Let the house go?

blueseaJune 17, 2008

This is a long tale with a lot of factors so please bear with me. Here is our story. December 2006 things were great. We were completely out of debt except for mortgage and minding our own business. Then hubs company decided to move 1400 miles or so away. We have stock in this company and believe it to become a very successful company. Company wants three people to move and hubs is someone "they have to have". They will give us moving money + some. They discuss insurance since they want to change insurance, we tell them we have to have good coverage for one of our children who is special needs. They say fine. We get our house ready to sell and when school ended July 2007 we leave with our house still for sale.

Two weeks later our real estate agent calls to say that a pipe broke in our house and flooded the downstairs. Our pergo is ruined. The stupid floor man that the insurance company hired decided to take six months because people living in their houses needed him first. We tried to kick his butt long distance because we are still paying mortgage but we had no effect. We depleted our savings and ran up our debt trying to save the house. We decided to give the keys to the mortgage company. At the last minute we got a renter. We are out $$$ every month, it's do able but not comfortable.

Company changes health insurance and to save everyone $50 they cut out mental health - which we told them before we agreed to move that we needed for our child. This was a make it or break it issue. Now we are paying through the nose for dr.s and therapy etc. Perscriptions are covered thank goodness. Now we are told that she needs occupational therapy on top of everything else. I'm not sure if it's covered or not. Our new insurance is lousy. When we reminded company that we specifically told them what we needed they said oh well. sorry.

A few months ago the rent check never came. I'm waiting for it so I can pay mortgage which we are struggling to do. Hubs calls the property management company and they said they weren't going to send it because they decided we weren't paying mortgage. Hubs screams at them and they overnight it. Now on Saturday we got told that renters decided to move back to Colorado. They have six months left on their lease. We find out property managers don't even have the full security deposit, they were collecting in installments. They told us oh well, sorry.

We have enough to pay full mortgage for one month maybe two. But once again, we will be depleted. The house is in Las Vegas which has been hit hard. We won't be able to sell it.

Should we deplete ourselves again and hope for a renter and then struggle to make our payments + debt + medical? Or should we hand in the keys because we have literally done the best we could. We didn't do a bad loan or make a bad financial choice. We just had rotten luck, lol. This is so difficult because we have NEVER defaulted on a loan before.

If we don't have a mortgage payment we can start paying off our debt and can pay for everything my child needs. I know it would be a long time before we could buy another home but at this point, I'm not sure I ever want another home. Certainly not where we moved to, neither one of us are in love with where we live. I'm happy renting and then when the company gets bought out, which I'm sure it will, hubs will have to find a job elsewhere. I want to be ready to go when this happens.

Does anyone have any experience with this? I'm so torn and confused. Since this whole move happened a year ago next month, I can't remember when I didn't feel sick to my stomach.

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Don't make any more mortgage payments until you get some advice. Talk to a bankruptcy attorney about what can and can't happen to you in the event of foreclosure. It varies a lot from state to state; I believe the laws of the state where the house is located will be the ones that apply, but these laws are widely published and available to any lawyer, so a bankruptcy attorney in the area where you now live should be able to help you out.

It's probably going to boil down to whether or not you're protected from a deficiency judgment, which means, is the mortgage holder going to have the right to come after you for the difference between what they get for the house when they sell it and what you owe on it. This varies, but in most states they can sue you for the deficiency. Where you go from there is, can you file for bankruptcy to protect yourself from that? That's going to depend on how much money you make, what kind of assets you have and their value, and other things. The more stuff you have that you'd rather not lose, the harder this becomes. If, like most people, you have little (or more likely, negative) equity in vehicles, just basic household stuff with a garage sale value of a few thousand bucks, and no big heirlooms or prized collectibles, you may be able to get out from under this fairly painlessly.

Then there is the possibility of working a voluntary foreclosure out with the mortgage holder. All have different criteria for this; some do not do it at all, while others are pretty lenient. You may well want to talk to the lender about this before actually pursuing any other avenue, but I'd first talk to a lawyer to see what they can and can't do to you so you know where you stand when you talk to them.

    Bookmark   June 17, 2008 at 9:25PM
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I encourage you to post this over on the "Buying and Selling Homes" forum on this site. A lot of realtor/mortgage broker/rental experience over there, people who might be able to help you sort through this.

