Is it wrong to throw in the towel?

I have purchase this home in 07 at 300k with 5yr interest only and now the house is valued at 149K. Applied for a loan mod which has been a mess (not to mention my ex leaving). Im 28 with a child and over priced place that is really compact (I know the realtor soon me a dream this was when the market was real hot) I been thinking to myself I will never get the price I paid for this and even if the loan mod those go through I still will be paying more for what the worth of it what do you think? Please I know but be easy thanks

Do not throw in the towel there are solutions out there.

The thing the place is so small that I am already out growing the place and can’t see myself selling in the next 2yrs bc I’m so upside down with the loan

I would wait for the loan modification paperwork to be completed before you make a decision. At the very least you may be able to convert it to a rental property. Having a foreclosure on your credit report is going to destroy your credit and prevent you frompurchasing another home for 3-5 years minimum. If the modification gets declined then you will have to just make a business decision about the property and move on. By the time your 5 year ARM starts adjusting your rate will most likely go up and price you out of the house anyway. Hope this helps.

This may not help you but may help someone else. You should live your life in a planful way. The thing I got out of the Rich Dad Poor Dad books is that you should think of yourself as a corporation that generates money for the stockholders. You are your stockholder. The money from your paycheck is looked at like the revenues at a company and be used to fund your lifestyle and work for your investments. I bought my house to live in I buy investment houses to invest. The 2 are different. As long as I can make my payments if I was never able to sell my house and had to pay on it for all 30 years I would have a paid off house in 30 years. The same reasons you bought your house should still be there. It is the place you call home. It is your HOME. HOME. Not invesment but HOME.

Every car you see on the road is upside down and nobody is running around with their hair on fire. Think through it logically and ask yourself if you are happy living there and can afford the payments. If you are then live there.

That is why I always preach that it is not about the money, it is about the lifestyle you want. Always set your lifestyle where you want to be and invest to afford the lifestyle. I don’t drive a Prius because my lifestyle doesn’t include driving an ugly car, I didn’t marry the first girl that asked me because I didn’t want to be married to an ugly wife, I didn’t buy a house that I was not happy with because if I was stuck living there for 30 years then that would be ok with me.

Your spouse has left you, you have a child, an interest only balloon mortgage for a $300,000 house now worth only $149,000?! No wonder you are stressed.

Your last gasp should be that loan modification. If that doesn’t work, yes, it’s time to throw in the towel.

See if you can give a deed in lieu of foreclosure. Sign the property back over to the lender so that they don’t have the expense of foreclosing. If that can work. Call your lender and talk to them.

Yes, it’s honorable to pay your debts. No, none of us want to default. But your spouse has left, along with half the earning power of your family. I just don’t see how you can fix that.

Now would be the time to start over–move in with family, re-group. Your first priority is your child. Your second priority is your health. That big mortgage is way down the survival list.

Good luck to you and let us know how you fare. You are young and will climb up out of the hole you have fallen into. Your credit will eventually repair itself. You can get back in the game later by buying direct from owners. Now is not the time for a real estate investment, it’s time to take care of your basic needs.


Deed of Lieu or Short sale are always the best options. Discuss with your lender the requirements for a deed of lieu. Some require the home to be listed for at least 90 days. Then seek a realtor to list the home.

You are 150k in the hole. You’ve lost half of your earning potential and you have a child to support.

Quite frankly other than doing something highly illegal, you have no option but to give it up.

Of course maybe you can place your last hope on a loan mod. But How far do you think they will go? Most likely they will mostly play with the term and interest rate and call it a day.

For any loan mod to be worth it you would need to get the actual principle reduced to $149k or less since the market is likely not finished tanking yet. Subtract an additional 6% for expected realtor fees when you sell; since its obvious from your post that is what you want to do in the near future. Just playing with the term and interest leaves you in limbo as a foreclosure waiting to happen and stuck with the place in the interim.

And please don’t wait around with the forlorn hope that appreciation will save you. Housing usually only appreciates at the inflation rate. It would take you 20 years at that rate to catch up, meanwhile you would have lost more than 150k anyway in lost opportunity costs and payments made during those years. The last decade 1997-2007 was a bubble and that bubble has burst.

Keeping the place as a rental is only worth it if the loan mod based upon term length and interest give you a monthly payment that is half or less of the expected rent for the place and that you are guaranteed that payment for the life of the loan. Anything else and the house remains an albatross.

Right now you have a choice. 161k in today’s money or a bad credit rating for a few years (with lots of company mind you). (Extra 9k for realtor expense when you sell, 2k closing costs) Which is worth more to you and your child?

you actually do have few options:

deed in lieu
short sale

For the above options make sure they will not pursue a deficiency judgment or 1099 if law reverts to the norm, otherwise not worth it to you.

failing that you can:

allow the foreclosure to happen in all due speed

and if you are willing to be a bit morally ambiguous right now:

stop all payments and save up the cash for moving, security deposit, and rent for some other place. Considering what is happening around the country you may even end up in your place for free for a year or more waiting for the foreclosure.

buy another place you can afford immediately, before you credit is shot and then allow the foreclosure to happen. Not very moral but would let you go through the few credit shot years actually owning a place, if that is what you prefer (although nothing wrong with renting).

