In 2006 I was laid off in Michigan and after 9 months found a job in Washington. We contacted a Realtor and were told we were better off trying to rent it out as property values had tanked and we were about $50k underwater at the time.
Fast forward to today and we have had renters but the rent does not cover the mortgage and the maintenance on the house is beginning to be unaffordable. Because of that debt we cannot afford to buy in Washington either.
My wife and I have started to kick around the idea of letting the house go back to the bank and shake the dust off our boots and move on.
House details; 2006 refi (when I was laid off to free up cash) 80/20 220k interest only 10 yr ARM
with Midland, 58k 5 yr ARM HELOC with GMAC. Appraisal at $295k. Market analysis today at $140k (3 years -$155k)
Our renter has a lease with us until June 2010 that we intend to honor and won't do anything until then.
But our worry is since the house is in Michigan (recourse state) that both the first and second could come after us for the deficiency. Has anyone had a similar experience and had the banks actually come after you for the deficiency?