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sammenergus · Joined: 14 Jul 2009 Posts: 2 2.21 Dollars($)

Hi, I've been grabling with an underwater property in SW FLA and have come to the conclusion, based on our unique circumstances, that foreclosing on the house will be a great benefit to us. Please read on and tell me if I'm wrong:

I'm a US citizen, gainfully employed abroad, with a relatively stable job situation in the foreseeable future. We still own a house that's probably worth about half of what we paid for it 4 years ago. It's underwater by at least $75,000, and we put %30 down. It has an interest-only loan that's set to reset in May.

My question is...why shouldn't I foreclose? Walk away from the $120,000+ we've already lost, plus monthly losses of about $800 (even though it's rented to stable tenants), which is only about 10% of our monthly income. We won't be back in the US in the foreseeable future, so we won't have to worry about not being able to get credit in the US. We have access to credit here and out financial situation here is very stable.

Am I wrong? How would foreclosure be a bad thing for us?

Thanks,
Barry

Niicss · Posted: Wed Jul 15, 2009 1:16 am Post subject:

Hi sammenergus

As you do not plan to return to US in the near future, it can be a good option to foreclose the property. However, you should note that you'll remain liable for the deficient amount resulting from the sale of the property. In case, you do not pay it off, the lender may place lien on your other properties. In my opinion, it would be better if you could go for a deed in lieu. You won't remain liable for the deficient amount resulting from the sale of the property.

sammenergus · Joined: 14 Jul 2009 Posts: 2 2.21 Dollars($)

Thanks for your response Niicss,

We don't have any other assets in the US, except for a few thou in a savings account. Would they be able to sue me to pay the difference, even when I can show that I have nothing for collateral?

Barry

smithsussane · Posted: Wed Jul 15, 2009 10:35 pm Post subject:

Hi sammenergus!

Welcome to forums!

If you apply for a deed in lieu and if the lender accepts it, then you won't be liable for any deficient amount. Thus, the lender will not be able to sue you for any difference. However, there are chances that you may be liable for taxes on that forgiven amount as the IRS will consider it as your income.

Feel free to ask if you've further queries.

Sussane

Posted: Thu Jul 16, 2009 3:46 am Post subject:

Thanks Sussane,

Well, taxes on an approx. $80,000 loss, still beats holding on to a sinking ship of a mortgage in my eyes. It would mean one final 'hit' and then we'd be rid of the damn albatros around our necks.

Is it a given that my application for a deed in lieu would be accepted by the lender? How likely is that? What do they base their decision on? I've got (as of now) decent credit and haven't missed a payment yet.

Sammenergus

aksh12th · Joined: 30 Jun 2009 Posts: 49 0.28 Dollars($)

Going look at a foreclosure more seriously than a bankruptcy that doesn’t include the house.for foreclosure try to avoid it. IF you’re having problem making payments for a month or two,contact your lender.

If you're keen on keeping the home, filing Chapter13 makes sense.payoff period in Chapter 13 is quite short, that is within 3-5 years.

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