Scared Walker in GA

[Redfive]

Hello All, I happened upon this website today while searching for as much info as I could on the subject of walking away from a home. Obviously, like most people on here, my biggest concern is the bank "coming after us" after the foreclosure. I'm hoping to explain my situation and get some knowledge from the forum about whether my wife and I should consult a lawyer, CPA or just let the process play out as others have seemed to have done.

Bought the current home in 2005, paid $180K and got an interest only, fixed rate loan for the first 10 years. Because of this, we still owe $175K on it. Our home value increased to as much as 225K but has dropped below 100K and has been around 97K for the past year or so. We've never missed a payment on anything and both of our credit reports are around 800. I have attempted multiple times to get refinanced but have not been able to because being so far underwater and being current. SO...we got fed up with basically throwing away thousands of dollars that we'll never see again (80K+ in interest over the 7 years) and decided we'd look into strategic default...which I have to say is something I never thought I'd think about. We were able to qualify and purchase another, much nicer and much larger home for MUCH lower than our first home. Now we have both houses, we were hoping to rent the first home, but have had no luck. I refuse to waste more and more money on the house and will miss my first payment in December (while keeping the new house and cars current obviously). We are terrified of the bank coming after us for the difference once it sells however after reading some people's posts who are also in GA, I feel somewhat better. But, I do have some questions that weren't asked in the other threads about foreclosures in GA.

1) Will the bank be able to come after my new home in any way, shape, or form?

2) It seems 401K's are safe from what I've read (correct?) but what about college funds or something like that which are simply in savings accounts?

3) I know of the Tax relief law that is until the end of 2012, I would assume 13 months would be enough time to complete the process...or say its Nov 2012, would the banks purposefully try to mess with people and postpone sale until 2013? Would there be anything in it for the banks to do that?

4) I hear the banks don't really like to come after people who have shown they can't make payments which means they don't have anything for them to get in the first place...but, people who have shown the ability to pay may be more likely for them to try and recoup the difference? We make good money and have some savings (although the vast majority has gone to refurbishing our newly purchased, previously foreclosed house), are we a prime target to come after?

5) If the worst happens and there is a deficiency judgement, I'm assuming there are ways to negotiate the final amount due and/or other options?

I feel relieved to start the process, this burden has weighed heavy on me, knowing I'm throwing money out the window for the simple reason of keeping a good credit score. I've made peace that this is a business decision, not a moral obligation. Any assistance, tips or comments would be welcome!

Thanks!

[blue_sky]

Hi Redfive...

I am not the expert many folks around here are... but first of all you need to determine if GA is a recourse or non-recourse state... do a search for one of those terms and GA and you will find links on this site to tell you which it is. If it's a recourse state, banks can come after you for a deficiency judgement.... BUT apparently the big boys do not tend to do this, but small community banks do so more frequently.... beyond that, I don't have a lot of knowledge... but this can at least get you headed in the right direction.

I just walked this month too, and I am in a recourse state (NM), but mine's with BoA.... so the odds are I won't have to deal with it... and in fact, fyi, sometimes the banks (Chase is one I know of) will actually pay people to do a short sale after a while... so the home stays off their books, and in that process you can definitely negotiate a deficiency judgement away... which my friend did.

[sp97dktheta]

Hi Redfive,

My wife and I are also walking in GA. I'm not an attorney, but I have met with one to discuss our walk, so I'll share with you what I know at this point. In GA the bank has 30 days after your foreclosure sale to notify the court that they would like a confirmation of sale on your foreclosure in order to obtain a deficiency judgement against you. I believe they have to give you five days notice prior to the scheduled hearing so that you can respond and dispute their evidence that they followed foreclosure laws in GA, along with proof of the Fair Market Value of the home. If the bank does not notify the court of their request for confirmation of sale within the 30 day window, you will not be looking over your shoulder for years as you might have to do in other recourse states.

The attorney told us that they are just not seeing any of the big banks spending the money to go after home owners who are foreclosing. The exception to that are homeowners with discoverable assets, like vacation homes, and large savings/investment accounts ... but even in that scenario, she said that the bigger banks didn't seem agile enough to chase home owners in the 30 day window they had to confirm the sale. So if you do have assets (savings account, another home they could place lien on, as you do), I would not communicate any information to them during your walk ... seems like you'd just be asking for trouble.

