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mike lund · Oct 8, 2008, 09:18 AM

I can no longer afford my mortgage payment but I have never been late and have 690 credit scor, never late on any payments in the past 10 years. There is no room for a refi because the equity there is only 17% left it is an investment prperty with tenants in the state of norh carolina. Can I volutarily give the prperty back to the back? If what is the consequences and procedure to do so

ScottGem · Oct 8, 2008, 10:13 AM

You can try, but the bank may not accept it. They are not in the business of managing property so they don't want it. They just want their money back. Even if you do give it back, that doesn't remove your obligation for the loan. The lender will sell the property, usually at auction, then come after you for the balance owed. There is also your credit rating to be considered. Defaulting on a loan will have an significant adverse effect.

Have you considered a co-op/condo conversion? You could then take the outstanding balance of the mortgage add the cost of conversion and sell each apt to the tenants. This is a simplification of the process, but it may be your best bet.

Neilcathy67 · Oct 8, 2008, 10:14 AM

Go talk to your lender. If it is Countrywide they are now owned by Bank America and they announced that they will sit down with 400,000 borrowers and solve their payment problems. The ball is in your court, DON'T WALK AWAY, I am sure in this time of mortgage problems there will be a lot of lenders that will sit with you and drop your payment to help

ScottGem · Oct 8, 2008, 10:22 AM

Originally Posted by Neilcathy67

Go talk to your lender. If it is Countrywide they are now owned by Bank America and they annouced that they will sit down with 400,000 borrowers and solve their payment problems. The ball is in your court, DON'T WALK AWAY, I am sure in this time of mortgage problems there will be a lot of lenders that will sit with you and drop your payment to help

I would agree with this advice if this was the OP's primary residence. But its not. Its investment property. Lenders are much less likely to negotiate new deals on investment property than on personal residences. He already mentioned that he can't get a refi.

Neilcathy67 · Oct 8, 2008, 10:34 AM

Even with an investment property the Bank may work with you . I am a Licensed Mortgage Broker for 31 years and I am seeing stuff that I would have only seen in my dreams, as far as lender working with you. BB&T is in trouble too, and I know they will work out a payment plan if possible. At least try. BTW. Do you know what a default judgements is? If you give the property back they will hit you it and empty your bank accounts and attach your primary home.

ScottGem · Oct 8, 2008, 10:51 AM

Originally Posted by Neilcathy67

Even with an investment property the Bank may work with you . I am a Licensed Mortgage Broker for 31 years and I am seeing stuff that I would have only seen in my dreams, as far as lender working with you. BB&T is in trouble too, and I know they will work out a payment plan if possible. At least try. BTW. Do you know what a default judgements is? If you give the property back they will hit you it and empty your bank accounts and attach your primary home.

Yes, it can't hurt to try and negotiate with the lender. Since the OP talked about trying for a refi, I assumed he had already done so. Lenders do NOT want the property on their hands. They never do, and especially now. But they also can't afford to give money away. But lenders are being very creative and open to negotiation.

I'm wondering if you know what a default judgement is, because the way you mentioned it was not accurate. A default judgement is when someone sues someone for something and the defandant does not show up at the hearing or try to defend against the suit. In such a case, the judge awards a default judgement to the plaintiff. But how a creditor gets a judgement here doesn't matter. Whether its by default or awarded after a hearing doesn't matter to the OP.

Also depending on where they are, its rare that a creditor can attach a primary residence for debt not secured by that property.

Neilcathy67 · Oct 8, 2008, 01:34 PM

What I have seen is the bank take back the propery, sells it and there is a difference between the mortgage note and the sale price of the house. That diference becomes a default judement and they start to see what they can collect against. One of my clients did give back the property, the bank sold it for 100k less then the mortgage balance, then received a default judgement from the courts and pursued the borrow tro collect on the difference.

ScottGem · Oct 8, 2008, 02:25 PM

Originally Posted by Neilcathy67

What I have seen is the bank take back the propery, sells it and there is a difference between the mortgage note and the sale price of the house. That diference becomes a default judement and they start to see what they can collect against. One of my clients did give back the property, the bank sold it for 100k less then the mortgage balance, then received a default judgement from the courts and pursued the borrow tro collect on the difference.

I don't know where you see that. The ONLY difference that I know of between a judgement and a default judgement is that the defendant didn't present a defense or show up at the hearing. Its possible that, in some jurisdictions, since a foreclosure already represents a court adjudicated default on the loan, that its automatic for a judgement for the balance to be entered. But I've not heard that called a default judgement.

The main point, where we are in agreement, is that turning the property back to the lender will likely result in a balance remaining on the mortgage and that the lender can pursue the borrower for that amount (plus fees).

rockinmommy · Oct 8, 2008, 05:05 PM

Originally Posted by mike lund

i can no longer afford my mortgage payment but i have never been late and have 690 credit scor, never late on any payments in the past 10 years. there is no room for a refi bc the equity there is only 17% left it is an investment prperty with tenants in the state of norh carolina. can i volutarily give the prperty back to the back? if what is the consequences and procedure to do so

I'm curious what you've got? Is it a single family home, or multi-family? If multi - how many units? If it's rented, I'm a little curious why you can't meet the payment.

17% equity isn't anything to sneeze at. Have you tried to sell the property? Even if it was just for enough to pay off the mortgage it would be better than giving it back.

I think you've got a lot to work with. If you can give more facts I'll be happy to help you work through some possible exit strategies.