Sorry if this is a repost. I couldn't find it.
http://articles.moneycentral.msn.com/Banking/HomeFinancing/HomeownersWhoJustWalkAway.aspx
My favorite part is:
3 families, 3 stories
Linda's family now lives in a rented condo. Their credit is ruined.
It was a far different tale three years ago. The Tampa resident, her husband and two children moved into a $400,000 three-bedroom home. It had a pool and faced the beach. The couple thought they could afford the $2,100 monthly mortgage payment on their $160,000 income. It sounded like a good deal. There was no down payment, and they paid $9,000 for closing costs.
Then life for Linda and her family suddenly turned sour.
The bank notified them that their monthly payment had been miscalculated, that taxes and insurance for two years should have been included. To fix its mistake, the bank increased Linda's monthly payment to $5,000 a month to get what was owed. And the family moved out of the house before the bank began to foreclose. "I left the keys in the door, hanging in the door," Linda said.
In California, Ismael, a Navy officer, went to YouWalkAway for help. He paid the $995 fee to get some advice. The company spelled out his options but did not tell him what to do.
Ismael, 37, still lives in his four-bedroom house in Menifee, Calif., for now. But he is ready to leave.
"The situation I am in is really ugly," said Ismael, who asked that his last name be omitted. "It's better for me to walk away and leave the stress and everything that is involved in this home. I am about 95% sure I am walking away."
The single parent of a 3-year-old, Ismael bought his $370,000 home in 2005 for no money down, qualifying on his mid-$40,000s salary. (That's about triple what he might have qualified for under more traditional lending guidelines used in MSN Money's Housing Affordability Calculator.) He was paying $2,700 a month for an adjustable 8.25% loan.
Photo by Joseph A. Garcia
Yadira Magaņa, left, with her children Lizeth Torres, 13, and Conrad Torres III, 10, have lived at her mother's Oxnard, Calif., home since walking away from their previous residence in 2007.
Then he and his girlfriend split up, reducing his household income to a single paycheck at the same time the mortgage was adjusting upward. To add to his struggles, the value of his house dropped by $145,000.
Yadira Magaņa, a medical biller in her early 30s in Oxnard, Calif., has a similar story. She walked away from her $585,000 home in June 2007. When she bought it, Magaņa thought she had gotten a great deal. She made a $16,000 down payment on the house. But she lived there only eight months before her marriage collapsed.
She couldn't afford to pay the $4,500 monthly interest-only mortgage, plus taxes and insurance separately, on her own $50,000 income. So she and her two children moved into her mother's house.
In Magaņa's case, the bank declined to do a short sale (for less than was owed on the mortgage). "I told the bank I was leaving. I couldn't afford the home. The bank was not trying to help me or suggest different options. The only thing to do was let the home go," said Magaņa.
Meanwhile, her credit rating drops every month. It's now in the 500s, when an excellent score is 750 to 800. Her decision to walk away will be on her record for years to come.
"I left the keys on the counter. I felt like a failure," she said.
Edit by Moderator: Thank you for participating in the forums. However, this topic has been covered in a recent post Here.