We've stopped paying on our mortgage with BofA back in October, and have received some calls from them to "help" us. Also received calls from their 3rd party folks to try to "help". We've answered the phone, told them we're already working with them to obtain a deed in lieu, and they seem to go away for a week or so. We know we won't get a deed in lieu, we're just talking to them about that and providing minimal info as we wait for our foreclosure and enjoy the free rent while we save money.

[Redfive]

Thank you for the replies and the info! I forgot to mention that my mortgage is serviced by Cenlar, it was previously with Taylor Bean and Whitaker before they got raided by the feds or something like that. I'm not sure where Cenlar ranks as far as the big boys when it comes to servicing mortgages. I do know my loan is a Freddie Mac mortgage.

I hate knowing they can put a lien on my current home, but hopefully the odds will be in my favor. If not, we'll just have to go with the flow and attack each problem when they present themselves. Thanks again for the replies!

[WalkingUtah]

We are walking next month and have all the same fears as you have. Mainly I am most worried that the banks will come after us and our small but steady net income will be interrupted or get even smaller and we won't be able to afford a nice apartment or healthy food for our kids. We could not care less about our credit scores, and we have no credit card debt so they can hit us as much as they want there. Both our cars are in great shape so we wont need to apply for auto loans in the next several years.

I wish there was some way we could do this and guarantee that our money will be safe against the banks, but it looks like the only thing we can do is follow the path where it takes us an hope for the best. From what I have read, most people end up not too stressed and definitely in a better place financially.

Good luck, Redfive. Keep us posted on everything that happens... maybe it will help someone else who needs support.

[WalkThisWay]

A deficiency judgment was also one of my biggest fears. I would recommend that each of you become familiar with your state laws. I am in Florida, and a lot of the attorneys and news articles harp on "judgements following you for 20 years!!" to scare people. I have looked at the applicable statutes, and that is just not the case. Florida allows you to protect you homestead (up to 160 acres in rural areas), and the head of household's wages are absolutely protected from garnishment as long as you respond to a writ of garnishment. For the large majority of people, their home and income is their biggest asset. Also, retirement accounts and prepaid college accounts are safe in Florida. So, find out what they can and cannot go after, and be sure to participate in any legal action. Don't just ignore summons, etc., because then the banks win by default.

[NtheMiddle]

We're 6 months into our walk in GA and just received our notice from GMAC that our account is in foreclosure. I plan on paying close attention to the whole process to better defend myself from a deficiency judgement. I need to check out some more lawyers, though.

Do any GA walkers in the Atlanta area have any recommendations?

RedFive, good luck with your walk -- I feel better about the whole thing now that I've been out of the house for a couple of months. Life is good.

[stuckinmichigan]

Hello all,
Could you please elaborate on the head of household not being able to have his or her wages garnished? Is this in GA or does it apply to other states like Michigan?
Also, are there any public records or case studies that would help us hedge our bets on the likelihood of the banks getting a deficiency judgment and what people can settle for? I'm willing to do and share the research if someone can point me in the right direction.

[Redfive]

Hello all,
Could you please elaborate on the head of household not being able to have his or her wages garnished? Is this in GA or does it apply to other states like Michigan?
Also, are there any public records or case studies that would help us hedge our bets on the likelihood of the banks getting a deficiency judgment and what people can settle for? I'm willing to do and share the research if someone can point me in the right direction.

I'd be interested in this also, I don't have any info myself. I've done some research and I'm sure there ARE public records...just where to go and get them, etc.

[jupiterjones]

I've begun my walk in Atlanta, GA. I was worried so did a ton of research, called lawyers, talked to friends who short sale or walked away recently.

It all comes down to if the bank thinks it's worth coming after you. They have 30 days after the foreclosure sale. that was good in the past because the banks were way to busy but it's slowed down. one lawyer told me the banks are postponing the foreclosure sales to get more time.

One lawyer said the 2nd mortgage (if you have one) is guranteed to come after you. But most 2nd banks will try to settle. He said refuse their first offer then take their 2nd offer.

My huge concern is my 1st coming after me. the first call they made was to my work to ask if I was still employed. I'm just past due so the barrage of calls hasn't started.

I'm going to move to a rental so can't help OP about the banks coming after their new home.

All lawyers said the banks will send you a 1099 for the loss on the home so prepare for a big tax bill.

