[Cloud9]

I have had the wolf at my door. He carried a court order and wore a sheriff’s uniform. There is no hiding from him unless you are willing to drop out of the culture and live under a bridge. A lot of people are looking at hard times as this thing unwinds.

[korosten]

Imagine you own a house, and as time goes on the house is losing value and at some point, say just about when you want to move because of PO, the value of the house is less than what you owe the bank. (say you owe 300k, but the value of the house is only 200k)

Then obviously you won't be able to sell it (unless you *pay* an extra 100k to sell it). You could still pay the mortgage, but because of PO you want to move away from the area. And maybe you even have some savings.

What would happen if you would "leave the keys" in the house and simply "walk away"? Obviously this would end in foreclosure,but what happens after that? Could the bank try to find you and make you pay (if you had savings?) Could they take your 401k savings? What are the laws for that?

(Just trying to think of worst case scenarios

[Cloud9]

The bank will seek to force you to pay the difference between the selling price and the note. Your one hope, the bank goes broke before it can secure a judgement against you.

[korosten]

How can they force you? What if you declare bankrupt? And what about the 401k?

[Tyler_JC]

$this->bbcode_second_pass_quote('Cloud9', 'T')he bank will seek to force you to pay the difference between the selling price and the note. Your one hope, the bank goes broke before it can secure a judgement against you.

[Tyler_JC]

A few articles in which credit scores effect employment.

How Bad Credit Can Cost You A Job

Qualification: Must have a good credit history

College grads beware: Many using credit checks to vet job candidates

Credit score does matter.

That is, unless our civilization collapses.

[Cloud9]

The new bankruptcy reform will make it rather difficult for you to escape your debt. I filed under the old system. If you are serious about walking away, it would be wise to consult an attorney. I am not one.

[Roccland]

$this->bbcode_second_pass_quote('Tyler_JC', 'A') few articles in which credit scores effect employment.

How Bad Credit Can Cost You A Job

Qualification: Must have a good credit history

College grads beware: Many using credit checks to vet job candidates

Credit score does matter.

That is, unless our civilization collapses.

[korosten]

What if you went to another state? Or say.. Canada ?
What if you don't declare bankrupcty?

[korosten]

Here is the answer to my own question

In summary: it depends on the state and your loan.
if you live in CA, and if your loan is for the purchase amount, then even if you walk away and the house value is a lot *lower* than the foreclosure sales price, the bank will not run after you.

(The will though if you refinanced with a higher loan than the initial purchase price, or in some states)


_________________
*Deficiency judgment*

*Legal action sought by a lender who wants to recover any losses on a foreclosure*

If you default on a mortgage, the lender can not only sell your property to get their money back, but they can also sue you if the money from the sale isn’t enough to cover the loan. For example, if you owe a lender $100,000, but the lender only gets $90,000 in a foreclosure sale, they can take you to court for the remaining $10,000. If the lender wins, they can attack your assets, income, credit and peace of mind until you pay this amount. If you have Private mortgage insurance, a lender can use this money to offset any losses instead of getting a deficiency judgment. Keep in mind that only some states give the lender the right to a deficiency judgment.

However, a lender cannot obtain a deficiency judgment if the underlying debt arises from "purchase-price loan," which is either a "seller carry-back loan" (see above) or a third-party purchase price loan for a owner-occupied residential property that has no more than four units (see above).

The matter can be summarized as follows. A lender cannot get a deficiency judgment if it forecloses by private sale, nor can it do so if the underlying loan was a purchase-price loan. Therefore, a lender will choose to sell the property at a private sale if (1) the sales proceeds will pay the entire loan or (2) the loan was a purchase-price loan. Since most loans fall into one or both of these categories, a private sale is usually the preferred method of foreclosure.
_____________

A deficiency judgment is the result of a judicial foreclosure, the process by which a lender takes you, the borrower, to court in an attempt to receive a judgment for the amount that they claim you owe them above and beyond the principal and interest you owe on your loan.

The lender has 90 days to start the motion for a deficiency judgement after a foreclosure sale and the market value of the property must be determined by the court.

In most cases, lenders do not pursue homeowners who have lost their homes to foreclosure and thereby incur a deficiency judgment. Although they may receive a 1099 income statement, lenders realize that they average person who looses their home to foreclosure, most likely will not have the funds to make due on a deficency judgment

In certain states, most notably California, homeowners may not be liable for any deficiency on their mortgage, provided that the mortgage you have on your home is the original one you took out when you purchased the home. This "purchase money" security interest provision means that under California law, you are not entitled to pay deficiencies on your mortgage unless you have refinanced the mortgage since you bought the home. 2nd mortgages which were taken out at the same time as the "purchase money" or original mortgage may also be covered by this provision, however you must consult a legal professional for advice pertaining to your own situation.

In most states, the lender will not pursue obtaining a judgment to cure deficiencies unless the amount owed as a deficiency is very substantial. This is due primarily o the high cost of working through the courts ina judicial foreclosure. Most lenders prefer a non-judicial foreclosure.

[roccman]

Very nasty stuff here...

Mods - could not find housing thread - please merge

WSJ

$this->bbcode_second_pass_quote('', 'M')ortgage Lender's Bankruptcy
May Threaten Thousands of Homeowners
By PEG BRICKLEY
September 12, 2007

Thousands of homeowners face an "imminent risk" of losing their homes because of clashes between American Home Mortgage Investment Corp. and its former financial backers, according to Freddie Mac, a government-chartered housing financier.

