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Posted: 9/17/2009 12:07:16 PM EST
[Last Edit: 9/18/2009 9:23:09 AM EST by motown_steve]
As some of you know, I still have a house in Michigan. It is a1,400 sq foot, 3 bedroom brick ranch with a 2.5 car detached garage and finished basement. I bought it to be my home and I paid $144,000 for it on an FHA loan at 6% for 30 years. I have owned the home for nearly 7 years now. When I lost my job in Michigan, I moved to Texas to find work because there just wasn't anything to find in the Great Lakes State.

For almost 21 months I paid the entire house payment out of my own pocket while I also paid rent and had the house listed for sale. When the house wouldn't sell I rented it out. I have had renters in the house for nearly three years now. Over the time that I have had renters, I have lost $19,740. This in money spent on maintenance and the difference between what they pay me each month for rent and what I pay each month in the house payment. Unfortunately The rental market is so flooded up there right now that I cannot get the full note on my house from a tenant. But now, I may not be able to do anything to save this house from foreclosure.

Things have changed since I moved down here. My income has gone down, my basic cost of living (rent and medical expenses in particular) has increased and the note on my house has increased due to tax games that the State of Michigan is playing (they didn't raise property taxes, they just reassessed everyone's homes at a higher State Equalized Value and started collecting property taxes three years in advance...but it's not a tax increase!!!). Now I have another factor to worry about. In January my Federal Income Taxes will be going up. To my knowledge, no one has done anything to extend the Bush Tax Cuts, so all on their own they expire in January, giving another hit to my income level.

My tenant's lease expires on 12/31/2009. I know that at this time the husband/father of the family living in my home is not employed. He has been laid off for nearly 6 months now and has been working by picking up odd jobs and contracts here and there doing whatever kind of work he can. They have been making the rent, but they are struggling. My problem is this. I cannot afford to cut their rent anymore. I am already paying $360/month to keep them in the house. I can't afford to pay any more than that. The other problem is that I cannot rent the place out until it is vacant. I can't sing another contract, I can't even show the place until they are out and they only have to give me 30 days notice that they are leaving. My property manager is telling me that it is going to take at least three months to find another tenant (because the market is saturated) and that I am on the high competitive side of the rent scale in the area. Well, I can't afford to pay the note on the house for three or four months while I look for a new tenant either. Lastly, I can't sell the place. I have to offer first right of refusal to my tenants for purchase, and they don't have to answer until the day they are supposed to move out. I guess that is a state law which I was required to include in the lease. Besides that, I am upside down on the place. I owe more on the place than what the comps in the neighborhood are going for. Once I tack on commission for the agent and seller's closing costs I am WAAAAAY outside of what the market will bear. Simply put, I'm fucked.

If my tenants don't renew then I can't keep this place from going back to the bank next year. I found out today that they want me to knock $150/month off the the rent before they'll renew. That would mean that I would have to pay $510 out of my own pocket every month for them to live in my house. I couldn't do it even if I wanted to.
Link Posted: 9/17/2009 12:10:20 PM EST
Sorry man.

There are lots of others in your situation, so you are not the only one.
Link Posted: 9/17/2009 12:12:12 PM EST
[Last Edit: 9/17/2009 12:12:35 PM EST by Specop_007]
Cut your losses IMO. Yeah it sucks and your credit will get ground into dust but better then trying to maintain an untenable position.

Damn, I want to change my avatar to some type of monkey now to keep the chain going.
Link Posted: 9/17/2009 12:13:39 PM EST
I feel for you. It doesn't put money in your pocket or fix anything, but damn that sucks.
Link Posted: 9/17/2009 12:16:05 PM EST
how much did you put down? if your down payment was small,I say walk.
Link Posted: 9/17/2009 12:23:39 PM EST
Originally Posted By Wash-Ar15:
how much did you put down? if your down payment was small,I say walk.


I sorta agree.

Although it's hard ideologically speaking for me to advise anyone to "Walk" from their home, this is a tough one. I suppose it depends on how much your initial investment + equity you have in the place.

