Woolsgrove

Hi,
We have a condo in Florida that is costing us more than it's worth!

We're thinking about walking away from it, losing the deposit and starting again in the future.

Can you really just hand the keys into the bank and forget about it? What's this about leaving the keys in the mailbox?

Surely there are bank/lawyer fees incurred somewhere??

Any help appreciated!

Woolsgrove

fatbrit

They could probably sue you for the difference between what they get for it and what you owe. If they do, they will, of course, pad it as much as they can with silly fees. Whether they could collect is another matter. But you'll be in good company! Just mail them the keys and be done with it would be my advice. Of course, getting another mortgage on US property could be difficult.

Mummy in the foothills

Have you contacted the bank to try and renegotiate the loan to reduce the payments?
It'll ruin your credit, but then it's ruining a lot of peoples credit, so it won't be unusual.

Englishmum

He/she seems to be located in London and I guess the condo is just a vacation home or investment property (to rent out to all those Brits who love having their hols in Florida!).

If London based, then I doubt if Woolsgrove is bothered about it affecting their credit rating as it won't affect him or her across the pond.

Actually, going slightly O/T there is a huge problem for many peeps in the UK who bought 'Buy to Let' properties:

http://www.dailymail.co.uk/news/arti...-revealed.html

Tarkak9

That sucks but one isn't alone... many are in same boat and thinking of handing over the keys. Assuming there is just one bank involved.. talk to them first to see what options may be available to you eg loan modification etc. Most likely you want to talk to the loss & mitigation department.
If you are certain that you just want to hand in the keys per se; I would talk to them too to see if they would settle for a deed in lieu of foreclosure (which they may not b/c of the fair market value and indebtness is way off); you also want to ensure that there are no other liens etc on the property b/c bank won't just take over that responsibility (that's often too why they prefer to foreclose). Foreclosures are costly for a bank so thats why they may entertain the d-i-of-4clsre... banks are just looking at the net bottom line.

Banks are swamped right now so it can take a while to get a response from them with regards to what they'll approve for/with you as they want and like to weigh up all relevant facts and (especially) figures before making an overall decision. No matter what, you want to determine if there is any ramification to you from them with pursuing you for any portion of the original loan etc... negotiate with the bank and get it in writing that you are forgiven of the debt and that there is non-recourse before you sign/send anything! The debt can also follow you around so if you buy another prop, that can resurface as a title issue for you which is why to have everything in writing to the contrary. Often too banks issue a 1099 with debt forgivenesses/short sales as its seen as taxable income to you... so you want to double check that too - the tax codes have all changed b/c of that.

No matter what occurs, it will dent and hurt your credit for a stint of time so you want to factor that in if you have somesort of credit in the US and plan to use it .. ie buying another place down the road.

good luck.

MsElui

i saw a tv program about this a while ago. there is a law that actually protects americans from being endlessly persued by the banks (unlike the uk). They seemed to say that literally handing your keys in to the bank (post?) and informing them was the end of it. It would obviously scorch your credit for at least 5 years. They used an example of some lady in florida who had bought a really nice apartment. She could afford the payments but it just wasnt worth as much as she paid. She basically walked away from it saying that if she carried on paying - no-one would help her later in life with a pension etc but if she walked she could use her own money to keep her pension going etc and just cut her losses. Apparently its a growing occurance.

like i said above - it protects americans have no idea if it would have same protection for the brits?

Michael

Whether the mortgage company can come after you is dependent on state laws. Although most mortgage companies do not try to collect in most cases, apparently Florida law allows the mortgage company to try to collect for any deficiency.

http://www.foreclosure.com/statelaw_FL.html

Are deficiency judgments permitted in Florida?

Yes, a deficiency judgment may be obtained when a property in foreclosure is sold at a public sale for less than the loan amount that the underlying mortgage secures. This means that the borrower still owes the lender for the difference between what the property sold for at auction and the amount of the original loan.

Woolsgrove

Thanks for your thorough replies everyone... now for a bit of background.

I am sitting here in the lounge of my aunt/uncle's villa. They have a condo out here that they're trying to sell, and they want to walk away from it because it's decreased in price. Yes we are from Britain, and yes, it's a holiday home for 8-10 weeks a year for family members (the condo was, we now all come out to the villa.)

I've been trying to tell them that this will dent their credit, and that the bank could seize the villa for payment of the condo. They're trying to tell me that that can't happen because they have some kind of 'insurance' on this villa that means it can't be taken from them. How likely is that?

I've told them that they won't be able to get a mortgage for anywhere else out here, and that the bank could pursue them etc. Let's see if they decide???

Thanks everyone!!!

Woolsgrove

scrubbedexpat099

Title Insurance?, but of course this has nothing to do with the issue. Hope it is not with AIG.

All the people I have heard of handng in their keys, bar one, were up to their eyes in debt, if the well is dry, no point going further.

The odd one out was a bit weird, property prices had gone up and ended up with a cheque...

Where I am the propert goes to forclosure, usually the Bank ends up buing it back for the amount of their loan, the debt is the crystalised.

I do know of two cases involving mutiple property ownership, on one he lost both, on the other the guy buying the major property did a deal with the bank that he kept his house as part of the deal, can not guarantee a nice guy like this.

lansbury

Or they could have the integrity and ethical values to honor the contract they signed with the bank.

One thing walking away because you can't pay completely another because you choose not to pay.

fatbrit

You mean reciprocate the integrity and ethical values the banks offer their customers? I thought that was just what they were doing.

Lord Lionheart

I'd stroll away casually strutting my stuff like a funky chicken, that's how I'd do it. A goose-step would be a close second.
'How to walk away from a mortage' FFS, that's why it's called 'walking away'.
What about a half page announcement in the Sunday Times, stupid bloody questions I see on here

lansbury

No I meant live by the standards you would expect to be treated by.

fatbrit

It's not unreasonable to expect the bank to crap on you at any given opportunity?

Tarkak9

If they are currently trying to sell it, then they may want to consider arranging a short sale with the bank and ensure it writing that they have been forgiven any amount of the debt (to be safe - if its not in writing, it doesn't exist). Ofcourse, banks typically will say, '..bring us the contract first'. Basically a bank will want to know much more about circumstances and finances etc and most likely want to see a 'hardship letter' (which is basically an affidavit).
Overall, what you need to convince the bank is why its in their best interest to perform a short sale vs the alternatives... being abroad may also help.
The only other option is coughing up the difference in balance to the bank upon closing, ie bringing cash to closing.

Short Sales & 4closures (or any sort of default) will appear and affect one's credit history.. as well as bankruptcies. The insurance they are referring to, in my mind, is mortgage insurance... which they should really read up on what ínsurance' they have to see if its relevant and not been lead upstream b/c mortgage insurance protects the bank upon default not the borrower; you may have the insurance but doesn't mean one retains the title scot free. etc