I want to thank all of u for your comments it really helped me see the big picture

sometimes it is worth it to just walk away. you’ll recover

Worth Repeating:

In any deal you make with the bank make sure it comes with a No deficiency judgment in writing.

You don’t want this coming back on you.

Sorry about your situation. Remember the important things:
Family, Friends, Faith


Yeah since the place is a two level condo I don’t feel its worth holding on two plus with it being in the hole now how do I go about the process without getting hit with a 1099 or def of judgement?

I would advise a short sale for two reasons:

  1. it will not affect your credit as negative as a foreclosure

  2. Obama is passing a law to give the seller (you) $1500 to short sell and give both the lien holding bank $1000 and the new purchaser’s bank $1000.

This is to encourage people to sell instead of foreclosing and leaving the property abandoned.

You should speak with the bank as they stated above for no deficiency of judgment which basically means they will not seek to make you pay taxes on their loss of the other $150k or whatever the difference is on the short sale.

What is the likely hood of me getting a short sale on this condo and who should I speak with to start the process

You’re not going to get a no deficiency judgment in writing. It’s not that easy.

To get a bank to agree to a short sale, you’re going to have to prove economic hardship. And the only way they’ll take your claim for economic hardship seriously is by missing a mortgage payment. But then, you’ll screw up your credit by missing your payment. Why would the bank take a $150K hit unless they were convinced the process for foreclosure already started?

You’ve gotta ask yourself what your credit is worth. Are you planning to be restricted to lease optioning property for the next several years?

Credit is really not that important right now I know two people who have brought properties with bad credit not to mention cash is king now a days

If you have a lot of cash, why do you have a $300k mortgage on a personal house? And how much more are we talking about with the extra $150K you are taking an issue with? An extra $600 a month on top of what you would be paying if the mortgage were $150K? How much could you get it reduced to under a loan mod after you bring up to the bank that the building would only fetch $150K on the market? It might not be that bad.

If you think it’s that easy to get a new mortgage on another house with bad credit from giving ypur house back to the bank in this market, I’ll take my hat off to you.

Since its a condo and the space is small I don’t feel I will be able to sale in the future. At the time when I brought to market was and of course people where like just buy something it will sell for more but of course that didn’t happen but I do c ur point

stuck with a Lease option? What happened to just going to a plain old rental?

What’s with the obsession with, having, to own something. The goal should not be just to own something. That is the mistake many people made during the bubble.

BTW, right now with so many people being foreclosed upon or the like its likely the black marks on their records will disappear quicker and blend in more than at any other time for they will be considered special cases resulting from the bubble. If one is going to be foreclosed upon or the like its better to do it now than drag it out and blend into the crowd and start today towards rebuilding your credit.

Look if it is considered home and is so well loved that he is willing to pay an extra $150k that is one thing. If it were and investment and it were still a successful investment that would also be one thing.

However his posts make it clear that he dislikes the place and its was just bought at the time just to own something, likely as an investment.
Furthermore as an investment its already pretty much a lost cause. He’s not going to recoup a 50% loss in value. Even if you think hyperinflation is around the corner that money and credit could be put towards something else today at half the price.

Add in a divorce, child support, and that he specifically said he is having trouble making payments and expects to have even more trouble in the near future.

Also $600/month is not little money to everyone. It would take a lot of work hours for some people to make that amount. And it adds up, $7,200 in just a year not counting potential interest. And for what, his payment is only interest and it would take $150k in principle payments just to not be in a personal negative net-worth. Moreover thinking of the situation in that way is bad financial thinking. Its the monthly payment mindset that led so many people to huge burdens of debt. He’s in the hole for $150,000. Thinking of that as $600/month is leaving out the little fact that its $600/month for infinity (considering that is just interest on the $150k). BTW, his more likely extra monthly burden is about $750, assuming he has something like a 6% interest rate (might be low for an interest only).

It does come down to which he which he prefers more $161k today (by being released from the mortgage liability) or bad credit for a few years. Its may be worth it to him to pay for his mistake. BTW, I assume the wife was also involved so its actually both their burdens and her input should be taken into account.

If you do decide to walk away via short sale, deed in lieu, or foreclosure speak to a local attorney to advise and maybe represent you. Laws covering your situation differ by region. Its possible that your loan(s) are not recourse by law so you may not have to worry about a deficiency judgment. You can also get advise that that matter from several web sites such as you walk away dot com. If you decide to stick it out I do wish you the best and hope it all turns out alright for you.

Sammydy u took all the words out if my mouth I don’t want to be tied down to something that wasn’t worth what I paid for If the place was more spacious than yeah stay in the fight but if not going ahead let it go there so many other cases and houses sitting out here that they will have to change the laws to get people back in these house home ownership is so over rated