Michigan going to be hurting for a while. I'm no expert, but I'd guess it'll be a long time before your able to sell it.

Link Posted: 9/17/2009 12:23:57 PM EST
On one hand, yes you bought the house and are responsible for the mortgage, BUT sometimes you just have to stop the bleeding. 6K a year to a house that's currently being rented? Cut your losses.
Link Posted: 9/17/2009 12:25:29 PM EST
it takes a long time to foreclose so if it gets too much stop paying keep collecting the rent and put in an escrow account in a bank that you don't have any notes or loans or cc at. worse case after a year you lose the house, more likely the bank will work with you and re write the note
Link Posted: 9/17/2009 12:25:44 PM EST
This is not legal advice, so talk to an attorney first.

It's a little more complicated due to your situation with having tenants living in the house, but you could stop paying the mortgage completely for a few months. Then let the bank send you a Notice of Default. From there you could ask the bank to refi or do a short-sale. After you get the NOD you'd have to tell your tenants, but by then maybe you could afford letting them live there for $150 less with the condition that they know the details etc.

These banks DO NOT want these homes back on their books. They are playing a shell-game, not wanting to recognize the losses from foreclosures, so they avoid this by simply not going through with the foreclosure process. There are thousands and thousands of people across the U.S. who are still living in "their" homes for over a year - and not paying a dime to the bank, and yet the bank won't do anything about it.

One year of rent - socked away might really help you and give you more options.

Anyway, I'm just throwing this out there. Good luck.
Link Posted: 9/17/2009 12:56:07 PM EST
Originally Posted By Wash-Ar15:
how much did you put down? if your down payment was small,I say walk.


I paid $8,000 to move into that house back in 2003, between down payment and closing costs.

Since then, between lost equity, interest paid, taxes paid, improvements/maintenance/repairs, I would say that I have lost about $70,000. Hell, in the last three years I have lost nearly $20,000 on interest/taxes and maintenance alone.
Link Posted: 9/17/2009 1:02:24 PM EST
Here is an idea. Move back into the house and get your CDLs and start long haul trucking. You will be gone a lot but you can make some money. It is a miserable life but it is a living.
Link Posted: 9/17/2009 1:10:02 PM EST
That sucks dude.
Link Posted: 9/17/2009 1:21:03 PM EST
Contact your mortgage providor. Explain your situation to them. They will accept your position as a reason to modify your loan, allow you to attempt a short sale, or do nothing and take over ownership of the property through foreclosure. Most places own so many foreclosures that they are willing to work with you because some money coming in is better than no money coming in. Considering how bad MI is right now I would bet that they would gladly give you a mortgage adjustment with a lower payment that would allow you to lower your rent.
Link Posted: 9/17/2009 1:21:40 PM EST
Originally Posted By LIINTLICKR:
This is not legal advice, so talk to an attorney first.

It's a little more complicated due to your situation with having tenants living in the house, but you could stop paying the mortgage completely for a few months. Then let the bank send you a Notice of Default. From there you could ask the bank to refi or do a short-sale. After you get the NOD you'd have to tell your tenants, but by then maybe you could afford letting them live there for $150 less with the condition that they know the details etc.

These banks DO NOT want these homes back on their books. They are playing a shell-game, not wanting to recognize the losses from foreclosures, so they avoid this by simply not going through with the foreclosure process. There are thousands and thousands of people across the U.S. who are still living in "their" homes for over a year - and not paying a dime to the bank, and yet the bank won't do anything about it.

One year of rent - socked away might really help you and give you more options.

Anyway, I'm just throwing this out there. Good luck.

+1.



The bank doesn't want to foreclose, and the state doesn't want you to stay. Seems like it all works out fine...

Link Posted: 9/17/2009 1:22:20 PM EST


Hope things get better for you. SOON
Link Posted: 9/17/2009 1:25:28 PM EST
I would have walked long ago

Posted Via AR15.Com Mobile
Link Posted: 9/17/2009 1:25:44 PM EST
Originally Posted By hammerkill:
Here is an idea. Move back into the house and get your CDLs and start long haul trucking. You will be gone a lot but you can make some money. It is a miserable life but it is a living.


