posted: Mar. 8, 2011 @ 9:47a
After consulting some friends in the market and an attorney, the decision has been made to walk away from my mortgage and let the company foreclose. We are approximately $100k in the hole on a $250k house. If it was $10k-$25k in the hole, that's one thing, the credit score is worth saving. But my credit score is not worth $100k to me. Attorney has advised staying in the house, saving up $, then prepare to be foreclosed on in as little as 3 months. Could be 3, could be 30 -- always a crapshoot with the banks. I am in a recourse state, so the bank can come after me for a judgment afterwards. Even still, walking is the smart decision, and here is why.
Much of the loss of valuation comes from foundation damage on the house that our home inspector failed to catch. We brought out a guy to check the foundation a couple months ago as we suspected problems, and he stated that the inspector we had was either incompetent or just ok'ing houses for his realtor to move them through, the foundation damage had been patched over to give the appearance of it being fixed, but it wasn't.
Before we found out the foundation damage, I had tried on 3 different times to refinance my 5/1 ARM into a fixed rate loan with Bank of America. They wouldn't talk to me. My loans aren't backed by Freddie or Fannie, so no government programs are going to help.
After considering all the options, we've decided to move where the job market is better for my line of work (75-100% raise), schools are better, etc. I'm sure I'll get the 'pay your bills, deadbeat!' comments, but I don't care -- my goal has to be doing what is best for my family. And staying in this damaged house with a mortgage that is basically a time-bomb is not a sound financial decision. Buying the house in the first place wasn't one, my fault for not seeing through the veil of "you must buy now!" and everyone in my family basically telling me renting is throwing money away, when you get married you need to buy a house and settle down, etc. We had planned on moving in 5 years (when the ARM was up) -- wasn't banking on any sort of financial gain from the house, but it seemed logical to build equity. Oops.
So, for the sake of contributing to the board and others who may be weighing this decision, I'll detail what I've gone through and provide updates.
2/1/11 - Missed first payment, technically due late on the 15th. Credit score via credit karma is 740.
2/15/11 - No notices or anything from bank.
3/1/11 - Notice from bank informing us of our upcoming ARM reset. Credit score 756.
3/5/11 - Notice from bank that our escrow payment is increasing $120 a month due to property value assessment raised (wtf) and homeowner's insurance increase.
3/8/11 - Credit score 762. No phone calls from bank as of yet.
3/13/11 - Credit score 690.
3/?/11 - Notice of intent to accelerate.
~4/1/11 - New job secured, 85% pay raise. Looking for places to rent.
4/5/11 - Credit score 713.
4/19/11 - Rental application approved. Starting the new job in a week. Nothing else new on the bank front yet. Still not a single phone call.
5/7/11 - Credit score 700. Still no phone calls from the bank.
5/26/11 - Nothing really new to report. Still packing up the place. Credit score is still 700.
6/1/11 - Moved into new place.
6/1/11-6/9/11 - Applied for store credit card, approved. Other credit card limit slashed 85%.
6/9/11-6/15/11 - Other credit card limits proceed to get cut. No closures yet though.
7/23/11 - some more credit lines slashed. 3rd party debt collectors/'we want to help you stay in your house' companies begin contacting me, but i'm not even sure they are from BoA. May be just vultures. They purposely make it hard to tell. STILL no phone calls from the bank!
7/29/11 - BOA finally enters the picture, calling about loan re-mods, etc. not interested for obvious reasons.
12/27/11 - Letter from Recontrust arrives stating I have 30 days to validate the debt. Credit score 646.
12/29/11 - Received Notice of Default from Recontrust.
~1/7/12 - Received notice of foreclosure sale date at courthouse for end of January.
~1/?/12 - Foreclosure sale postponed (again .. probably 4-5x now)
3/25/12 - Credit Score 641
~7/20/12 - Foreclosure sale scheduled for September.
7/30/12 - Credit Score 646
9/8/12 - House bought back by bank for over a 40% loss. No bids at auction.