My condo is underwater , thinking about walking away

**SoCalRes** · 03-22-2009, 03:23 PM

Hello everyone,

[I'm new here. Please forgive me if I'm re-hashing this topic, I'm sure it's a popular one. I wasn't able to find something specific by the search function, so I'll state my story here. Also, if this thread belongs somewhere else, I ask the moderators to move it accordingly.]

I currently own a condo in suburban San Diego that is severely 'underwater'. The delta b/w the current balance on my loans and the current value of the condo (estimated by what neighboring condos have recently sold for) is = -$150K.

I'm a very good borrower, my 2 mortgages are current, have never missed a payment, have even made extra principal payments throughout the last 3 years. My financial situation is very good, I have a credit rating of ~800, and (as judged by my income) I can definitely afford to keep my condo.

But, I'm about to lose my job, layoffs are coming (I can't go into it, I'm just fairly certain it's going to happen in my company, enough said) . . . On top of that, per some family reasons, I'm moving back to the east coast.

I can't refinance my condo b/c it's so severely underwater (nor do I really want to, I'm fine w/ the terms of my loan).

I can't conduct a short sale or turn in the keys (or any other such bank-sponsored program), b/c I cannot demonstrate a financial hardship (at least not yet). My situation is quite the opposite at the moment, I'm enjoying much financial security!

I could rent my condo out, but given current market rates, I'd still be eating about $1K a month (factoring in property taxes, community fees, maintenance). That considered, I really don't want to keep this condo.

And so, I'm considering 'walking away' from my condo (i.e. purposely not paying the mortgages, going into default and allowing the bank to foreclose).

Now, I know this'll dramatically reduce my credit score. I know this'll brandish my credit w/ a foreclosure, that'll preclude me from buying anything in the next 7 years.

But I think I'm ok with this. I don't intend to buy anything for another 7 years, and I think I can rebuild my credit.

Not only that, but I think I would have to hang on to my condo and rent it out for a good 7-10 years, hoping it would go back in the black, for me to sell it and make a decent profit (or just break even!).

So whether I 'walk away' from it or keep/rent it out, I'll be in the same place in 7 years (assuming I work on repairing my credit, in the walk-away scenario). Heck if anything, if the economy continues to decline along with the RE market in SOCAL, walking-away may be the clear better option.

What do you think?

Thank you for any input.

**Treble888** · 03-23-2009, 02:58 AM

Hey
Welcome to the forum. Please see this post http://www.realestateforum.com/showt...3610#post53610.

Good Luck!

**Vegasloanlady** · 03-28-2009, 02:52 AM

I've seen client who walked away from there mortgage come back in a yr with a 720 Fico . I was surprised by this and looked into it. I found out all it takes is for you to reestablish your credit using secure loans at CU, secured cc, and then a car loans. After about a yr your credit should be fine.

**SoCalRes** · 03-28-2009, 08:16 AM

Originally Posted by Vegasloanlady

I've seen client who walked away from there mortgage come back in a yr with a 720 Fico . I was surprised by this and looked into it. I found out all it takes is for you to reestablish your credit using secure loans at CU, secured cc, and then a car loans. After about a yr your credit should be fine.

Thank you, that's very encouraging. By 'secured loans at CU', do you mean loans at a Credit Union? (forgive me if I'm missing some of the lingo here). If so, any particular credit union?

**Codythebest** · 03-28-2009, 10:00 AM

What's your mortgage balance on it?
WHat are your payment and expenses on yoru condo? (HOA, Taxes, etc..)

**SoCalRes** · 03-28-2009, 04:31 PM

Originally Posted by Codythebest

What's your mortgage balance on it?
WHat are your payment and expenses on yoru condo? (HOA, Taxes, etc..)

Mortgage balance is $360K. Monthly payment = $1900 (mortgage) + $210 (HOA) + $300 (property taxes) = $2410/month.

BTW, if I do walk away, should I continue to pay the HOA fees during the preforeclosure process? Can the HOA take any action against me for not doing so?