Consequences of stopping paying mortgage

There is another alternative for borrowers in this situation. Sometimes it works and sometimes it doesn't. It would be done before the other alternatives mentioned are taken

Talk to the financial institution who holds the loan or services the loan. Explain your situation. Sometimes it is to their advantage to write a workout loan, to make it more affordable you to pay. Often times, when individuals go delinquent on a mortgage loan and they know they can't pay it, they metaphorically hide from the bank. They don't answer calls, don't respond to correspondence and so forth and they are three or four months delinquent and they are foreclosed upon.

At times it is more advantageous for a financial institution to do a workout loan than foreclose, hold, maintain the collateral and try to sell it in a cold market. Sometimes the bank will say no way - no work out. But other times they will. Banks don't usually make money in his environment when they foreclose on a house. You may want to talk to your lender, if this is a viable option for you. If they say no, what is lost? But even if it is a workout and you still can't afford to pay the new terms, it is not a good option for you or the bank. But if are offered new terms you can afford, that is different.
 
Quote from sharknyc:

what happens to the people who just say f.. it an stop paying their mortgages? is that equivalent to bankruptcy?

credit history is done for a while, but what else are they facing?
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What happens you will be out on the street taking shelter behind grabage dumps and eating cobwebs for lunch.
 
Quote from JSHINV:

There is another alternative for borrowers in this situation. Sometimes it works and sometimes it doesn't. It would be done before the other alternatives mentioned are taken

Talk to the financial institution who holds the loan or services the loan. Explain your situation. Sometimes it is to their advantage to write a workout loan, to make it more affordable you to pay. Often times, when individuals go delinquent on a mortgage loan and they know they can't pay it, they metaphorically hide from the bank. They don't answer calls, don't respond to correspondence and so forth and they are three or four months delinquent and they are foreclosed upon.

At times it is more advantageous for a financial institution to do a workout loan than foreclose, hold, maintain the collateral and try to sell it in a cold market. Sometimes the bank will say no way - no work out. But other times they will. Banks don't usually make money in his environment when they foreclose on a house. You may want to talk to your lender, if this is a viable option for you. If they say no, what is lost? But even if it is a workout and you still can't afford to pay the new terms, it is not a good option for you or the bank. But if are offered new terms you can afford, that is different.
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Good point here. But it seems that many have over extended themselves, rather than just experiencing a few unexpected expenses and fell behind on a bill or two. Spoke with a friend that got a deal and a half on his parent's home. They retired and wanted to move South. Unfortunately whatever equity he had as a result of the deal from his parents was taken out to make changes in his home. Not a bad idea......however, the payments for the mortgage and home equity line of credit is causing challenges.

Also, the city just reassessed property values.....and his property taxes have gone from $8000+ to over $10,000.

Lenders do not want to add to their inventory of homes....However, they may not have a choice. This explains why Short Sales have increased. Buyers are bidding .60 on the dollar for some of the homes...and the lenders are excepting the offers.



Speaking of Home Equity Lines of credit (Revolving Debt), some lenders are decreasing the amounts initally offered. My neighbor had $75k, and used a little more than $40k of it. The Max has been reduced from $75k, down to $50 - $52k. Why is this an issue...?

Because now his utilization (amount owed vs. max limit) has increased to about 80% on this debt and thus will influence his FICO score.....since the home equity line of credit reports to FICO. Not sure how much, but remember, other existing debtors will do inquires on your report.......and if they feel you are more of a risk........interest rates will increase.

The residual effects on this credit game is crazy.
 
Your examples are valid.

But many people borrowed to the max to support a lifestyle they believed they were entitled too. And others just were careful enough and were just a victim of circumstances.

Unfortunately regardless of the cause, it sometimes comes down to a bunch of bad choices and you have to choose the least of bad.


Quote from 2ez:

Good point here. But it seems that many have over extended themselves, rather than just experiencing a few unexpected expenses and fell behind on a bill or two. Spoke with a friend that got a deal and a half on his parent's home. They retired and wanted to move South. Unfortunately whatever equity he had as a result of the deal from his parents was taken out to make changes in his home. Not a bad idea......however, the payments for the mortgage and home equity line of credit is causing challenges.

Also, the city just reassessed property values.....and his property taxes have gone from $8000+ to over $10,000.

Lenders do not want to add to their inventory of homes....However, they may not have a choice. This explains why Short Sales have increased. Buyers are bidding .60 on the dollar for some of the homes...and the lenders are excepting the offers.



Speaking of Home Equity Lines of credit (Revolving Debt), some lenders are decreasing the amounts initally offered. My neighbor had $75k, and used a little more than $40k of it. The Max has been reduced from $75k, down to $50 - $52k. Why is this an issue...?

Because now his utilization (amount owed vs. max limit) has increased to about 80% on this debt and thus will influence his FICO score.....since the home equity line of credit reports to FICO. Not sure how much, but remember, other existing debtors will do inquires on your report.......and if they feel you are more of a risk........interest rates will increase.

The residual effects on this credit game is crazy.
More...
 
Quote from JSHINV:

Your examples are valid.

But many people borrowed to the max to support a lifestyle they believed they were entitled too. And others just were careful enough and were just a victim of circumstances.

Unfortunately regardless of the cause, it sometimes comes down to a bunch of bad choices and you have to choose the least of bad.
More...


Since you and I are bonding so well here. If I happen to make a bad choice or two…..would you consider sharing some of your good fortune with me J

We have done a lot of talking in this post here and I feel like we are darn near family. Please don’t answer right away….let your thoughts marinate……hehehe
 
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