I need to move and I haven't been able to sell my house for 3 years now. I'm running out of time and money. I took the equity out of the home to buy another property where I want to live and paid cash. Now I am paying on a property that's probably not worth what I owe on it. Cyberhomes says I lost 10K just last month. So buh bye to the rest of my equity and I already lost the 120K cash worth of improvements I made. So how long do I keep on beating this dead horse just to protect my credit rating? I have excellent credit and my FICO scores are over 800. I've never had credit troubles so maybe I don't understand how my life will change if suddenly I'm no longer credit worthy. I'm hoping you can explain this to me. My other home is free and clear paid for. I don't believe there is anything they can do to affect my ownership of this property. Please correct me if I'm wrong. What CAN they do to me other than destroy my credit? Do I have to make sure I keep no money in banks etc? I feel like I'm contemplating a major life change but I admit I just don't know. What will happen to the credit cards I've had for more than 20 years? Can they cancel them if I've never been late on a payment? I just don't see any other way out. I feel like my hands are tied. Please enlighten me!
When you say you haven't been able to sell your home, do you mean that nobody has offered you what you want for it or that you have had no interested buyers at all? Depending on where you the property that you are trying to sell is located, the housing market is now a buyers' market. You may have to take a loss if you want to sell your house. If you do sell at a loss, that loss could be offset on your income taxes. You'll want to talk to your tax adviser about this. The other issue is that you would need to be able to sell the house for enough money that you are able to pay off the home equity loan. Find out the payoff value on the loan from your lender so that you can know how much you would need to sell your house for to cover the payoff and any transfer taxes, etc., connected to the sale. The only way you would have to fear your bank accounts being frozen would be if some creditor got a judgment against you that allowed them to seize money from your bank account to satisfy the judgment. If there's enough money to be gotten out of you, a creditor could also have your wages garnished (but that's capped at a maximum of 25% of your take-home pay, depending on where you live) or put a lien on your paid-for home if they get a judgment against you. The only times a judgment or lien against your paid-for home would bite you is if you had to sell and/or if you applied for credit after that point. The judgment or lien would have to be satisfied off the top of the proceeds of your sale (after taxes due on the sale, of course). As far as credit cards that you've had in good standing for a long time, I doubt that the issuers would just cancel them on a whim. As long as you are able to keep current on them, there is no reason for them to be canceled. This is just my take on this. I'm sure that others will be along to offer their experiences, suggestions, etc. Good luck!
Prices aren't going to go up any time soon, so why not lower the selling price, close the deal, and borrow against your new property to cover the difference? No harm to your credit or your conscience, just a small dent in your monthly cashflow (but probably a smaller one then the mortgage you're paying on). If you're looking for a way to duck out of the first mortgage, sure, you could just mail the keys to the lender and say "buh-bye" and you'd get a ding (as in big black mark) on your credit report, but, hey, it's only one tradeline (two if you are carrying a 2nd or a HELOC) and you already have a place to live so the worst that could happen is the bank comes after you for the difference and you have to borrow against your current property to settle that debt. Sure it sucks to lose money on an investment, but that's the way it goes, some times. You just have to pick up and press on.
But--you own a property free and clear. If you default on the home you are trying to sell, don't be surprised when they attach a lien to your new propery. Either sell at a loss or take a mortgage on the new property and use the proceeds to pay your old mortgage until the market recovers. But expect that it will be at least several years until the market recovers in most areas.
