buy n bail since nearly all funding sources have changed their guidelines to the point that you can qualify within those guidelines then you are in the clear. Just stay honest on the app and don't misrepesent your ability to repay a new loan. i.e. Having an official lease agreement for x months when you tell the bank you are going to rent your house. Or having enough income to qualify for both houses.
3. Affects it to a lesser degree then I initially thought. If the lender's guidelines requires to run spouses credit then you have to do it. If the guidelines don't require it, then you don't have to do it.
4. Not totally sure on this one yet, but I think the answer is yes. Especially given my house was purchased before marriage. Now if we wanted to file a joint return, only the mortgage for one primary residence can be used.
5. Yes, addressed in other posts.

[Shibby]

Any suggestions on how to find an attorney that has expertise in this area (thinking of walking away as well in Arizona), hope to get someone familiar with the process to review my loan docs to make sure the 2nd mortgage can't come after us.

[darlyj]

Originally Posted by Shibby

Any suggestions on how to find an attorney that has expertise in this area (thinking of walking away as well in Arizona), hope to get someone familiar with the process to review my loan docs to make sure the 2nd mortgage can't come after us.

I would check into real estate or bankruptcy attorneys. We are on a last ditch effort to get our loan modified today - DH is at the NACA event in Phoenix today - and if we don't get what we need there then we will be walking as well. Can't take the stress of three to six months of additional uncertainty that comes with their so-far mainly bogus temp mods, only to probably have to move anyway.

As for the second mortgage, my understanding is that in Arizona, if it is a purchase money loan then they cannot come after you. If it is a HELOC or personal line of credit with the house as collateral, then they can pursue legal action, which they may or may not do. One of the things that I've been hearing a lot of is that the 2nd company will sell the debt off to some collection agency to try and recoup some of their $$$ if it is not otherwise worth their while. You will be hounded by the collection agency. I think the only way to guarantee that they can't come after you is to file and accomplish Chapter 7. But I am not an attorney.....that's just my understanding so far of how they play the system rules.

[StuckInAZ]

Update Nov 20th

Decided to take the leap and cease payment this month. I was amazed that it took so long to receive the first call. I got a call (that I missed) and an email on Wed. I got another call on Thurs that I also missed, but this time they left a voicemail asking me to call ASAP.

As expected, got another one today that I was able to answer and it was the automated system putting me on hold asking me to wait for a rep. Only waited for a couple minutes and spoke with a nice rep who informed me of the missed payment and asked when I planned on paying. I told her that I would be ceasing payment from this point forward due to personal reasons. I think this caught her off guard at first because there was a long awkward pause before she jumped into the "I'm sorry to hear about your hardship..." script which didn't quite fit the situation.

She asked again about my reasons, and I just said it was personal and the bottom line was that it was a tough decision but in the best interest of my family. She said she understood and told me to go to their website to view assistance programs, warned me bout late fees and credit reporting and that was that. I wonder when they will call again?

So I felt really odd afterward, like it was finally sinking in and becoming real. It will be so strange to leave our home.

Anyone know when to expect the first credit ding will appear on my report? Dec 1st?

[azhardspot]

StuckinAZ ... i am in a similar situation as you are ..
we brought a home in 2005 .. i am the only one on the note and both of us (me & wife) were on the title.
my attorney advised my wife to file a quit cliam and discliamer deed ... we did this recently ... it essentialy means that its my sole and separate property from now on. so now when my wife goes out to get qualified for the home .. she can specify that she is not a homeowner because she does not hold legal title to the property and she is not on the note as well ... pls talk to your attorney and see if the quit claim/ disclaimer deed is something you would want to consider ...we also filed the deeds in the recorders office .. so its public information from now onwards ...

[StuckInAZ]

azhs - glad you got some clarity on your situation. Attorneys are expensive, but they are worth it for the piece of mind, aren't they? Do you feel comfortable moving forward now and have you found a lender who will work with you to apply for lending in your wife's name only?

For me, the property was acquired several years before marriage so I am the sole person on the loan and title. The only connection my wife has to the house is through me, which may mean everything or nothing depending on who you talk to. We are currently working out a hard money loan through a relative to avoid the entire loan guideline process.

