| Jerome
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Oakland, CA
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Registered Feb 05, 2010
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Jerome's most recent comments:
- On 4 Feb 2010
in
Banks Desperately Trying To Scare Debtors?,
Jerome said:
No, we won't owe any tax on any of it. We'll owe $36K, which we'll settle for under $10K. We'll gladly pay $10K to walk away from this money pit.
We'll save $1500K+ a month renting, so the savings will add up quickly. Not the way I envrisioned it, but here we are. - On 4 Feb 2010
in
Banks Desperately Trying To Scare Debtors?,
Jerome said:
It is indeed ugly, but we'll save a ton of money in the long run. We're in Oakland in a "transitional" neighborhood. Unfortunately for us, it's transitioned right into the crapper.
We'll owe about $36K on the second and be able to walk away from this blackhole of debt. We have good income, so we'll be saving in no time. It's a no brainer. - On 4 Feb 2010
in
Banks Desperately Trying To Scare Debtors?,
Jerome said:
We're in CA and considering short selling or foreclosure. We just talked to an attorney today about the lay of the land with respect to our facts. Refinanced our first and our HELOC, making them both recourse loans. We're about $150K underwater.
Even with a recourse first mortgage, California law prohibits a deficiency judgment on this loan if the lender goes through non-judicial foreclosure. (CCP 580d.) There is basically no chance the lender will do a judicial foreclosure, which would allow a deficiency judgment on a recourse first mortgage, so we're basically safe on the first.
As for the HELOC, we're on the hook for that. Options are: (1) try a short sale where the first kicks them over something from the sale and they both accept as a condition of sale that they will not sue you for deficiency; or (2) go into foreclosure and settle the debt with them for 10-20% of the original amount.
One other looming issue is taxes resulting from foreclosure or short sale. You'll receive a 1099c for any cancelled debt from either foreclosure or short sale. Federal tax law currently waives taxes for foreclosure and short sale if you meet certain requirements (primary residence, etc.). California law was the same, but that law just sunsetted. There are two bills (AB111 and SB 96) that seek to reinstate the tax waiver for California. A tax attorney I spoke with believes that the bills will pass, bringing CA law into conformity with Fed law, but that hasn't happened yet.
With all of this in mind, we are going to strategically default. Our neighborhood is destroyed by foreclosures and values won't be coming back for a decade or more. We've been here five years and never envisioned it going this way. We've put lots of money into our house and don't want to leave it. But we also can't throw our famliy's future away by throwing good money after bad for another decade.
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