When to move out?

[59Cottage]

We are not paying our mortgage for the first time this month. My husband's pay was cut by 25% in the Spring and I have not been able to work since May due to my special needs daughter's health declining. Basically, our income has dropped by half, medical bills are mounting and we can not afford to stay in our house.

We lived in NYC when 9/11 happened. My husband worked five blocks from World Trade Center and his boss up and moved that company to PA. That sent us into a financial tailspin that lead to bankruptcy in Dec 2004. Buying this house two years ago was a huge financial victory for us.

Now we are going to have to walk away.. the only question is, "When?"
We have two young kids in school and we plan to stay in the same school district. In a small town like ours, word is going to get around pretty fast, but I would rather ride it out so that my kids can keep their friends and teachers. Plus, special needs daughter already has programs in place at school that would be a pain in the behind to set up elsewhere.

My husband wants to stay in the house for as long as possible, saving the money we would have by not paying a mortgage or rent. I, however, think it would be better to find a rental place in the next month before our credit bombs out the bottom. Otherwise, we are going to get stuck in a crappy apartment in the worst neighborhood because no landlord will want to rent to people who have both bankruptcy and foreclose on their credit reports.

Which do you think would be the wiser choice?

[Moe Bedard]

You have options and you pretty much laid them out above. The points you made are spot on and you're right about renting and wrong also. Let me explain.

Yes, some property managers are strict and old school on how they qualify their potential tenants. However, there are many now who are willing to rent to people like you and understand the current state of our crisis. I am not sure if New York is tougher because it is mainly larger apartments, but here in California, there are many property managers who will listen to good people with true hardships.

If you choose to stay it will depend on your mortgage servicer and when they decide to foreclose. Many are not following the foreclosure timeliness per the state laws, meaning the time is actually a lot longer because of back logs etc. Some homeowners are staying up to a year plus in their home payment free.

[Moe Bedard]

Here is the NY foreclosure process

http://council.nyc.gov/d28/html/memb...ureProcess.pdf

[59Cottage]

Thank you. We are actually in CT now, so I will look around the forums for the CT laws. I am glad that we are not in NYC anymore. Most landlords there require long applications, credit checks that you have to pay for, and will not rent to you for the slightest infraction (and on top of that, the realtors want a 12-17%-of-the-yearly-rent fee for themselves that the renter has to pay).

It certainly would be nice to not have to pack up those boxes yet. And to not pay rent or mortage for a year would mean being able to pay off a lot of medical bills and even pay for some much-needed physical therapy that the unsurance company won't cover. Hmmmm... something to think about.