Purchased a house in Atlanta in 2007 for $530,000 - 80/20 loans, both through Suntrust. Both are in my husband's name only, as he was the only one with income at the time.
We can afford the payments (barely, as unfortunately we have a lot of other debt due to medical bills, poor luck and some poor decisions on our part), but:
1. the neighborhood has gone way downhill in the last few years (for example, a man was just shot right across the street from us the other day in broad daylight) and we have a small child, who I do not want to subject to this kind of environment.
2. The house is currently worth about $300,000 and we do not have $230,000 sitting around to bring to the table. We have not even bothered to put it on the market for this reason. About 50-60% of the homes on our street are for sale or have been foreclosed on.
We contacted SunTrust back in early 2009 requesting a loan modification. After several months of confusion regarding what was required from us, whether the process had actually been started, etc., we were told our file was finally under review. About 4 months ago (approximately a year from the time we applied), we received a letter stating that our request for modification had been denied due to the fact that we had too much debt. In other words, because you need too much help, we're not going to help you at all. I'm sure the fact that we had never missed a payment didn't help us either.
So we started missing a few payments - I believe we are currently about 50 days behind.
The big twist in this is that I have just been offered an amazing job in another state - it pays an incredibly generous salary and I would be stupid not to take it. We could be free and clear of ALL our debt besides the mortgage in one year with this extra income.
However, we can't sell this house for the reasons I stated above. It seems our primary - and perhaps best? - option is to just walk away from it and let the bank foreclose.
My questions are:
1. Is letting the bank foreclose the best option or should we attempt a deed in lieu? They have not seemed open to a short-sale option, although we have not officially asked for one.
2. What are the chances of them pursuing a deficiency judgment against us? We have no other assets besides my husband's retirement account (which is about a quarter of what the deficiency would be). His income is entirely from a disability pension received from the state and although I am not completely sure, it appears from my research that as such, it is protected from creditors.
3. How would a foreclosure, etc. affect my credit or assets if I am not on the mortgage? Would it affect me at all? Would it be possible for me to purchase a house in my own name and on my own salary/credit then? Or does the fact that we are married affect how this works?
We are planning to consult an attorney this week, but any advice, experiences, etc. you can share would be greatly appreciated! Thank you!