Considering Short-Sale or Foreclosure in Florida

[rmt23]

My husband and I bought our first home in October of 2007 when we thought the market was relatively low. We bought the house for $226,000 (it was on the market for $250,000). We put 5% down and closed quickly as an incentive to the buyers. Since that time the value of our house has dropped to the $150-160,000 range. Our payment also went up from $1800 to $2100 because of a shortage in our escrow account and higher taxes. Our house was buglarized in July of 2008 and there have been three more break-ins in our small neighborhood in the past month. The neighborhood is generally quiet, when we bought the house I pulled the police reports and there had not been any incidents.

Anyways...We are a young couple, we understand the commitment we have made with a mortgage but we are also at a point where we aren't comfortable living in our home. We don't feel safe and we also feel like we are pouring money into a home that will not regain its value for at least another 3 years which we may want to move before then.

We feel stuck. We have thought about putting the house on the market knowing we are going to have to do a short sale. We also have thought about falling behind on the mortgage in order to get the bank to negotiate with us to lower the payment. Even if the payment is lowered though we don't know if we want to continue living in this neighborhood.

We are able to make the mortgage payments. We both are currently employed full time but my husband's company just went through a huge restructuring and I work in the construction field so neither one of us feel very secure. If one of us were to lose our jobs we certainly would not be able to afford the house. We feel like maybe it would be better to get out now, have a much lower rent and put the money in savings.

We do have some money in savings but we don't want to deplete the savings for this house and then when it does run out still lose the house.

So there is our lengthy situation. We know we are lucky to have work and be able to afford the mortgage but we're wondering if that is really the best option. We could rent for $900 and save an additional $1000 per month. If we do a short sale or foreclosure can the bank take away our savings, cars, etc? We understand our credit would take a big hit but are okay with renting for a few years---we are more concerned that they may garnish or wages or take our savings....Should we just bite the bullet and walk away or just stay in the house and continue to pay on a mortgage for a house whose value continues to fall?<!-- google_ad_section_end -->

[fandelem]

do you have any update on your situation? i am in a similar situation-- i can afford my mortgage, but man, when you look at it in black and white-- renting for a half, or a third in my case, it really doesn't make sense to hold a depreciating asset!!

[Marshall Rosenbach Esq.]

RMT23 - have you even tried a loan modification yet? If not, try! See what happens. Ask for a 2% rate. If that fails, when you do a short sale, if you can get the lender to agree to "Waive the deficiency" and to agree that the payment in the short sale satisfies the entire debt evidenced by the note, not just the mortgage, you won't have to worry about them taking your car....do you understand?

Fandelem - if you have experienced a hardship recently, which many people have, I think you should try for a modification even if you are struggling yet paying your monthly mortgage payment. Many people feel that if they are current, there is no solution for them. That is not the case.

[fandelem]

Originally Posted by Marshall Rosenbach Esq.

Fandelem - if you have experienced a hardship recently, which many people have, I think you should try for a modification even if you are struggling yet paying your monthly mortgage payment. Many people feel that if they are current, there is no solution for them. That is not the case.

Luckily, I have not experienced a hardship yet. I still have my job. I am looking at it from a business black-and-white viewpoint. It makes no sense to me to continue paying $42,000/yr to basically rent my house when there are other rentals available at about $15,000/yr (a few less amenities, but we are okay with that).

[Marshall Rosenbach Esq.]

Well then see if you can get a reduced principal balance or that you are going to have to leave. You might as well try before you just move out or do a short sale.