401K, IRA are safe from garnishment. In FL they can not garnish your wages if you are head of household. A few other states do not allow wage garnishment. In GA they can garnish 25% of your take home pay. I might be moving out of GA.

[jupiterjones]

Forgot that all the lawyers said to watch the foreclosure sale amount. They've had clients fight the banks for selling way too low.

[meohmy]

I've begun my walk in Atlanta, GA. I was worried so did a ton of research, called lawyers, talked to friends who short sale or walked away recently.

It all comes down to if the bank thinks it's worth coming after you. They have 30 days after the foreclosure sale. that was good in the past because the banks were way to busy but it's slowed down. one lawyer told me the banks are postponing the foreclosure sales to get more time.

One lawyer said the 2nd mortgage (if you have one) is guranteed to come after you. But most 2nd banks will try to settle. He said refuse their first offer then take their 2nd offer.

My huge concern is my 1st coming after me. the first call they made was to my work to ask if I was still employed. I'm just past due so the barrage of calls hasn't started.

I'm going to move to a rental so can't help OP about the banks coming after their new home.

All lawyers said the banks will send you a 1099 for the loss on the home so prepare for a big tax bill.

401K, IRA are safe from garnishment. In FL they can not garnish your wages if you are head of household. A few other states do not allow wage garnishment. In GA they can garnish 25% of your take home pay. I might be moving out of GA.

So they can't garnish your pay if you no longer live/work in Georgia?

[ITGuyGA]

My wife and I have just begun walking away, we are two months into and just recieved our Making Home Affordable Pamphlet. The current home is completely in here name so we are going to walk away and purchase a home in mine before the forclosure. We are just buying time and saving money until that moment comes. I am worried about the deficiency judgement possibilities, and I am concerned since we are married that through some legal means, they can try to come after me. At this point, my wife's credit was already messed up from her past, I can't see a forclosure hurting it further. If they do come after us, we can try to file chapter 7 on her, but with our combined incomes, we don't meat the mean test unless I can rack up some expenses on myself. Any comments that can put us at ease would be welcome. These Green Tree Servicing folks make it hard to relax.

[GAmom]

Wow I'm in the same position, let's keep this thread going to keep each other updated in GA.

Mainly what happens if you default on your 2nd mortgage. If you eventually settle then maybe it's best to do that 1st and then foreclose on your 1st after if needed. I also want to know how is all would affect my husbands credit.

[Redfive]

We're going on the 2nd month, I'm getting mail from Cenlar about financing help, etc. We're finishing up with the house, we're going to clean it and then send the keys back in the next few weeks. Hopefully that'll let them understand that we don't want to keep the house and they'll start the process.

[Setmefree]

Great thread, I will be following as my primary residence turned unwilling investment rental is also in a recourse state. (New York) My mortgage is through citi, but I have no idea who owns it.

I dont have massive savings, but I do have another property out of state.

I did give information in my application for a DIL. That might have been a mistake, but psychologically it felt good. Oh well. I will be late come this Monday! Good Luck!

[LexieMustang]

Hello!!

I walked in Georgia a few years ago, so I'm hoping that my experience will help you a little.

Georgia is a recourse state, but it very rarely happens.

After your home is sold at the trustee sale, the lender has 30 days to come after you for any deficiency balance. Generally, the bank won't come after you unless you have significant properties and/or assets. I don't know much about 2nd mortgages - I had a traditional FHA loan and only one mortgage. My mortgage also had PMI - but I never heard from the PMI company.

With that being said - DO NOT SHOW THE BANK YOUR FINANCIALS. In fact, keep your communication with the bank as brief and short as possible.

Let me know if I can help. Good luck.

[ITGuyGA]

Well it has now been over four months of non payment and we are soon to be closing on a new home. At about 3 months in, I sent a debt validation letter to the servicing company and that slowed them down a lot, no phone calls or communications. I have told the mortgage insurance company that we were leaving the house next month. I never go into details with anyone. Luckly this house is in my wife's name and with my excellent credit, we close on a new home that is in my name and backed by the VA. I am still fearful of a judgement against my wife, but these forums have helped ease my tensions. We thought one of the best way to assist in preventing that was to buy this house so my debt to income ratio was higher and reduced my liquid assets, and if we had to ny wife could file bankruptcy. The longer I go through this process, the less scary it is. Learn the law on the subject, read these forums and just breath. No one is going to jail and the sky isn't going to fall. You are making a strategic business decision that will help you and your family in the long run.