Not an option. As it stands I currently make twice what the average truck driver makes. The problem is that I am single, so my income tax bracket is the highest. I have also taken a 10% pay reduction, my rent has increased, my property taxes have nearly doubled from what they were when I bought the house (even though there hasn't been a property tax increase) and I have a herniated and severely deteriorated disc in my lower back which I am going to have to have a second surgery for in December. Even after this second surgery my doctor has told me that I have an 40% chance of being on pain killers for the rest of my life. These cost me about $300/month out of pocket since my health insurance does not cover prescription drugs, and since they are narcotics I am required by DEA regulations to see the doctor each month to have my prescription renewed, which means I have a $45 co-pay every month for the office visit. On top of that I my rent has increased by $250/month over what it was when I originally moved to Texas. The final straw is the fact that my Federal Income Taxes will be going up effective 1/1/2010 when the Bush Tax Cuts sunset and my Federal Income Taxes revert to what they were under Clinton. In short, I am simply not going to have enough money left over at the end of the month to cover the cost of the house payment. I am too far upside down on my car to sell it, I have almost no CC debt, and due to money that I gave my father prior to his death, and the cost of his burial, plus the time that I have to be off of work without pay for my back surgery at the end of the year, I will be left with a meager savings come January. I have been going over my budget again and again, and I don't have enough items to cut that will allow me to make my month house payment if I lose my tenants.
Link Posted: 9/17/2009 1:27:30 PM EST
I hope it works out for you. What do you do for a living?
Link Posted: 9/17/2009 1:28:31 PM EST
Dont worry,
We got it for you
Link Posted: 9/17/2009 1:35:28 PM EST
sometimes it is just best to walk away. Cut your losses and join the MILLIONS of folks with terrible credit.

Don't think for a second that those affected by the recession will not be able to borrow anything once the economy turns around.
Link Posted: 9/17/2009 1:35:28 PM EST
Link Posted: 9/17/2009 1:45:57 PM EST

Originally Posted By motown_steve:
As some of you know, I still have a house in Michigan. It is a1,400 sq foot, 3 bedroom brick ranch with a 2.5 car detached garage and finished basement. I bought it to be my home and I paid $144,000 for it on an FHA loan at 6% for 30 years. I have owned the home for nearly 7 years now. When I lost my job in Michigan, I moved to Texas to find work because there just wasn't anything to find in the Great Lakes State.

For almost 21 months I paid the entire house payment out of my own pocket while I also paid rent and had the house listed for sale. When the house wouldn't sell I rented it out. I have had renters in the house for nearly three years now. Over the time that I have had renters, I have lost $19,740. This in money spent on maintenance and the difference between what they pay me each month for rent and what I pay each month in the house payment. Unfortunately The rental market is so flooded up there right now that I cannot get the full note on my house from a tenant. But now, I may not be able to do anything to save this house from foreclosure.

Things have changed since I moved down here. My income has gone down, my basic cost of living (rent and medical expenses in particular) has increased and the note on my house has increased due to tax games that the State of Michigan is playing (they didn't raise property taxes, they just reassessed everyone's homes at a higher State Equalized Value and started collecting property taxes three years in advance...but it's not a tax increase!!!). Now I have another factor to worry about. In January my Federal Income Taxes will be going up. To my knowledge, no one has done anything to extend the Bush Tax Cuts, so all on their own they expire in January, giving another hit to my income level.

My tenant's lease expires on 12/31/2009. I know that at this time the husband/father of the family living in my home is not employed. He has been laid off for nearly 6 months now and has been working by picking up odd jobs and contracts here and there doing whatever kind of work he can. They have been making the rent, but they are struggling. My problem is this. I cannot afford to cut their rent anymore. I am already paying $360/month to keep them in the house. I can't afford to pay any more than that. The other problem is that I cannot rent the place out until it is vacant. I can't sing another contract, I can't even show the place until they are out and they only have to give me 30 days notice that they are leaving. My property manager is telling me that it is going to take at least three months to find another tenant (because the market is saturated) and that I am on the high competitive side of the rent scale in the area. Well, I can't afford to pay the note on the house for three or four months while I look for a new tenant either. Lastly, I can't sell the place. I have to offer first right of refusal to my tenants for purchase, and they don't have to answer until the day they are supposed to move out. I guess that is a state law which I was required to include in the lease. Besides that, I am upside down on the place. I owe more on the place than what the comps in the neighborhood are going for. Once I tack on commission for the agent and seller's closing costs I am WAAAAAY outside of what the market will bear. Simply put, I'm fucked.