[azhardspot]

stuckinAZ ... yes looks like as long as you dont lie on your mortgage app .. there is no buy and bail ... the real estate attorney clearly said that there is no law called buy and bail ... it essentialy means that you dont lie on the mortgage and keep it all true ...

[Woody]

StuckinAZ...I thought I was reading my own post! I also have decided to walk away from my house in Arizona (East Valley). Like you, I can still make the payments, but with a house $160,000 under and no end in sight, it was a no-brainer to walk. Like you, I can live comfortably now (although I have an ARM due to reset in 2012...just in time for the end of the world, so maybe I shouldn't even worry about that...), but I can live more comfortably and actually put some money in the bank. I'm not interested in a refi, mod, NACA, HOPE...I don't have the energy for dealing with that. I'm meeting with a lawyer on MOnday, but as I've read here, I think we're pretty lucky to be in Arizona....if you're gonna foreclose, thank god it's in Arizona! I actually don't have any moral quandries about this as there really is no option for my family. We can rent a beautiful house for about 800-900 bucks a month less...and not have to worry about buying a new air conditioner when it breaks. Sure, credit will be shot for a spell, but who cares? We're stressed about money now, and by stopping now we can save some serious cash...and actually go out. In fact, my wife and I are already planning a little trip to Las Vegas to celebrate our new-found independence and fortune! We are goint spend entirely too much money, but that's exactly the point! We can't do it now, and wouldn't be able to for years. Hell, I might even go to the 1 dollar video poker machines! It's time to live a little and send our money to the banks who could care less about us and what they've done to people. I asked my wife, "Really, what's the lure in owning a house?" It's part of the American Dream that's fed to us since we were kids, but at the expense of what? Keep us updated on your walk, and I'll keep you updated on ours.

Forward....WALK!

[KFish]

StuckinAZ...

I am in a similar situation too...we can continue to pay, with somewhat of a struggle. At least for now. But we have decided to walk on our 3 properties in AZ.

When I was thinking about making the big walk...I met with our tax man, financial advisor in his office, and a real estate attorney in AZ. All three agreed it was the smarter financial decision. As it has been said on this thread, it's best to take emotion out of it. Buying a house is somewhat of a business. Your business is now losing money...close it down and call it a loss. Businesses fail across the country EVERY DAY. You dont hear about sympathy for all of the empty offices everywhere. Don't feel bad! Do what is best for your family long term.

There are a lot of good threads on here...especially in the deed in lieu area. I would also suggest reading through them. You will learn a lot not only about the procedure and the laws...but the emotional side of it. It has helped me a ton and I think it really helps put the situation in perspective.

Which lender are you with? I stopped payments this month too, along with many others on this forum. I am interested to see how all of our processes compare....

[AZOwner]

lol, I feel like I'm in good company now! It was really difficult to decide to quit flushing our money down the toilet every month in AZ; but, lemme tell you, once we did it I smiled every time I chose to answer a call asking about my next payment.

My credit actually was noted as late before my 30 day late period (went to free credit report dot com and checked!) Thankfully, I traded in my 100 thousand mile vehicle in time -- so now we are also set on transportation while we rebuild our credit (which we never intend to use, but who the heck knows . . . )

We also went to one consult with an attorney who told us the steps in foreclosure. We're almost at 90 days late, and yesterday someone showed up at the door and handed us a piece of paper, asking us to call the collections people to arrange for our next payment ! LOL! She said she was an inspector.

also, I am monitoring the county recorder website. You can look up your deed/title information on-line. We have an address issue, as our original addy on the paperwork is no longer recognized by the post office -- so that is how I will find out if Foreclosure paperwork has been issued. . .

It's freedom. You have to take care of your family first. After all, none of us go to work each day with the thought of keeping our national banks rich. Right?!

Go get 'em tiger!

[azhardspot]

AZowner .. is the notice of default filed in the county recorder's office OR its just the Notice of Trustee sale thats filed in the county recorder's office ?

thx