In documents filed with the U.S. Bankruptcy Court in Wilmington, Del., Freddie Mac said it seized $7 million that homeowners sent to American Home to cover principal and interest payments, property taxes and insurance just before the company's Aug. 6 collapse. American Home quit making payments to tax authorities and insurance companies Aug. 24.

Freddie Mac said 4,547 loans valued at nearly $797 million are at stake. It said it doesn't have the loan files necessary to pay insurance premiums and property taxes on them, however. "Therefore, there is the imminent risk that borrowers' insurance policies may lapse for nonpayment, subjecting the borrowers to a risk of loss of their mortgaged properties," Freddie Mac said.

[lateralus]

and weeee can cash in on the rest of you fools for cheap.....how's that for a thought? Cheap forclosure property...yeeehaaa.....

[NEOPO]

I was wondering how these bastards were going to make a living postpeak, now I can sleep.

[Ferretlover]

"Middle-class, new developments reeling from vacant homes, shady renters
Eighty-five bungalows dot the cul-de-sac that joins West Ontario Avenue and East Ontario Avenue in Atlanta. Twenty-two are vacant, victims of mortgage fraud and foreclosure. Now house fires, prostitution, vandals and burglaries terrorize the residents left in this historic neighborhood called Westview Village.
"It's created a safety hazard. And if we have to sell our house tomorrow, we're out of luck," said resident Scott Smith. "Real estate agents say to me 'We're not redlining you, but I tell my clients to think twice about buying here.'" … "
What to expect

[Twilight]

Nice addition, it will be interesting to watch how this shapes up. The traditionally bad, low-income areas are getting it first, but it is only a matter of time before all the respectable middle class people who bought a new boat and had a pool built are moving out to downsize. The rot will spread.

The BBC did a piece on this recently too, touched on the crime issue.

[blukatzen]

I live in the city of Chicago, and in a fairly solid middle class neighborhood, not rich, but not poor either. Bungalow heaven, if you will. Nice older buildings, some doing upgrades to them.

It was only 2 years ago, this neighborhood was on the list to "rock-n-roll" for gentrification.
There were 2 old factories that were being renovated towards gentrification and rehab. The general surrounding neighborhood were getting tickets if you didn't upgrade things like sidewalks, tear down old garages etc.
In fact, I had to upgrade my garage or else it was a 200.00/PER DAY fine! I did a lot of upgrading on the house.

Now, it's about a year later, and we have a LOT of "for sale" signs, some over a year old and you can tell no one is living there. Empty houses are not good for the neighborhood's morale. Not a lot of trick-or-treaters these past 2 years...

A neighbor of ours across the alley, had a fire in one of their garbage bins, and they promptly moved out. (it burned some of the siding off their neighbor's garage and their fence.) They now live in Colorado, moved in with family over there.
Now the house sits empty, and rats are starting to move into the old garage, etc.
In fact, my cats kill several rats a week now just from that old garage, and we see a rat hole into their house. We've had to yell at the realtor, now we are getting the alderman involved.

This is what is happening to a once GOOD solid neighborhood. These are only the 4 legged rats, I rue the day when the 2 leggeds come...

[TheDude]

Buying a Home for Dummies (it's like it was written for me!) strongly advises against this unless you can inspect the house thoroughly, since many foreclosers burn their bridges big time - one example they mention is pouring cement into sinks.

Nevertheless I'm amazed at the prices being offered for these shacks - five digits in some cases around here. And there are millions of them up for sale now. Love to hear some more info on this.

[joeltrout]

If you are buying foreclosures that are bank-owned then you can make the sale contigent upon a home inspection in which you can hire a professional home inspector.

If you are buying a foreclosure at an auction then you run many risks especially homes that you cannot inspect before purchasing.

Replacing a sink and some plumbing is nothing compared to replacing a bad roof, structural damage, or unstable foundation.

The problem with foreclosures are you buy them "as-is" which might mean they will not replace the broken shower head or it might mean the house is unliveable and has to be torn down and rebuilt. I recently bought a foreclosure that was bank-owned "as-is" and the only problem we found was replace one electrical outlet and a light switch.

So it can really pay off but be careful because it can really hurt if you buy a lemon.

[truecougarblue]

Wait at least another year before considering this. The credit crunch has barely gotten started and rate resets will be pushing huge numbers of additional morons and innocents to foreclosure in the next 6-9 months.

I'll be waiting at least until the 3 and 12 month trends for foreclosures is on the decline in my area.

[Leanan]

Cleveland's mortgage meltdown has sparked a crime wave in the nation's hardest hit area for troubled homeowners

$this->bbcode_second_pass_quote('', 'T')he first thing that happened after owners moved out of foreclosed homes in Slavic Village was that squatters and looters moved in, according to Mark Wiseman, director of the Cuyahoga County Foreclosure Prevention Program. "In the inner city, it takes about 72 hours for a house to be looted after it is vacant," he said.

...Long-time Slavic Village resident Joe Krasucki had celebrated his 78th birthday last spring, when, late in the evening, he heard some noise and went out for a look. Reports said he'd had run-ins with local gangs before. A neighbor's abandoned house had already been stripped of its aluminum siding and, according to Rokakis, Krasucki thought the looters were back, working on his home. Outside, he was attacked and badly beaten. He died some days later.

After stripping the siding, looters don't take long to make a vacant property nearly worthless.

"If someone takes the doors, moldings, appliances, it's bad enough," said Wiseman. "But once they pull the piping out, it's all over; they do it with a sledge hammer."