Can someone smarter than me find an alternative to walking away?

[Highlighter]

Hi friends. It's unfortunate that most of us are here for unpleasant reasons, but it's really comforting to have a (virtual) support system.

Here is my situation:
Purchased a condo in Chicago for $280,000 in 2004
Refi in 2008: 1st (CitiMortgage) $251,659 / HELOC (Harris Bank) $25,484
Husband lost job in 2008 at the same time we were doing the refi, so I'm the only one on the Mortgage & HELOC.

We didn't get into a bad loan. We didn't purchase more than we could handle, and even on one salary, we're thisclose to making ends meet. Our savings is suffering for it, but we're trying to make it work. What's the problem, then?

In a word: water. That, and the value of our condo is about $200,000. That's easy enough to understand, but the water....that's where my real issue is. We've had a water infiltration problem since 2005 (conveniently after the warranty was up), and several other units in the building have experienced the same. A very reputable engineering firm surveyed the situation and concluded that all of the flashing needs to be replaced, all the bricks removed, and re-mortared....to the tune of $5.5 million. Naturally, no one can afford this, so we're doing a patchwork job on the known issues and hoping that will suffice.

The engineering report, meeting minutes, and everything else related to this situation are all part of the disclosable documents any potential buyer would get, rendering, in my opinion, any unit in my building unsellable. Given the glut of condos on the market in that price range, why even consider one with known water issues?

The builder is gone. No recourse there. However, my issue really is that I won't be able to afford ANY special assessment, since we're technically not even making ends meet now.

Knowing that a special assessment is coming, we've decided to look at this as an opportunity to get away from this toxic unit by walking away. Except, I am waivering on it. We're meeting with our Real Estate atty next week to discuss all the consequences, but there's something in me that really doesn't want to do this. It's not the fear of losing my home, I have other options for that. It just feels hinky, I guess.

Is there an alternative, though? I just want to be fully aware of all my options before making a decision. Plus, if we do walk away, do we stop paying everything? Mortgage? HELOC? Taxes? Assessments? I'm so confused...I don't want to get slammed on the back end for the sake of saving some money on the front.

Any advice would be greatly appreciated. I'm sorry this is so long.

[darlyj]

The laws can differ from state to state, and your attorney will be best suited to advise you of your options.

On a personal note, I'm sorry that you are having to go through this due to poor workmanship. Do you have a mold problem yet? Personally I would get the heck outta there for that reason alone....it can cause serious health problems.

[Irish Gal]

Originally Posted by Highlighter

The builder is gone. No recourse there.

Is the HOA absolutely certain about that ? Or individual owners ? I'm no construction defect expert, but it seems to me that a special assessment in the amount of $5.5 million due to faulty construction that led to such costly and severe water damage (resutling in not being able to sell now) is no joke and I would hope there were some legal recourse (loophole), somewhere. If I were an owner, or on Board, I would get a few legal opinions to see what legal loopholes might exist to sue the builder, even post warranty. $5.5 million is no joke. Maybe I'm naive, but I wouldn't just resign myself to the special assessment w/ no recourse theory. Until all options exhausted. Maybe your HOA (or you) has already consulted a few attys who specialize in condo construction defect and there is no recourse. If so, so sorry to hear. I would then look at it as a business decision, consult w/ a lawyer experienced in IL real estate and debt collection to weigh my options. I wouldn't get bogged down w/ the emotional aspect of homeownership. How could you have planned for such a financial horror as $5.5 mil in water damage to your unit/complex? It's out of your control. I'd cut my loss now (after consulting w/ atty) and start the financial recovery sooner rather than later. You're lucky one of you still has a job. In this market, who knows how long that will last. That's something to consider, also. Good luck. Keep us posted.

[Highlighter]

Hello everyone, and thank you so much for your quick and kind responses.

Regarding the developer, I have heard various rumors, but from what I have been able to ascertain on my own, he is already in litigation (for the past four years) with a different building, which would put us second in line. Assuming he hasn't already left the country (one of the rumors I did hear), my building would be second in line for any assets, and the Board seems reluctant to pursue anything because litigation is so time consuming and costly, with most of the monies awarded going to attorney fees.

