LostBrit99

I lost a disgraceful amount of money on my house in Spain when the crisis hit two years ago so I have always rented here in Playa Del Carmen. I do have a little left that could buy me a house here in Mexico but in the Uk I would be lucky if it was enough for a deposit if I could get a mortgage that is. I would probably be more miserable being tied to a mortgage and bank in the Uk than I am here.

cityboys1911

when you loose money on selling a house what happens to the balance owed on the house when you move ????

Pulaski

On the contrary, I think tenants have more rights in the UK than in many (perhaps not all) states in the US.

Tip: try to find a landlord who has rented the house for a number of years, because he is less likely to decide that owning rental property "just isn't for him", or only be a landlord because he's "waiting for the right time to sell" a house that he inherited or previously lived in.

LostBrit99

It depends on if you have a mortgage or not. I didnt have a mortgage so I just lost a huge amount of money in the crash. Many people I know in the Uk or in Europe have just handed the keys over to the bank and walked away. There isnt anything they can do if you cant pay it back. They will black list you and you will have no credible credit rating but they cant put you in jail as in the Uk its not a criminal offence.

cityboys1911

that snot what I really want to do as my daughter still lives in the US but 1200 miles from where we live and I want to visit her occasionally if I walked away would I be arrested if I return to the US for a visit

LostBrit99

Well I dont know what they do in the Usa but in the Uk they wont put you in jail as its not a criminal offence. The amount of people that have lost their homes in the Uk and have negative equity, could you imagine how full the jails would be?
On the other hand there are many Americans I know that live down here in Mexico that own loans in the Usa and they have walked away from them and they dont get arrested when they go back to visit family. So I dont know but it seems many people are just walking away from their homes all over the world and handing in the keys to the banks.

Pulaski

That is not correct, like LostBrit said in the UK, in the US non-payment of a debt is a civil matter, unless it is considered a matter of fraud, but that would be very rare for a owner-occupied home. For unpaid debts you can be sued, but they can't lock you up, there haven't been debtors prisons since Victorian times.

LostBrit99

Those are the words I was looking for CIVIL MATTER. In the Uk its a civil matter and so you cant be jailed. You will be blacklisted and you wont be able to get credit. They can only jail you for fraud. If you take out a loan and dont make any payments and they CAN PROVE it was intent to fraud THEN they can sue but thats a very hard case to prove too.

I know a couple from the Usa who spent a fortune on credit cards, had a wild life declared themselves bankrupt and five years on they have been given credit cards and mortgages on their return to the Usa.....crazy I know but I have met them all here in Mexico and its all expats.

I know Scottish people and English people in Spain who have walked away from loans and mortgages and have no regrets.

I would be terrified of having a bully boy on my door but it seems many people have lost faith so much in the system that they have thrown the towel in and I cant say I blame them because in a way, the system isnt there to help us, we live all our lives doing whats right and then we are screwed by the state, so yes, each to their own I guess.

cityboys1911

so here is another question say you sell the house for 20.000 dollars less than you owe what happens then

LostBrit99

Depends on the bank. I know a woman in Washington that sold the house for lesss but owed money to the bank still afterwards and she made a deal with the bank to pay it back so that the sale went through. The sale went through and she eventually paid the money back.

I know another woman who owed more on her mortgage than the value of it and she just went into the bank with a letter and the keys and walked away.

I know a couple in New Orleans that owed more than they could pay and they just declared themselves bankrupt. Crazy thing is even though they were bankrupt and didnt have to pay anything back they still had credit companies offering them credit cards.

Its up to the bank what you negotiate with them, or go bankrupt and its wiped off in five years or just hand the keys in to the bank. You cant be jailed and if you dont have the money they cant make you pay it. They shout and kick up a fuss but if you dont have it, you dont have it.

My friend in the Uk had this for years, and in the end she just didnt answer their phone calls or their letters. There was nothing they could do. Yes she was black listed but now she is ok and back on her feet again.

Seems to me many people in the Usa and Uk are going bankrupt because its a n easier option and then you cant be chased or abused by the banks etc

Pulaski

In US terminology, that's a "short sale", and under the mortgage contract you are civilly liable to make up the shortfall. However following the 2008 meltdown, banks were willing, in some instances, to forgive the shortfall, but such sales were never easy to get approved, and I am not certain if it is even possible. That said, it would be in the bank's interest to forgive a little, because repossessions ("foreclosure" in the US) cost a lot in fees, and don't sell for a good price.

BUT, and here's the sting in the tail, the IRS sees a loan forgiven as "income", and taxes it as such!

If you want to try it, rather than handing back the keys and walking away, you should contact your bank, perhaps with a couple of realtors' valuations, to show what the property is worth. If you tell them you're planning on leaving the country and are willing to sell and leave things tidy or hand back the keys and walk away, you might get the bank's interest in a short sale without recourse.

bigglesworth

I do not know how it is in the US, but in the UK it is certainly wisest to keep the bank in the loop if the sale price of the house does not cover the mortgage. What can and does happen is that people ignore the debt left behind which then gets sold on. All charges for recovery are added to the debt, and a truly penal rate of interest can be applied.
In the UK (sorry, I cannot speak for the US) negotiation IS possible. There is a government body called the Money Advice Service which is very helpful.
https://www.moneyadviceservice.org.uk/en

Plus of course the Citizens Advice Bureaux too. Citizens Advice - the charity for your community

I am sure Pulaski will know if there is an American equivalent of either.

Pulaski

In the US you have no alternative to keeping the bank in the loop, because you can't sell the house unless the bank releases the title, and they won't release the title if they don't get all their money, or have explicitly agreed to accept less. I am not aware of a direct equivalent of either organization, however there are a number of "debt counseling" organizations, but you would need to be sure you're dealing with a genuine non-profit (charity) because there are some very dubious for-profit organizations too.

cityboys1911

I have no intention of walking away from the house I would be afraid I would get caught and anyway the wife wouldn't let me but if I don't get the price I need to cover the mortgage what are my alternatives ????

bigglesworth

Okay thanks Pulaski. It is much the same in the UK, i think I may be confusing two situations.
Perhaps it is when people walk away and just hand the keys in. In the UK that rolls up, but I thought (probably wrongly) that in the US that it was possible to hand the keys in and walk away?
On the advice orgs, I will ask my sister who runs a very legitimate BPO.