BiggerPockets

The lenders can slap you with a deficiency judgement for whatever they aren't able to collect from a foreclosure auction. If you have any other assets they are at risk.

:cool:

don't have too many other assets. don't have much, can't loose much. just my car and a 401k worth about 10k. would those be at risk??
I like your thinking Krzysztof... i hope it plays out that way..... do you think thats really a possible outcome?? sounds too good to be true.

yes i think it is " really possible outcome"

from peter gabriel's first album ( 1977):
..." when the flood calls
you have no home, you have no walls
in the thunder crash
you're a thousand minds, within a flash
don't be affraid to cry at what you see
the actors are gone, there's only you and me
and if we break before the dawn, they'll
use up what we used to be...

lord, here comes the flood
we'll say goodbye to flesh and blood
if again the seas are silent
in any still alive
it'll be those who gave their island to survive
drink up , dreamers, you're running dry....."

If you just walk away the lender will seed a deficiency judgment. You already know the hit your credit will take and as David said be prepared for a forensic audit of your loan application and supporting documentation. If they request anything to "clarify" anything, I would let my attorney handle the details.

I'm going to take a slightly different angle at this question and ask why you want out? Is this your residence or a rental? If it's your residence, why the need to move? If you stay put and can afford the payments (no indication that you can't), there's no credit hit or other negative to worry about.

Hi Shari, thanks for the response. I really appreciate the short sale info.... my primary is through countrywide and my second is through wells fargo. so far (and we're only three weeks into this) wells fargo has already gotten back to my agent and said they won't accept if they cannot get countrywide to offer them some money. my agent is doutful that countrywide will want to offer wells fargo anything. so i'm fearing being stuck. maybe my agent should do as you suggest and see if the actual investor will play nicely with wells fargo.
I appreciate the tip on renting the house, i'm also trying to separate myself from my co-buyer. since we bought the house, she has become financially unreliable and deceptive at times when dealing with finances. I'd really love to just wash my hands of it all. I don't see myself buying anything any time soon after this whole experience. the thought of dealing with lenders again makes my stomach turn. thanks again for the good advice.

80/20 loans were common practice during the bubble. 100% financing by taking two separate mortgages.

No need. Closing costs were rolled into the first two. Yes, many, many people bought homes at the inflated bubble prices with absolutely no money out of pocket. That's a huge factor in the current crisis. Folks say "all these foreclosures, REOs and short sales are destorying my property values". No, the values they thought were there were fiction, and prices are falling back to their real value. But, for folks that are looking at being $200K, $300K or more in the hole on a property which will never again in our lifetimes be worth what it was at the peak, what choice do they have but to walk away?

Yeah Jon, my place is about 200k in the hole. good to know i'll always be stuck!! Think i'll go drink some hemlock... just kidding, anyway..
in this situation where i'm not in default, and my mortgage doesn't adjust until 2010, do i have any leverage to try a loan mod to get out of the interest only aspect of my loan.. i'm getting the impression that these lenders will only deal if your in some stage of default.

Jon, you don't look that old! You honestly believe homes will take more than 30-plus years go up to 2006 prices? Our market seems to be holding at 2003 prices but I do think it will be 5-7 years to start moving up. Inflation alone will contribute enough to get the prices up and rents sure aren't going down.

Lee, your agent should have put a small payment to Wells Fargo into the net sheet for Countrywide's approval. Wells will expect $2000-5000 to accept the short sale. You will have to re-negotiate with Countrywide to accept less. Believe me, if Countrywide has already accepted your sales price and costs, they will take a few thousand less but it will just take more time--3 weeks is nothing in the life of a short sale transaction. I'm surprised you've heard anything from either of them. Keep plugging away but Wells will want something for sure.

If you want to keep the property and try a loan modification, talk to the loss mitigation department of Countrywide. I was at a party last night and a guy told me his daughter just got a loan mod from Countrywide and they REDUCED the balance owed and reduced her interest rate to a market-rate fixed loan. She was not behind in payments. It's worth a few phone calls.