Hoping to get some advice as my husband and I are seriously considering starting the walk away process.
Here are details:
Purchased home 8/08 (FHA): $285,000
Re-financed 1/12 (FHA) loan with Freedom Mortgage: $270,000
Approx. Current Value: $200,000 on a good day
I have done research and am trying to gather as much information as possible before we decide if this is what we want to do. I have left messages with a few attorneys to make an appointment, but have yet to hear back. Any advice/information would be much appreciated as I am a novice to this process.
First, is the process of defaulting on a FHA loan any different than an 80/20? By that I mean, is the process quicker or slower or are there different laws?
Second, I know that WA state is a non-recourse state, so does that mean we wouldn't be taxed on the 'forgiven debt amount'?
Third, we took advantage of the First Time Home Buyer Credit of $7500 that we have started to payback ($500/year for 15 years). Does anyone know if we would still be responsible for that if the home went into foreclosure?
Fourth, does anyone have any experience with Freedom Mortgage in regards to this process? I haven't been able to find anything on anyone dealing with them through this process.
Finally, what does everyone recommend - saving the money that we would pay to the mortgage or using it to payoff other debts?
I truly appreciate any help and information we can get. This is a difficult decision and I want to make sure we as informed as possible.