Readers Respond: Foreclosure? Would You Do It If Your Home Was Severely Underwater?

Suppose you bought your home a few years ago, and today your home is worth a lot less than what you still owe on the mortgage because real estate values have gone down so much. Even if real estate prices stabilize and start to go back up, it will take you five to ten years of payments before you would once again have equity in the home. You cold rent the home, but the rent would not come close to covering the mortgage.

Do you continue to make payments on the house, or would you consider letting it go to foreclosure? What would you do? What Would You Do?

Homeowner..

I would not allow a foreclosure but would apply to the lender to qualify for a short sale. Foreclosure has more negative affects on credit than short sale...takes about 2 more years to get it back on track. another topic: please address our new property tax on sale of our home which goes into effect in 2013. it is part of the healthcare bill and is a 3.8% tax on adjusted gross income including gain for that year on real and personal property....I dont know if this takes the place of our current law on gain or is in addition to...

—Guest Jean Star Dillon

run for the hills

All the banks do in short sales is accumulate info on property and pricing for their benefit. Believe me,they could care less about you. Stand your ground and under no circumstances make any more payments. Live on their dime for 2 or so years giving you time to make decisions, then turn in the keys! Oh, I have not made a payment in 6 months and have since moved and am now renting.

—Guest ron smith

Retired - Former Mortgage Banker and Own

In some states a borrower can be held liable for a deficiency balance unless the foreclosure sale bid is for the full loan balance. Mortgage lenders ignore two facts: Borrowers while interested in price, are more interested in the monthly payment. Secondly, everyone has to be somewhere, whether it's rent or buy. If the lender would reduce the interest rate to the equivalent of a rent payment, the borrower would likely remain in the house (assuming they have income sufficient to meet other obligations). By graduating the interest rate annually and assuming modest real estate appreciation, the borrower and lender would be whole in 5 or 6 years. The forgone interest cost would be much less than the holding cost of the property and short sale cost. Why lender's do not see this, I find it hard to explain.

—Guest Maurice Linkous

Play hardball

I moved to Florida in 2005 - not the best timing in the world. My house is now worth 1/2 of what I paid for it. I told the bank I wanted them to reduce my interest rate down to 3%. Since I don't expect to have any equity in the house for another 10 years, I wanted an after-tax payment that made me indifferent between owning and renting. The bank wouldn't even talk to me becasue I was not 60 days behind. So, I quit paying. I told them I would get current when they modified my loan. 7 months later they finally agreed. I don't expect to every get any equity out of the house. I may even eventually give the bank the keys or do a short sale, therefore I really do feel as though I'm renting the house. But at least it's much more affordable now. Now if I could only find a way to do away with all of the maintenance expenses.

—Guest Guest Scott

jos

Let It Go To Foreclosure Let It Go To Foreclosure Let It Go To Foreclosure Let It Go To Foreclosure Let It Go To Foreclosure Let It Go To Foreclosure Let It Go To Foreclosure Let It Go To Foreclosure Let It Go To Foreclosure

—Guest jschu

Wait It Out

I did just that took 55k and the note went up and I wished I would have really stayed and waited it out...now I really miss my house, I am having sad and loud days in apartment living....next time i will wait it out. The pay off will be the peace in a home and new equity building skills.

—Guest kitkat

Fend For Yourself

I don't see the banks looking out for me. They made millions off those home equity loans and predatory mortgages. If I had the chance to let them foot the bill for my investments, I'd do it. I'd turn in the keys.

—Guest Ronald