Home left in Michigan

[scott777]

4 years ago I was laid off my job in the auto industry. At that time I refinanced my home to lower my monthly payment in order to give me some time to find another job. I refinanced to an 80/20 Interest only the first was $220k at about 8% 10 years interest only and the 2 was $58k Arm which is currently about 3% but will adjust next year.

After working at a job for 6 months with a much lower salary I was offered and accepted a job out of state. I moved my family and put the house up for rent. We found a renter for the first year, but the rent did not cover the entire mortgage, but was close. The second and third year we have had another renter in the house. Rent still does not cover the mortgage but this past year we have had 2 major repairs required on the house that have wiped out our savings. (basement flood and furnace replacement).

We don't plan on going back to Michigan anytime soon and the latest market analysis shows our house worth about $140k (appraised in June 2006 for $295k). We don't ever see the house returning to the value that it was before and are worried that if there are any more repairs required we may not be able to afford them.

My wife and I have started talking about walking away when the current tenant moves out next June but we have questions.

Last year there was a special assessment on the house to pay for repaving the neighborhood streets. It was just under $5k to be repaid over 10 years. What would happen to this if we walk? I assume that this is tied to us and not the house and that the local tax authorities would find us and make us pay.

Second, when we did the refi the loans were written in my name only. My wife's name is not on the papers and do not show up on her credit report.
will her credit take a hit if we walk?

Thanks for any comments.

[snapple candy]

As for the special assessment, is is paid thru an "add-on" to your property taxes? Or did you sign a special agreement with the county/city? Might want to have an attorney review that agreement.
Yah know they would have to find you, to make you pay.
As for your wife, seem like you are in good place as far as her credit but if you have any other credit together, it might take a hit on hers. I am a card holder on a friends cc due to bk. Somehow the bank (whom I have had problems with), even though I am only cardholder has linked my info to this account and now jacking the rate on him.

[scott777]

The special assessment is separate from property taxes. When the neighborhood advocate sold us all on the project he told us that it would be tacked on to our property taxes and paid through our escrow.
When it finally came through (2 years after it was first proposed to us) the county tax man sent us a separate bill. I contacted them and told them I would just want to pay this from our escrow and I was told that is not how it works.
I will have to look at the paperwork a little more closely.