If my tenants don't renew then I can't keep this place from going back to the bank next year. I found out today that they want me to knock $150/month off the the rent before they'll renew. That would mean that I would have to pay $510 out of my own pocket every month for them to live in my house. I couldn't do it even if I wanted to.

It's probably time to let the house go. I'd also tell your tenants to leave the state and probably come to Texas where there are jobs.
Link Posted: 9/17/2009 1:52:55 PM EST
Originally Posted By nissanfan84:
sometimes it is just best to walk away. Cut your losses and join the MILLIONS of folks with terrible credit.

Don't think for a second that those affected by the recession will not be able to borrow anything once the economy turns around.


Great advice ! let the other guy who is struggling to make it pick up the slack .


OP good luck !
Link Posted: 9/17/2009 1:54:29 PM EST
Link Posted: 9/17/2009 2:55:11 PM EST
Ok, you're not going to like this, but too bad.

I TOLD YOU SO!!!

Two years ago you posted about having an offer on this where you would take a couple thousand dollar loss (I forget exactly, but it was significant) and I (and others) told you to take the beating and move on.

You didn't and now, you're fucked.

STOP PAYING RIGHT NOW.

It's not a marriage, it's a business contract. If you stop paying, they take the house, that's the deal. (read the contract). Business's don't give a shit, they let things go into foreclosure all the time (read the paper), it's just a business decision. Let them take it. It will take a year or more, hell, stop paying property taxes too, let the county take it. (actually the bank will pay off the property taxes to take over the house). As someone said, they won't actually foreclose for a long time (esp in Michigan), it forces them to recognize the loss. Take the loss on your side and put it on the bank.

It's not a moral decision, it's a business decision and it's the same damn one you should have made two years ago.

DUMP IT, take the beating and move on. Dumping money down a black hole is not going to make it come back. You could have sold it for the 10,000 dollar loss (I could be wrong, but that's what I think it was) and lit cigarettes with the other 10,000 dollars and still be ahead.

IT ISN'T COMING BACK. Take the loss, and move on with your life.
Link Posted: 9/17/2009 2:59:57 PM EST
Sorry dude, the housing market is horrible right now and the only thing selling consistantly are the repo's that are dumps that are being sold for 10-30K. Anything nice and pricy either will be sold at a loss if bought in the last 6-8 years or will sit forever on the market. I'm seeing 150-200K houses in nice shape finally sell for around 90K after the bank sits on them for a year or so.
Link Posted: 9/17/2009 3:08:21 PM EST
Do you know who backs your loan?

Depending on who it is you may be able to get a loan modification. I have seen a good modification that really cut the house payment down and one that only took off $50 per month.

Might be worth a shot if you want to deal with it. To get it cut down really low I think you have to be in foreclosure.
Link Posted: 9/17/2009 3:08:22 PM EST
I would talk to a realtor and see what you should do. You're not specific here. How much do you still owe? How much does the town assess it at for tax purposes? Can a good realtor renegotiate a deal with the bank. I don't imagine the bank wants another house. Maybe they can cut the payment somehow. It's said that every foreclosure costs banks an average of 50K. It's a loss for the bank, not just you, especially in Michigan.
Link Posted: 9/17/2009 3:15:51 PM EST
Originally Posted By NoVaGator:
I would have walked long ago

Posted Via AR15.Com Mobile


+1.

Cut your losses and walk away. I would make sure that you have all the loans, CC's, etc you want, becuase once you default your credit is ruined for 7 to 10 years.

