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Walk away in Georgia - what do you think? & advice please

Discussion in 'Deed in Lieu of Foreclosure - Do You Need Help to ' started by cocoabutter, May 30, 2010.

  1. cocoabutter

    cocoabutter LoanSafe Member

    Some background:
    Purchased a house in Atlanta in 2007 for $530,000 - 80/20 loans, both through Suntrust. Both are in my husband's name only, as he was the only one with income at the time.

    We can afford the payments (barely, as unfortunately we have a lot of other debt due to medical bills, poor luck and some poor decisions on our part), but:

    1. the neighborhood has gone way downhill in the last few years (for example, a man was just shot right across the street from us the other day in broad daylight) and we have a small child, who I do not want to subject to this kind of environment.

    2. The house is currently worth about $300,000 and we do not have $230,000 sitting around to bring to the table. We have not even bothered to put it on the market for this reason. About 50-60% of the homes on our street are for sale or have been foreclosed on.

    We contacted SunTrust back in early 2009 requesting a loan modification. After several months of confusion regarding what was required from us, whether the process had actually been started, etc., we were told our file was finally under review. About 4 months ago (approximately a year from the time we applied), we received a letter stating that our request for modification had been denied due to the fact that we had too much debt. In other words, because you need too much help, we're not going to help you at all. I'm sure the fact that we had never missed a payment didn't help us either.

    So we started missing a few payments - I believe we are currently about 50 days behind.

    The big twist in this is that I have just been offered an amazing job in another state - it pays an incredibly generous salary and I would be stupid not to take it. We could be free and clear of ALL our debt besides the mortgage in one year with this extra income.

    However, we can't sell this house for the reasons I stated above. It seems our primary - and perhaps best? - option is to just walk away from it and let the bank foreclose.

    My questions are:
    1. Is letting the bank foreclose the best option or should we attempt a deed in lieu? They have not seemed open to a short-sale option, although we have not officially asked for one.

    2. What are the chances of them pursuing a deficiency judgment against us? We have no other assets besides my husband's retirement account (which is about a quarter of what the deficiency would be). His income is entirely from a disability pension received from the state and although I am not completely sure, it appears from my research that as such, it is protected from creditors.

    3. How would a foreclosure, etc. affect my credit or assets if I am not on the mortgage? Would it affect me at all? Would it be possible for me to purchase a house in my own name and on my own salary/credit then? Or does the fact that we are married affect how this works?

    We are planning to consult an attorney this week, but any advice, experiences, etc. you can share would be greatly appreciated! Thank you!
  2. LexieMustang

    LexieMustang LoanSafe Member

    Hi - I walked recently. Still awaiting the "consequences"...hopefully I can provide a little insight.

    Deed in lieu's are VERY RARE - your chances are getting one are slim to none, especially if you can afford the house. The bank will want you to essentially stop living to pay your mortgage - screw the fact that you have to buy groceries and gas! And the fico hit of a short sale vs a foreclosure is about the same. If I were in your situation with a job offer in another state - I'd probably walk, especially in this market.

    Deficiency judgements in Georgia are rare, but possible. The limited time window after foreclosure probably keeps these rare. The bank has 30 days after the foreclosure is complete to pursue any deficiency.

    If you are not on the mortgage loan at all, then your credit will not be impacted. If you are on the deed but not the mortgage, you should be able to do a quit claim deed to get your name off the mortgage in order to be able to secure property later. If they were to pursue a deficiency judgement against you, bankruptcy may be an option to get you "off the hook".

    I am not an attorney, so I do urge you to consult with an attorney and/or an accountant.

    Good luck with whatever you decide!
  3. I did it

    I did it LoanSafe Member

    Cocoabutter - I wanted to shed some insight on what Lexie said regarding deficiency judgments in the State of Georgia. Deficiency judgments in GA are only allowed if your lender does a judicial foreclosure (goes through the courts.) State of Georgia can do judicial or non-judicial foreclosure. The non-judicial foreclosure is the one that is mostly pursued in the State of Georgia as it is more cost-effective & requires a relatively short-period of time to do (generally within 90 days after you are 90 days behind.) They basically wait until you are 90 days behind; send out the letters to you(NOD, etc.;) advertise notice for 30 days in paper; & sell your house on the first Tuesday of the following month on the courthouse steps to the highest bidder, usually the bank. What is truly rare in GA is for them to do a judicial foreclosure as it requires them going through the courts, more atty fees & work on their behalf - also, their original contract could come into question, etc. Not to mention, that if a borrower chooses to play the game with them, they can stretch this type of foreclosure (judicial) to a year or more. That being said, I wouldn't even worry about the lender if you decide to walk, especially if they do a non-judicial foreclosure.

    Good luck & congratulations on your new job outside the State of Georgia. Georgia's high rate of unemployment, high home value depreciation, poor consumer protection, etc. make me say - get out while you can, Georgia sucks! I for one, am seriously thinking about walking too & relocating to greener pastures (more employment opporutnities, better consumer protection laws & stronger home values.)

    :pOh, one more thing, if your name isn't on the house, you can buy on your own. I know that to be a fact because I did it.

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