[Redfive]

Thanks for the reply LexieMustang, looks like you have a thread out there as well (in your sig), I'll take a look. We got something funny in the mail yesterday, a packet from some debt counseling company about our mortgage being behind...however it had our NEW house's address as the one being behind in payments which definitely isn't the case. I assume they just got our new address from the post office or something.

[tdoggATL]

Thanks for the reply LexieMustang, looks like you have a thread out there as well (in your sig), I'll take a look. We got something funny in the mail yesterday, a packet from some debt counseling company about our mortgage being behind...however it had our NEW house's address as the one being behind in payments which definitely isn't the case. I assume they just got our new address from the post office or something.

Hi Redfive.. What ended up happening with you? We are in a very similar situation as you and with the SAME bank. We are trying to figure out what to do. Did Cenlar come after you?

Thanks in advance!!

[Redfive]

Hi Redfive.. What ended up happening with you? We are in a very similar situation as you and with the SAME bank. We are trying to figure out what to do. Did Cenlar come after you?

Thanks in advance!!

We are still waiting, Cenlar has turned it over to a lawyers office and we've received letters from them. I gave them a call and my house isn't on the list yet as far as auction dates. I'm hoping we'll be on the July auction list. I wish I had good news but so far, we've only received a handfull of letters and a few of our credit card companies have lowered our maximum, other than that...it hasn't been a problem yet. I will keep this thread updated once I have more info!

[Redfive]

Well, today is the day of our auction. I guess we will wait and see how the 30 days goes. A friend of mine contacted a lawyer to discuss his situation (very similar to mine) and see if he should/could walk away. The lawyer gave him some good info and most of it can be found on this site and I knew before walking away myself. However there were a few points that I wasn't aware of so I figure I can tell everyone here, see below.

He said that yes, in GA the mortgage company has 30 days to FILE that they are going to attempt to come after someone. He said that about 50% of the time, the mortgage company is on-the-ball enough to do this filing. If they wait past 30 days, the person is free and clear. However, out of the 50%, only about 20% of those actually go forward with coming after someone. So, if you do the math, from what the lawyer says, only 10% of overall foreclosures does the mortgage companies try to come after someone. He also said that IF the person has purchased a second house and is living in it (like me), they very rarely go after them. He said that basically the mortgage company knows that the person could just file for bankruptcy and have any judgement against them wiped away and the company would waste money going to court and getting the judgment in the first place. Also, he mentioned that I should put any savings into a trust for my son if they decide to come after us. They can't come after retirement or cars (since the cars aren't paid off). We do have some savings, but we've put about $30K into ou new house and our savings has dwindled a bit.

SOOOO, I feel pretty good about the situation. We will see how this month goes, either I don't hear anything or I hear that the mortgage company "filed" and then they have the option to come after me. Just because they file, doesn't mean they will definitely attempt a judgement so we'll cross that bridge if it happens. I'm sorry if my explanations aren't very clear, if anyone needs me to explain more, please just let me know. Overall, I feel good about things. I also feel good every time I check zillow and see that our new home's value continues to rise (it is already $75K more than what I owe on it) and unfortunately my old house continues to dwindle in value (it is almost $100K lower than what I owed before walking away).

I still feel bad about walking away, but I know that I did the right thing for myself and my family. We no longer feel like there is a huge financial noose around our neck and now love our home that we can upgrade and really build a future in. Hope this info helps, I'll update again when I hear anything new!

[etchme]

I'm so glad to hear that you are feeling better. We have walked from a home in GA (tried a short sale but it fell apart) and our sale was scheduled for today 7/3/12 but it was postponed (by Wells Fargo) until the first Tuesday in August. I really appreciate you posting the info that your lawyer gave you it calms my nerves a bit. Please keep us posted on your situation when you can. Congratulations on your walk being complete!

[Gaphoneman]

Redfive-
Thanks for posting your walk, it's been a big help. I too am a TBW stepchild unwillingly adopted by CENLAR and sliced,diced,and sold off by Uncle Freddie Mac! It's been 30 days, did anyone file for a confirmation of sale? Thanks again-Gaphoneman

[Gaphoneman]

Redfive-
What happened with your FC? Did cenlar or Freddie try to come after you? I'm in similar situation in GA and wondering how things worked out for you! Thanks
Gaphoneman