Keep tenants in the property, continue to collect rent, and once foreclosure actually takes place; hopefully you'll have recouped some of the money you lost.

Link Posted: 9/17/2009 3:17:54 PM EST
How much fire insurance do you have?
Link Posted: 9/17/2009 3:18:29 PM EST
[Last Edit: 9/17/2009 3:30:54 PM EST by xcell]
There is so many people with bad credit out there they will just start giving houses to anyone again in the near future.
My parents house was 14K when they bought it now it is at 150K.
I thought most people on here where glad their houses where worth more a few years ago so they could keep charging foolishly.
Now when the time comes to pay back I have to laugh at the "just leave it advice".
Link Posted: 9/17/2009 3:19:36 PM EST
Damn, that sucks.
Link Posted: 9/17/2009 3:20:44 PM EST
Let me ask you this Motown. Aren't you a good solid conservative who believes in limited govt. and capitalism???
Link Posted: 9/17/2009 3:20:47 PM EST
Originally Posted By hotbiggun42:
Originally Posted By nissanfan84:
sometimes it is just best to walk away. Cut your losses and join the MILLIONS of folks with terrible credit.

Don't think for a second that those affected by the recession will not be able to borrow anything once the economy turns around.


Great advice ! let the other guy who is struggling to make it pick up the slack .


OP good luck !


oh, wah wah wah, its all about you all of the time, your not picking up any body's slack so just get over yourself

OP, do what you gotta do
Link Posted: 9/17/2009 3:27:38 PM EST
What is the matter with today's young, working generation? Why has nobody stated the obvious which is to get a second job?
Link Posted: 9/17/2009 3:36:04 PM EST
Life sucks sometimes. Occasionally we have to deal with situations in which no possible good can come out of it. Based on what you have posted there are no good options. Embrace the suck. Take the loss. Let that mother go. Doesn't seem to be any other choice.
Link Posted: 9/17/2009 3:51:44 PM EST
Originally Posted By 74HC:
What is the matter with today's young, working generation? Why has nobody stated the obvious which is to get a second job?

Why don't you get a second job and make his mortgage payments for him?

That'd make about as much goddamned sense as telling him to pay for a bank's mistake.
Link Posted: 9/17/2009 3:56:13 PM EST
Alternatively, sell the house at a loss and get a note on the difference between the principal and the selling price. Or just work the extra into a HELOC on your current residence maybe. It would stop the bleeding at least
Link Posted: 9/17/2009 3:59:24 PM EST
Your contract specifies what happens if you stop paying. Nothing immoral about taking that route out of the house.


Despite what some might say, you did not promise to do everything you can to pay that bill each month. You promised to either pay the bill, or deal with the foreclosure.

let the banks eat it. they have enough of your money via transfer payments from the government anyway. talk about immoral.

Link Posted: 9/17/2009 4:02:24 PM EST
[Last Edit: 9/17/2009 4:06:18 PM EST by Klee]
Well I've learned that having really crappy credit , oh mine is via the exwife , is a great burden off your shoulders. No more worrying about credit card bills or which new car to buy or that new boat thats out or the new dirt bike or ect.

Living with no credit makes life a lot more stress free , If you make the cash you can have what ever you can buy outright.

Either I can afford something or I cant.

My only bills are child support , gas & water , rent , car insurance on a 1998 car , and electricity oh and food.

And buddy after getting hosed by my ex while the economy was good really prepared me for living with the basics while I'm out of work. Not including the child support I can make it on $700.00 a month not including food.

So what you take a hit on your credit look how much cash that frees up every month , thats assuming some local crackhead does not set your fully insured house on fire after your tenets leave .
Link Posted: 9/17/2009 4:04:39 PM EST
this is what many people are doing, not saying it's right.

quit paying taxes on it, quit makeing mortgage payments, continue collecting rent, you will have positive cash flow for 1-2 years until they get around to forcloseing.
Link Posted: 9/17/2009 4:04:40 PM EST
The only thing worse than losing money is throwing good money after bad.
There can be tax repercussions with a foreclosure, talk to a lawyer to get your options and pick the one that benefits you the most.
Link Posted: 9/17/2009 4:08:27 PM EST
I think I might lose my house

I think you lost your house a while ago, but you forgot to let go.