For the first year or so I had high hopes. After that I lowered the price to ridiculous. There just are no buyers here for anything but fixer upper starter homes. My home is quasi rural and a major commute so I took the hit on fuel too. There are very few decent paying jobs close to my home and people are no longer willing to make the commute because of fuel prices. Even trying to sell at a loss, there are no lookers. I am selling because I am going to retire. I've already wasted 3 years living in a model home trying to sell. If my home is losing 10K per month, the truth of the matter is it will never sell. Would you buy a home at any price that was going down in value that fast? The way things are going, I would have to stay here and work till I'm 80. After I retire, I'll have a pension and some savings. Not a lot because of the house disaster. I probably will have to work at least part time. My other home is a fixer upper that I bought cheap. It will take a lot of work to make it an OK place to live. After I retire, I will have time to work on it. It's a modest home, nothing elaborate. This house thing has pretty much wiped me out. Not much left. So much for careful planning and always doing the right thing. I guess I just need to start learning about protecting the little I have left. After 3 years and most of my money, I have little left to sacrifice.
On a related note, I've come across some places saying they have 'plans' than allow you to walk away debt free. Does anyone know how they do that? If I can avoid having liens put against my other property, that would be better for me. I was always the one who advocated eating beans to pay your bills on time. What a strange turn of events.
Most of those plans are scams. They take your money in fees until the debt are charged off, then try to negotiate settlements. There are some other scenarios as well, but most of them are illegal or very close to it. I wouldn't get involved in them. What is the zoning on your propery? Have you tried to sell it for farming?
My home is one acre, waterfront, in a residential subdivision of much more expensive homes. 3300sf, stone and brick. 2 granite fireplaces. Some of my neighbors even have stuff like limos and elevators. I sort of figured the walk away places had to be some kind of scam. However, I did figure out 1 thing. I can form a corporation and put the paid for home in my corporate name. At least that's worked for corporations for years.
If you can't sell it and your assets are dwindling, I think you have no choice but, to leave it. I would estimate a 120 point dive in terms of scores but, they will recover. People forget that credit scores are worthless without the money to repay what they will get you.
This is remarkably sad to me. I'd hoped there was some great solution out there but I guess not. I guess I will start shopping around for the best attorney I can find to help me mitigate my losses.
ask your attorney about putting the property that you own free and clear into a land trust. If the trust owns the property instead of you, it makes it a little more difficult for someone to put a lien on it.
Thanks. I hadn't thought of that. I was also considering forming a corporation that could own my house.
Be careful if you form a corporation that isn't really doing business, but just owns your house. I believe that the courts can deem that the action was taken to avoid the lien (or something like that) and they could dissolve the corporation and attach the assets.
Have you thought about renting - or even pitching it as a home to rent for people coming from abroad? Tourism has increased in the U.S. due to the weak dollar. Is it near any tourists attractions? I have heard of donating houses to charity...though not sure if you have to own it 100% to do that.
I saw an item on the news a while back about someone who got frustrated trying to sell their home, so they held a raffle. Your charity suggestion reminded me of this, because in order for a raffle to be legal (in most states) it has to be conducted for a charity. The one I saw on the news, they sold tickets for $100. They sold enough tickets to pay off the house, and the surplus was split between the homeowner and the charity. And the winner of the raffle got a house for a hundred bucks.
The house is pretty much 100 miles away from anywhere. If I had to give it's biggest advantage, I would say safety. People don't even lock their doors here. It's a safe place to raise kids and the schools are excellent. But with gas over $4 per gal even that probably isn't worth a 500 mile 10-20 hour commute per week. I've done some reading on the Trust idea and that looks promising.
No, it's supposed to be my retirement home. Since I lost so much money, I might need something like a reverse mortgage some day so it would be nice to at least have that option. I'm not at all worried about willing it to anyone. I plan to spend all my money!
Well, that being the case I would still advise walking away from it. The deficiency after foreclosure may be pursued and it may not. You just never know. However, if it is, the worst case is a a lien. Not an issue really unless you intend to sell the current residence.
Thanks everyone. I appreciate every word. It's hard for me to see myself as the kind of person who would do this. All my life, I've been unfailingly honest in all my business dealings. I had ethics out the wazoo. If I was 30 or 40, I would have had time to recover and change my strategies. But I don't think anyone is going to give me a do over darn it!
