Ramifications of walking away from your house

S

SuperVolatility

What are the ramifications of walking away from your house?
My friend has bought his house for $445K in CA now it's worth $280K and he is lookig to move else to buy a bigger house for $400K - much bigger, in nicer districts but what is the ramification?

How bad is the credit will be hit.
Will the bank sue?
 
Abandoning a house is called "deed in lieu of foreclosure" and counts about the same toward loss of credit rating.

Whether the lender has recourse depends on the facts of the case and state law. In many states, a purchase-money mortgage (loan taken out at the time of purchase) is a non-recourse loan, meaning that the property is the sole security. Refinance and second loans are almost always full recourse, meaning the lender can try to recover any loss by suing.
 
Quote from SuperVolatility:

What are the ramifications of walking away from your house?
My friend has bought his house for $445K in CA now it's worth $280K and he is lookig to move else to buy a bigger house for $400K - much bigger, in nicer districts but what is the ramification?

How bad is the credit will be hit.
Will the bank sue?
More...

No chance in hell will he be buying another house if he walks away from this one...at least for a few years...
 
Quote from SuperVolatility:

He is tryng to buy a house before he lets th is current house go.
More...

What do you mean 'let it go'. Are you asking about the advisability of walking away from the contractual obligation imposed by the mortgage you (he) signed (assuming that he/you signed one)?

I think I'm misunderstanding your question here. Please define what you mean by 'letting a house go' and 'walking away from the house. If it is fully paid for, what is the issue?
 
Nik,
his house is not paid for. He did a 100% financing and current balance is $200K higher than market yet. Another example. House is worth at market reate at 300K but his loan balance is 500K.
Now he is thinking to buy a bigger house in a nicer location for $300K and 'walking away from his current house where balance is 500K' - walking away means foreclosure.
I own 4 properties...he only owns his own house so he has no plans of buying any more property for the next 10 yrs if he can buy a bigger one now and let the old/500K one go to the banak, become bank owned.
 
Assuming that your "friend" is less than 40 years old, it is likely that the effects of abandoning a home "in lieu" will last to his mid 50's or longer. His ability to take on standard financing with any bank or lender is shot to shit, so if an emergency happens during this time, he is out of luck.
 
Quote from SuperVolatility:

What are the ramifications of walking away from your house?
My friend has bought his house for $445K in CA now it's worth $280K and he is lookig to move else to buy a bigger house for $400K - much bigger, in nicer districts but what is the ramification?

How bad is the credit will be hit.
Will the bank sue?
More...

You don't "abandon your house." They are legally entitled to come after you for anything still owed to them. And they will. And they will collect. And they will roll in all their legal costs, etc. into the total. And they will collect it all from you.

It is a very expensive lesson in "the fine print"
 
You must log in or register to reply here.
Back
Top