A friend of mine is seriously considering this, and I am interested enough to want some insight of my own. Any comments or info/links welcome.
He bought a single home 3 years ago for $410k with 10% down and 2 mortgages. Outstanding loan now is around $340k. According to zillow.com his house is worth $240k now. So he says if he walks away from it, he takes on a credit hit, but avoids paying for an underwater mortgage that may never come up to par.
He is capable of paying : his job is the same for the past 4 years. Then, his wife was working at almost-minimum wage, and now she doesn't have a job, but that the difference is small that it may not count as an 'inability' to pay.
He says he has two options - (a) rent, or (b) a much more convoluted approach - buy a second home from foreclosure (so it'd cost him at or below fair price), make it his primary residence and claim he cannot bear the burden of the current home (making a valid case for foreclosure).
Apart from the ethics of it, is either of the options viable? Can he foreclose even if able to continue paying? I am guessing he must have access to some cash for downpayment towards that 2nd house, or is he hoping for 2 mortgages again?
whaddya say?
Additional note : this came up when he was checking his options against what is offered by the govt now : his monthly payment is exactly 31% of his income, so he cannot avail any help; the value of the house precludes any refinancing...
He bought a single home 3 years ago for $410k with 10% down and 2 mortgages. Outstanding loan now is around $340k. According to zillow.com his house is worth $240k now. So he says if he walks away from it, he takes on a credit hit, but avoids paying for an underwater mortgage that may never come up to par.
He is capable of paying : his job is the same for the past 4 years. Then, his wife was working at almost-minimum wage, and now she doesn't have a job, but that the difference is small that it may not count as an 'inability' to pay.
He says he has two options - (a) rent, or (b) a much more convoluted approach - buy a second home from foreclosure (so it'd cost him at or below fair price), make it his primary residence and claim he cannot bear the burden of the current home (making a valid case for foreclosure).
Apart from the ethics of it, is either of the options viable? Can he foreclose even if able to continue paying? I am guessing he must have access to some cash for downpayment towards that 2nd house, or is he hoping for 2 mortgages again?
whaddya say?
Additional note : this came up when he was checking his options against what is offered by the govt now : his monthly payment is exactly 31% of his income, so he cannot avail any help; the value of the house precludes any refinancing...
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