Probably walking away in Maryland...

[Eric in MD]

Just found this forum tonight and have been reading it the last few hours. What a great resource!

Here's the deal:

We were stupid, plain and simple.

We bought a TH when I moved here for my job. Mortgage is for 310. It's worth 222 according to tax assessment and Zillow, although TH's in the neighborhood have sold for 260 and someone is trying to do a short sale for 250. Loan is interest only for 10 years. Monthly payment is about 2100.
We have never missed payment and have great credit. Lender was First Horizon and now is Metlife.

I am going to try get a promotion at work and will have to move to CA, but there is no offer...yet. I honestly think my chances are great. I am freaking out here.

Our options seem to be:

1. Try to sell and take on a huge debt.

2. Rent at a loss, risk vacancy, try to sell in a year or two
and hope the market is better. Potentially be in the same
boat or worse after bleeding cash for years. We can rent
it our for maybe 1700 but we would have to pay a
property manager.

3. Stop paying, try to do a short sale or a deed in lieu of
foreclosure.

My wife had a consultation with a lawyer today who advised that we simply stop paying and foreclose. He said they might come after us for up to three years for the difference but they don't typically do this..yet.

All this has lead me think that maybe we should just walk even if I don't get the job. It is just a hole we are throwing money into. We have added 10K in improvements and will never see a penny of return. We just want to get it over with and move on. I feel that even if I don't get this job, having it suggested to me might be one of the best things to happen because it got us to face the facts about or mortgage.

These might be stupid questions but here they are:

1. What if I just sell my house at a loss? Can I just take on
the debt and have a relatively small monthly payment?
Would I have a debt that I could potentially settle if we
have to file bankruptcy?

2. How important is the relocation? Would it make it easier
to get the lender agree to a short sale or deed in lieu?
My wife certainly wont have a job at first in CA.

3. Are assets in my 401K protected by any law?

4. Is there some option I'm missing?


It is so strange to have to face this considering that we are not facing a sudden hardship-actually, we might face foreclosure due to a job promotion.

I am starting to sell or throw away stuff this week to make whatever happens easier.

Any advice or encouragement will be appreciated.


Thanks!

[Kimbly]

Hi Eric! Welcome to Loansafe!

I know, tough decisions all the way around. I actually passed up a great relo offer in 2007 because we were already upside down and the market was continuing to slide. Now I wish I had sold it and begged, borrowed or stolen (just kidding) the difference. Then it was about $25k. Now I am realistically $140k upside down.

I'm not sure how the sale with a remaining balance works; that would be a question for your attorney (or someone else may come along that can provide some insight). Unless you're in a position to take out an unsecured loan, I'm not sure how that would work.

If I were in your shoes, my first question would be how important is credit for my job? Will you eliminate the possibility of the promotion if your score plummets and/or you face foreclosure? Does your company do periodic credit checks that could become problematic even if you don't get the promotion?

I'd also ask yourself how comfortable you are with destroying your credit and the future challenges (insurance rates, car loans, student loans, etc).


I'm in AZ and not familiar with foreclosure laws in MD. It's important for you to know if the lender can come after you for the deficiency if you proceed with foreclosure (again, a question for your attorney or check out the foreclosure toolbox on this site). You should also find information on whether they can secure any part of your 401k or other investments.

I know I'm not answering your questions, and am probably just creating more. Keep searching the site and I'm sure you'll find lots of info. You can do a search for threads involving MD laws using the search function, too.

Know you're not alone, Eric. We are all facing these same difficult decisions and no one answer is the right one. Our individual goals and situations make it a personal decision and one that has to be weighed heavily. I've made the decision to walk even though my 2nd will likely try to pursue judgement or settlement. My 1st has no recourse in AZ since it's purchase money. My credit score does not impact my employment and my current position is secure. I did just finance a car before my first missed payment to take advantage of my score while it lasted and because I know I won't be able to in a year (and, I needed to trade in that 2002 with 130,000 miles on it!). I recognize that my credit cards may be closed or hit with extreme interest rate hikes, and that it will be more difficult to rent. All that said, it's the right decision for me. As an additional note, I do think it's going to get worse. There are a lot of Negative Am loans to hit in 2010 and I think most of these will be forced into foreclosure since the payments could double and people will realize how far upside down they are given the market and their "decision" to only pay their partial interest each month.

Do you research, weigh your options, and commit to whatever decision you make. Good luck!!