I guess the reason for my original post was twofold, even if I didn't realize it at the time. One, I am genuinely interested in understanding all of my options so that I can make an informed decision, and am just impatiently waiting until next week's appointment with my attorney.

But secondly, and I don't think I realized this until after I posted, I think I just need to hear from anyone that if we ultimately walk away, that it was a valid choice, and not a cop-out. Juvenile, to be sure, but I think that there is so much emotional baggage tied up in this situation, that sometimes you just need to hear that it's ok. I know this site isn't for therapy, and I don't mean to make it seem like I'm looking for permission, but there is (at least in my mind) such a stigma to foreclosure, that sometimes you just want to hear that you made the right choice. As I type this, I feel like it's just pathetic for me to solicit approval from the Forum, and I know that I will do what I need to do with or without it, but I guess sometimes you want to hear it anyway. Does that make sense?

[darlyj]

Originally Posted by Highlighter

Hello everyone, and thank you so much for your quick and kind responses.

Regarding the developer, I have heard various rumors, but from what I have been able to ascertain on my own, he is already in litigation (for the past four years) with a different building, which would put us second in line. Assuming he hasn't already left the country (one of the rumors I did hear), my building would be second in line for any assets, and the Board seems reluctant to pursue anything because litigation is so time consuming and costly, with most of the monies awarded going to attorney fees.

I guess the reason for my original post was twofold, even if I didn't realize it at the time. One, I am genuinely interested in understanding all of my options so that I can make an informed decision, and am just impatiently waiting until next week's appointment with my attorney.

But secondly, and I don't think I realized this until after I posted, I think I just need to hear from anyone that if we ultimately walk away, that it was a valid choice, and not a cop-out. Juvenile, to be sure, but I think that there is so much emotional baggage tied up in this situation, that sometimes you just need to hear that it's ok. I know this site isn't for therapy, and I don't mean to make it seem like I'm looking for permission, but there is (at least in my mind) such a stigma to foreclosure, that sometimes you just want to hear that you made the right choice. As I type this, I feel like it's just pathetic for me to solicit approval from the Forum, and I know that I will do what I need to do with or without it, but I guess sometimes you want to hear it anyway. Does that make sense?

It makes perfect sense and is not pathetic. I know that we were very stressed out about the potential of "losing" our home that we didn't realize what negative effects it was having on our family. Coming here we realized that we are far from alone and do have the support of some wonderful folks on this forum, whatever we choose to do. There is a stigma with foreclosure, however I see that changing somewhat due to the large numbers of people who are in the same boat. Sometimes all it takes is realizing that you are not alone...and if you should choose to walk, you are FAR from being alone. It is a big decision, and there is nothing wrong with soliciting input from those of us who are either in the process of weighing our options, or already have, in order to seek out what is best for your situation. Good luck to you!

[Believe]

Highlighter, trust me when I say this: The banks haven't considered what is the right or moral thing to do for the thousands of us here at loansafe. All they care about is MONEY. Therefore, if I was in your situation, that is all I would care about. I would consider the bottom line - period. Now is the time to look after your best interest and what's best for your family. Nobody, and I mean nobody, will give you an award for doing the right thing. It's a dog-eat-dog world right now, and you need to do what's right for your finances.

[auroraproblem]

Though I find the subject line a challenge, as from reading your post I believe you to be very smart.

You will have to do what is best for you at this point. First I would talk with a real estate attorney to find out if there are options for you to be able to leave given the condition of the building. This is where I would start. In no way would I recommend you staying unless there are a sufficient number of people staying that can afford that repair. I say this because it is not going to get better unless repaired properly.

I had a friend who bought a manufactured home despite what everyone said. He is still trying to get his family out 12 years later and still can not.

Wish there was something I could give you for info; the only thing that comes to mind is talking with a real estate attorney to find out for sure what your options are.

[weneedpeace]

I just also want to extend support to you.

While working in real estate (transaction management), I can say that MANY builders were rolling out condo communities in our region like pancakes on a hot griddle. High turnover and stories that I've heard - at least 2 big contractors in our area jumped ship leaving new homeowners, subcontractors, material yards, and others holding the bag.

I do believe that your best guidance is going to come from a real estate attorney. Bring all documentation with you referencing the special assessment.