Good luck, man.
Link Posted: 9/17/2009 4:09:06 PM EST
At least you're in Texas. I still live in stupid NY. Could I move in with you in Texas? I could pay $500 a month.
Link Posted: 9/17/2009 4:13:48 PM EST
That sucks. Check into whether the bank can/will go after you for a deficiency judgment. I don't see MI real estate coming back any time soon. The state's losing jobs and population. (Heck, you're proof of that). Hope things work out for you.
Link Posted: 9/17/2009 4:14:39 PM EST
IM inbound
Link Posted: 9/17/2009 4:15:57 PM EST
OP, I give you credit, I truly believe you tried to make this work. You found a job out of State, you found renters to cover the house (partially), and you have been covering the difference out of pocket to try and cover your obligation. I bet 98% of those that go into foreclosure don't try half as hard to cover their debts. But even with your effort, it might be time to let the bank have it. The State isn't helping either by doubling your taxes over 7 years, let them have it too, and never look back. You made an honest effort, but sometimes even that isn't enough.

Best of luck.
Link Posted: 9/17/2009 4:37:10 PM EST
Originally Posted By BozemanMT:
Ok, you're not going to like this, but too bad.

I TOLD YOU SO!!!

Two years ago you posted about having an offer on this where you would take a couple thousand dollar loss (I forget exactly, but it was significant) and I (and others) told you to take the beating and move on.

You didn't and now, you're fucked.

STOP PAYING RIGHT NOW.

It's not a marriage, it's a business contract. If you stop paying, they take the house, that's the deal. (read the contract). Business's don't give a shit, they let things go into foreclosure all the time (read the paper), it's just a business decision. Let them take it. It will take a year or more, hell, stop paying property taxes too, let the county take it. (actually the bank will pay off the property taxes to take over the house). As someone said, they won't actually foreclose for a long time (esp in Michigan), it forces them to recognize the loss. Take the loss on your side and put it on the bank.

It's not a moral decision, it's a business decision and it's the same damn one you should have made two years ago.

DUMP IT, take the beating and move on. Dumping money down a black hole is not going to make it come back. You could have sold it for the 10,000 dollar loss (I could be wrong, but that's what I think it was) and lit cigarettes with the other 10,000 dollars and still be ahead.

IT ISN'T COMING BACK. Take the loss, and move on with your life.


You're not wrong. The other thing that I can kick myself over is that if I had done the smart thing and let the bank have the house when I moved out 5 years ago then my credit would be restored in two more years. Now It'll be 2016 before anyone lets me borrow any money again.

Then again, borrowing money hasn't exactly worked out for me that well either.
Link Posted: 9/17/2009 4:38:02 PM EST
Good luck, and my prayers are with you. Do not lower the rent, you can not, and it is unfair to ask you to do so. They will either move out and your problem will be accelerated, but not different, or they will find the money, rather than you finding it for them.



Link Posted: 9/17/2009 4:40:55 PM EST
Originally Posted By motown_steve:
Originally Posted By Wash-Ar15:
how much did you put down? if your down payment was small,I say walk.


I paid $8,000 to move into that house back in 2003, between down payment and closing costs.

Since then, between lost equity, interest paid, taxes paid, improvements/maintenance/repairs, I would say that I have lost about $70,000. Hell, in the last three years I have lost nearly $20,000 on interest/taxes and maintenance alone.


Should have walked away a long time ago, don't feel bad about it though.

A mortgage is a contract, it's business and not personal.

Let the damn thing go and move on with your life.
Link Posted: 9/17/2009 4:41:12 PM EST
If Motown is the conservative I think he is this may be the time for the first arfcom save-a-palooza home saver-athon. Here's how it works. Anyone who wants to help out can pledge to donate a certain amount a month. If we come up with enough to make it work for Steve we go for it. Who's in? $10 a month here!

Not a charity type deal.....just helping a fellow conservative.
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