On the job side, did your husband sign an employment agreement that spelled out what the company would/would not pay for, in terms of health insurance or other benefits?

Good luck - I hope you find a positive way out of this.

    Bookmark   June 18, 2008 at 12:57AM
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Your husband likes his job, but you don't like the area that you've been transferred to. Now you've lost insurance coverage that you were really counting on for your son. Plus, you have no idea where your husband's job is going to take you next.

And this is worth going through foreclosure? This is worth wrecking your credit?

Why don't you both get jobs in LA and move back into your house? LA is a great place to live and you have so many options there. I'll bet the housing market will get better before we know it. Probably a lot faster than your credit would improve after a foreclosure.

    Bookmark   June 18, 2008 at 3:35PM
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That's certainly worthy advice, but as someone who once had to sell a house for far below what I owed on it (taking a lot of borrowed money to closing -- money I'm still working on paying off), I see it a little differently. For one thing, at the closing, the buyer's attorney laughed out loud at me and essentially told me I was a fool for not just going through a foreclosure. I realize that's one person's opinion, and one I don't necessarily agree with, but he did explain that the consequences of foreclosure would have been less than I had thought, and I should have investigated it.

So, I'll reiterate my thought that you really want to talk to an attorney and see what your options are, and the potential consequences of various courses of action, and then you can make an informed decision.

    Bookmark   June 18, 2008 at 10:27PM
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Greetigs bluesea ... and welcome to this site, as I see that you signed on today.

You can find your way to the Real estate forum, can you?

As was suggested, I think that you'll find some good advice there, as there are many knowledgeable people posting on these forums.

You'll find some interesting, friendly people over on the "Kitchen Table", as well.

I am really sad to hear of the trouble that you're in - and after the promises that your company made to you, it must be really disheartening.

I wish that I had some useful suggestions, but I have had little to do with real estate (and live in another country).

My good thoughts and hopes go out to you ... and a prayer that things may work out well ... and soon.

ole joyful

    Bookmark   June 19, 2008 at 12:05AM
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"neither one of us are in love with where we live. I'm happy renting and then when the company gets bought out, which I'm sure it will, hubs will have to find a job elsewhere."

So... you hate where you are; your insurance is lousy; the company is not living up to its promises; DH will be losing his job there.

Move back to your house!
Why stay there and mess up your credit for the next decade?

    Bookmark   June 19, 2008 at 8:54AM
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I said move back to LA in my earlier post - I meant Las Vegas where your house is. Not sure where I got LA from.

There is a solution to this whole housing fiasco it just isn't likely to benefit speculators. And you don't sound at all like a speculator to me - just someone who is feeling a bit stuck and overwhelmed right now. Hang in there. I'm pretty certain that you'll be glad you did.

    Bookmark   June 19, 2008 at 9:54AM
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Here is another angle of advice for your budget:

I'm not sure about the nature of your child's disability, but be wary of popular but TOTALLY unproven therapies.

You mentioned OT. Occupational Therapy is fine if they stick with actual "occupational therapy"... but the profession has now enjoyed a windfall of business over "sensory integration therapy".

This stuff is no good. It probably does no harm, but it does not stand up to legitimate scrutiny.

I have no hesitation in recommending that you can drop that kind (sensory integration) of therapy if you are paying for it out of pocket.

You may swear by it (people swear by all kinds of things), but if you are squeezed... cut that off.


    Bookmark   June 19, 2008 at 8:58PM
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There are some serious decisions to make:

Can you move back to Las Vegas and have a job similar to before??

Can you do a short sale of the LV home, this is preferable than a foreclosure (which is never good)??

i would continue to pay the mortgage payments, if you can, and sell the house by lowering the price ever 3-4 weeks again working with a short sale. it appears you had a crappy relo package, most corporate plans buy your home if you cant sell. is this possible with your DH company??

since the house is no longer your primary residence if you foreclose the bank will send you an IRS form showing the difference between sale and mortgage price which is taxable.

I find property mgmt companies are not always the best given the service and what they charge you as you already described.

i would try and avoid foreclosure at all possible. given the LV market the bank may take any amount as payoff of the mortgage. please continue working with the mortgage company.

good luck

    Bookmark   June 20, 2008 at 11:16AM
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