If you find that there is little recourse for yourself as a homeowner and are already underwater value-wise, I would not hesitate to entertain a walk away.

Believe is right on the money. There are no 'moral' decisions with these lenders and investors. Stick around the message board long enough, and you'll find plenty of stories from those of us that approached our lenders with sanity and reason - only to be smacked back into a corner with ultimatums.

Please post back after your consultation with your real estate attorney. The intracacies with your condo association truly warrants their professional advice.

[Irish Gal]

Highlighter,

I wanted to comment on the emotional side of the decision, as it seems you've got or are in the process of getting all the legal/financial ammo you will need to resolve this with a "best outcome" for you and your family. Do a search (here) on "The Professor." He is an ex CA atty/foreclosure expert. He is a wealth of info on properly walking away (in gen'l but spec CA). When we all find this site, we ALL felt like you - the "f" word was hard to say or think about. And, by the way, as the housing nightmare drones on, the stigma is pretty much gone re walking away. Keep educating yourself, here, and "out there," and you will see. Right now, you are in the beginning stages of all this, so you feel enormous guilt. Believe me, it will slowly fade and then poof! One day you will wake up and have none. You will instinctively know you tried your hardest to do the right thing, and you can't keep feeding a black hole to nowhere. Your family will not survive. And, lenders are not working with homeowners. THAT's a big reason many, many people are walking, besides the reality of underwater status. But, back to the emotional stage of all this, I compare it to the stages of grief: denial, anger, bargaining, depression and finally acceptance (peace ). Right now, your emotions are clouding the business decision part. That's ok. You will get there. So, don't blame or be too hard on yourself. You will get through this. After you talk to a atty and get more specific feedback for your situation, you will feel better, as most do, as time goes on. The professor ("Prof Shays") continually reminded folks to look at the situation as a business decision, and let go of the emotional aspects of homeownership. No one involved in real estate transactions seems to have this dilemma but honest homeowners . This guilt is what works against homeowners and to the advantage of predatory lenders. It's a process. We've all been there. Those who've been there know you're a very responsible homeowner who did your best. That's all one can do. I warn you, there's alot of "deadbeat homeowner" propaganda out there. Learn how to protect yourself emotionally when it comes your way. Learn who you can share your dilemma w/ and not. Even friends, family, etc. sometimes are insensitive and have no clue what's really going on around this issue. They never had a pred mortgage, are not severely underwater, still employed, whatever. So, I caution you about being careful who you turn to for emotional support (other than this site) as sometimes folks get a slap in the face instead of a hug from those they thought would understand. This is a difficult process (at first) but you will survive. It gets better. One day at a time. Keep us posted!

[Highlighter]

I don't know what to say. I am completely overwhelmed at the support and understanding everyone has given me. Finding this site really was a lifesaver.

It's so unfortunate that such a heartwrenching and awful thing has brought us all here, but having a resource such as this can really be a ray of hope.

Our meeting with the R.E. attorney is next Thursday, so I will keep you posted.

Until then, with my sincere gratitude.
Highlighter

[Irish Gal]

Originally Posted by Highlighter

I don't know what to say. I am completely overwhelmed at the support and understanding everyone has given me. Finding this site really was a lifesaver.

It's so unfortunate that such a heartwrenching and awful thing has brought us all here, but having a resource such as this can really be a ray of hope.

Our meeting with the R.E. attorney is next Thursday, so I will keep you posted.

Until then, with my sincere gratitude.
Highlighter

Hi Highlighter,

Any updates? Hope all is well.

[snapple candy]

Hey IG, as usual you give good advice and I agree with all on this.

Highlighter, you are actually very wise to ask the questions you do. If you have no recourse against the builder, dont feel bad about walking. Please let us know what the attorney says.

[Sunbeam]

Highlighter, in addition to talking to the attorney, I feel it might be a good option to talk to HUD. There may be additional support there for your specific situation. When you bought this place you did not bargain for 5.5 mil in repairs due to shoddy workmanship. And if you do have problems with water, often mold follows. I know someone else mentioned mold, but if there is mold, you could be putting yourself and your family in harm's way. Don't let pride get in the way of taking care of your health first. Good luck to you!