Lost in AZ

[Santanaz]

I am lost here in AZ. We purchased a home here in AZ in 2005 with my father as a co-borrower. I thought it would be a good idea to enroll in the accelerated payment plan and a little over half the mortgage payment was taken out of our bank account twice a month. Life took us through some twists and turns and my wife was out of a job and we had a new adorable mouth to feed (two kids now) Times got really tough and I contacted my lender (mortgage was bought by Midland Mort) for a modification. After jumping through all their hoops which included cancelling the auto drafts and falling behind 90 days, they came back with an offer to lower my mortgage by $40. I laughed at their generous offer and they took those 90 days and spread them out, raising my monthly payment by ~$15. We scraped by the best we could for another year and were told by a friend about HAMP, thinking we finally found some relief; we contacted the lender again for a modification. Again we had to fall 90 days late, killing our credit which wasn’t great to begin with, and this time they were able to lower the payment by a couple hundred bucks, but they reset the terms of the loan. Now I am sitting here in a 189k loan on a 117k valued home surrounded by foreclosures. fficeffice" />>>
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I have spoken with friends and family and they all suggest walking away. I am going to school right now to get my MBA and my student loans are in deferment. My wife is also studying and we both will be finishing up in about 2 years. In addition to the upcoming school loans coming due, both of our cars are in bad shape so we know at some point we will need new cars. This really scares my wife and I as we are having a tough time making the payments as is. My dad is willing to walk away with me, even suggesting speaking to the mortgage company about a possible assumption on the loan since he is older and not very concerned with his credit. >>
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I feel trapped in this house. Firstly, as a graduation present, my dad put down about 23k on the house which I always wanted to repay. In this area I could probably pay less monthly on a purchased house than renting and there are plenty of nice houses in nicer areas that would be significant upgrades to where we are now. I would love to be able to walk from this house and buy another home. One scenario that has crossed my mind is leasing/renting this home out and paying the difference, but even at that, I doubt any lender would qualify me for a new home loan. I make decent money and have a steady and stable job, but the future looks like it is going to get worse for us if we don't do something now. What should I do?>>

[AZhelpneeded]

It's such a tough decision to walk away, but in your case it sounds like the best thing to do. Since your student loans will eventually come due and the bank seems unwilling to work with you it might be your best option. If you really want to stay in your home maybe you could check out the REST REPORT (numerous threads on here about it). I know nothing about it, but it seems it work for people trying to get a loan modification or to see if they will even qualify for one. If foreclosure is your choice, many on here will tell you to stay in the house rent/payment free for as long as possible while going through foreclosure to save up money. Best of luck to you.

[Santanaz]

Thank you for your response.

It is a very hard decision on its own, and it's compounded in my eyes because I don't want to drag my dad around with me through this as well as losing all the initial investment. I know I make a bit more than the 31% needed for HAMP at this point and while it would be nice to live rent/mortgage free for a bit, I would really just like this to be done quick and get into a new place. Although with all the talk of another big drop coming up soon, maybe waiting and saving til everything bottoms out cuold be a good idea too.

[briknope]

If you're asking for advice on what to do, I'll tell you what I am doing now in Arizona. I have not paid since October of 2010. No foreclosure action as of yet. I have banked more money than I have even been able to in my life. I have put all my ducks in a row as far as cars, medical issues, you name it. I am ready to be kicked out at a moments notice. I am ready to rent one of the thousands of rentals available OR seller finance a property that is owned free and clear by a cash paying investor. I said seller finance, not a lease option or lease purchase....those hardly ever work out. So 8 months of free living so far and many more to come.

Advice to you? Get your life in order as best you can and look out for your family numero uno as they say in AZ. Tell the bank to go and screw and you're not doing a stupid short sale and running around filling out modification form after form and clinging on to hope.