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Serving all
Orange County
Case-Shiller
HPI: Composite 20 Chart by YCharts
Federal
Foreclosure Resource Center
Making
Homes Affordable - US Gov
FHA
launches Short Refi Program for homeowners "underwater"
Videos...
The Coming Collapse
of the Middle Class
The Credit
Crisis Explained Part I
The
Credit Crisis Explained Part II
Assessing the Global
Economic Crisis
60 Minutes Video: A
new foreclosure wave coming soon
The
Next Financial Crisis
What to do if your house
is worth less than your loans...
- If you are "underwater" in your house, it
may make sense, from a financial planning perspective, to sell this bad
investment and cut your losses. Your house is the largest
financial investment in your lifetime, - you pay for it through
debt repayment. If the underlying asset (your home) drops in
value with respect to the current loan balance, you need to calculate
how long it will take you to receive a Return On Investment
(ROI). For example, if you are $200,000 underwater, it may take a
decade or more to just break even where you can sell your house without
any return at all.
- If you Short
Sale the property now, you can buy another home in as little as 2
years. I recommend you contact your tax planner and lawyer for
professional advice before you decide which course of action is for
you.
- Read
these articles first:
- 1) When Default Is a Strategy
- 2)
Penalties for Walk Aways: 7yrs
- 3)
Obama's Loan Modifications
- 4)
Mortgage
Modification Efforts
- Then go to Don's
Corner; develop an understanding of the
current housing
market - make an informed decision, today.
"Walking Away",
sounds great; homeowners walk away from their houses and leave
the keys in the mailbox. Are
their problems behind them? NO! The fun is just
beginning. The first mortgage will most likely be gone if it is a
"Purchase Money" (non-recourse) loan type and you reside in the state
of California
(check your state). If it is a "Cash Out" re-finance loan, then
it may be a recourse loan where the lender can still come after you
after the auction for the deficiency.
A
Home Equity Line Of Credit (Heloc), however, is a recourse loan which
may be "Charged Off" by the bank then sold to a collection agency for
pennies-on-the-dollar. These collection agencies have the legal
right to sue the homeowner in court to receive a Deficiency Judgment
against them and collect the full amount. This may force the
homeowner to declare bankruptcy; now the homeowner has both a
foreclosure and a bankruptcy on their credit record: a Short Sale is a much better
solution with much less impact to their credit. Many homeowners
can purchase a new home in as little as 2 years.
Good
luck!
Don
anewstartoc@gmail.com
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