Foreclosure...i need some advise?
Hi everyone I know I need to talk to an attorney but I would like to hear other peoples thoughts and experiences as well. First of all I am 29 years old...So i think I'm young enough to start over if I need to. I purchased a new build home in Oct 2006 in Columbus Ohio for $163,000. Today i owe $158,000 and all payments are current. For years I have never been late on any bills...My credit was 733 the last time I saw it. I went thru a divorce in Sept 2008. After the divorce I picked up a child support payment of nearly $800 a month...Well $600 for support and half of the babysitting cost which are $200 monthly. So a total of $800 a month. Because of this situation and the current economy I cannot afford the house, rent it out for the $1500 monthly payment, find a roomate, or sell it...I have tried to do all 4 of those things. The house is solely in my name, my ex wife has no connection to the home and she doesn't have any money anyways. I was able to rent it out last may for $1000 a month...which is no where near the $1500 payment, meaning I have to pay $500 a month out of my own pocket every month. My tennants are moving out this May 2009. Similiar homes in the nieghborhood rent for roughly $1000 a month, so to ask $1500 for rent is not going to happen. I have notified my bank and informed them of my situation and that my saving account has significantly decreased since last May as a result of pulling $500 a month to stay current. The bottom line is I cannot afford this house nor do I want it anymore. I tried to do the right thing but is it worth draining my savings to $0 and still losing the home? I have $4000 left in my savings. The home is prob only worth around $120,000 cause of the economy. Wells fargo is not taking me serious because all payments are current. I will probably stop paying after May 2009 when my tennants move out. I'm not left with any other choices. Unless wells fargo would drop the house payment from $1500 to around $700...i cant afford it. And i don't thing they will drop it that low for me. and this a V.A loan as well...if that means anything What are my options? Should I take my last $4000 and pay off credit cards and other bills instead of putting it into this house that i'm going to lose? Are they going to go after my 401k retirement? Will I get 1099 next year? Will I be sued? The bank would doubtfully deed in lieu? These are questions I have and I will talk to an attorney, but I'd appreciate everyones else's view. Thank you and I'm sorry to contribute to the American foreclosure mess, but divorce has really left me no options
Public Comments
- If you don't pay for the house, all of your assets will be seized. Your credit will be ruined and you may not be able to purchase a home in the future. Your wages can and will be garnisheed. The best thing to do is to arrange a short sell on your home if you can. If you have any savings it will be frozen until the bank gets the money they are due. Put the house up for sale and unload it as soon as you get the first offer. You won't make money, but you will be out of your misery! Good luck!
- First of all, you didn't mention if the divorce included a settlement of the assets. Legally, your wife is fully entitled to half of the home {regardless of having it in your name you are equal partners in marriage in law} and half of your pension for the years you where married. She can choose to also claim some of your pension credits. If this is all legally settled and signed off then fine, but if it isn't jut be aware she can come after it within 7 yrs {I think}. Definately and without delay go to a bankrupcy trustee. They can arrange for lower payments, they can try to keep you from filing, or they can just tell you to file. To file bankrupcy costs a fee, so you will need this money. I suggest you keep the company that holds your mortgage and your personal banking separate. I also suggest you take the bulk of the money out of the bank, and consider it your emergency stash. You will not loose your retirement and might be able to keep the house for yourself if the rate is lowered. Have you considdered converting it into a triplex. People these days are willing to take small apartments, even basement apartments, and if you are handy you can rennovate as you live their. This could turn into a lasting source of investment income. What is vital right now is you health. Keep that a priority, because stress can make you ill. To cope, get a really sound plan. Once you have a plan in place you can stick to it and release all the "what if" and anxiety. Bankrupcy is a final option, but it takes 7 years to dig yourself out and then even more to re-establish yourself. Go to that B. Trustee as soon as possible.
- Sorry to hear of your current situation. And, yes, you need to consult with an attorney about this. It is my understanding that legislation is afoot to help intervene in situations such as yours. You should be able to do some sort of loan modification to make your situation more affordable. In order to do this, though, I believe you must be living in the house. So, you may have to move back in in May and try to get a roommate again. How much in rent do you pay, rather than living in your home? Since you have to pay the $500 shortfall anyway, would it be better to move back into the home? Or, have you moved in with family/friends and pay little or no rent? Again, in order to modify the loan, you have to be living in the house. I believe you will suffer because this is a VA loan. If you let it go into foreclosure, you will probably not be able to use your eligibility again. Again, you should get proper legal advice about this. Divorce has ruined many people's financial situations. Everyone loses. Wells Fargo and other lenders are not helping those home owners who have been doing the responsible thing, but now know this cannot continue. It is shameful that they will not discuss your options until you are in default. Again, speak w/your legal adviser about this. I can't help but feel that you do not want to keep the house, no matter what. But, you may find the resulting fallout will haunt you for a very long time. Do what you can to salvage your financial situation. You're young, you'll be fine, but why have to start from the bottom again? Get a good legal/financial adviser and suck it up. Good luck.
