So, imagine this: Buy a condo for $240K, PITI + HOA nearing about 1800 a month, stop paying and still be in pre-foreclosure 3 years later.
1800 X 36 months = 64,800 saved (assuming you live there rent free, albeit that's a tad awkward when not paying HOA)
Condos in same building now selling for $80K. If this continues into next year, buy condo outright in cash.
Any other stories similar to this?
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FollowBefriend40 threads856 comments Oakland, CA
when you go into foreclosure the bank can come after your assets. Im pretty sure they can force you to sell the condo that you own outright.
FollowBefriend5 threads122 comments
I don't know if lender could make him sell the condo. They could certainly put a lien on it.
If similar condos are selling for 1/3 of this person's purchase price, he is smart to default on mortgage. If he is going to continue to live there until lender evicts him, he should continue to pay HOA fees, insurance, property tax. Assume his PI is $1300, that's $46,800 saved in 36 months. Not quite as good. If he chose a short sale instead of foreclosure, a good RE agent can negotiate a small settlement with lender and lender releases their claim on defaulted loan. It might work.
another problem is if it takes the bank until after 2012 to sell the foreclosure you will owe taxes on the debt forgiveness if my calculation is right you could be facing a $50k tax bill.
it's an interesting concept though. In theory you could get a mortgage and buy the condo for 80k live in it free for a few years if you dont mind screwing up your credit.
Save and then pay cash you'd have no mortgage!
FollowBefriend (1)12 threads51 comments La Mesa, CA
This is actually a true story beginning in May of 2008. Except, the buyer left the condo right away rather than staying and pocketing the rent. If CA is a non-course state, I don't see a single negative to this except bad credit, which you don't care about if you're paying cash. Or you could change up your order of operations, stop paying, start pocketing, hide the cash, file bankruptcy, buy condo outright.
FollowBefriend (13)102 threads3,763 comments
In CA they used to take up to 2 years to foreclose, so some people did pull that off. It is non recourse, so nothing other than a bad credit rating.