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how is the economy effecting you?

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CheffoJeffo:
And it certainly wouldn't make you lucky if you had previously purchased life or critical illness insurance ...

Dartful Dodger:

--- Quote from: shmokes on August 12, 2010, 01:39:02 pm ---BTW you can't just walk away from a house and rely on the foreclosure to wash your hands of it.  You owe the bank a certain amount of money. 
--- End quote ---

BTW: A mortgage isn’t like a credit card or tuition loan. Leaving a house for the bank is like leaving a watch at the pawn shop, the bank gets to keep the house.  All you owe the bank is your house.

If you walk away from a home you're still responsible for the utilities, tax and association fees(if it's a condo or town house).

...and in Illinois after a condo is bought the new owner of the condo is responsible for any past due association fees.  Which is why you need to know what you're doing before you buy a foreclosed condo/townhouse. The lawyer told me many people buy condos and days after the closing the association puts a lean on the new owners for the last owner's association fees.

I still hope to sell for a profit, but I need to be 3 months behind if I want to make a deal with the bank for a short sale.

AtomSmasher:

--- Quote from: Dartful Dodger on August 13, 2010, 11:23:44 am ---
--- Quote from: shmokes on August 12, 2010, 01:39:02 pm ---BTW you can't just walk away from a house and rely on the foreclosure to wash your hands of it.  You owe the bank a certain amount of money. 
--- End quote ---

BTW: A mortgage isn’t like a credit card or tuition loan. Leaving a house for the bank is like leaving a watch at the pawn shop, the bank gets to keep the house.  All you owe the bank is your house.

If you walk away from a home you're still responsible for the utilities, tax and association fees(if it's a condo or town house).

--- End quote ---
Yup, the collateral for your loan is the house, so if you can't pay the loan, then they take your house to settle your loan and you no longer owe the bank anything.  Of course once they re-sell the house, you will be responsible for paying the taxes on that sale, so you'll still owe the government money.

shmokes:
You're wrong.  If you borrow $400,000 from the bank you owe them $400,000 plus interest.  Your loan is secured by your house (or any other security you give them), but that is just to reduce the bank's risk so they'll give you the loan.  You owe them $400,000 period, because that's the amount of money they gave you.  If the Bank forecloses and only gets $200k for the house (so long as they weren't negligent in conducting the sale) you still owe the bank the difference between what the house brought and what you owe them.  Think about it . . . of course this is the way it works.  People get mortgages all the time for way more than the house is worth so they can buy furniture and appliances or put in a swimming pool or renovate.  What would stop you from just walking away with the extra couple hundred thousand and say, "Sorry bank . . . sell the house."

Now . . . banks may frequently ignore the deficiency since it will cost them more money to pursue and since you've already shown that you can't pay for the mortgage they'd likely not get anything, but that doesn't mean that taking your house settles the loan.  It doesn't.  You owe the deficiency and if the house sells for more than your mortgage the bank owes you any surplus.

Endaar:
Was just going to explain that but shmokes beat me to it. Same thing goes for an auto loan - a repo does not discharge the debt.

Endaar

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