Should I send the bank a letter if I am planning on walking away from my mortgage?

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We were offered a loan modification after a 12 month forbearance.
We made 6 trial payments like the bank wanted and then received a letter saying we were not approved for the modification and that they wanted 19,000.00.
If we had that we wouldn’t of needed help then. (WHAT A JOKE)
My husband finally found a job but in another state and we have to go
what steps should we take in walking away
ie should i turn off utilities, send the bank a letter and what should i say in the letter. (we live in ohio)
I hate to do this but we are drowning and have no other choice. thanks

4 Comments
  1. Reply
    lucinda
    April 29, 2011 at 11:22 pm

    Why don’t you get some sort of a loan, and pay it off? I’m sure there are more options.

  2. Reply
    goz1111
    April 29, 2011 at 11:25 pm

    Remember one thing, until the lender legally forecloses on the property you are still liable for any and all things associated with the property including liability for people injured on the property

    So even if you notify the bank, turn of the electricity and move, you are still legally liable for the premises, the bank could take anywhere from six months to a year to officially foreclose on your property, during that time you are liable

    It’s not as easy as sending them the keys and you walking away

  3. Reply
    loanmasterone
    April 29, 2011 at 11:54 pm

    If this is your plan not to continue making mortgage payments to this lender you need not do anything. No matter what you do at this point the lender have certain laws and legal steps that he is required to take before he can obtain the collateral for the mortgage loan you signed for.

    This procedure is called foreclosure. Each state has a method in place by which a lender would take the collateral for a loan that is no longer being paid on as agreed by the mortgage loan docs t hat were signed by you.

    You might consider offering the lender

    #1. A deed in lieu of foreclosure.

    This is a request from you to the lender offering the property back to the lender thus foregoing the foreclosure process. If this is approved then you would have no additional financial responsibility for the property.

    #2. Request a short sale

    This is a a request from you to the lender requesting the property be sold for less than the mortgage loan balance. Normally the lender would want the property on the market for sale by a licensed real estate agent. The lender would also want this real estate agent to assist you in completing your request for the short sale. If this is approved by the lender, once the sale is complete you would not have any financial responsibility for the property.

    Either one of the methods approved by the lender would reflect negatively on your credit report for about 5-7 years.

    Walking away from the property require nothing on your part. You might turn off any and all utilities that are in your name, as stated above by you giving the lender notice that you are walking away from the property there are legal proceedings the lender must observe prior to taking the property according to the state laws of your state.

    Once the foreclosure is complete this foreclosure would be reflected negatively on your credit report for about 5-7 years.

    If you plan to purchase another house, normally a lender would only entertain approving you for a mortgage loan after 24-36 months with rebuilt credit and acceptable credit scores. You would be required to write a letter of explanation as to why a negative action was taken on this house.

    If the property fail to sell for the mortgage loan balance at the foreclosure sale, you could receive a 1099 indicating you had a gain. Once receiving this 1099 you must file this with your federal income tax in the year in which you received it. The IRS has determined that if a company or person had a loss (Your mortgage company) then someone had to have had a gain and that person is the former home owner (You).

    I hope this has been of some benefit to you, good luck.

    For tax and legal matters you should consult your tax consultant and attorney.

    “FIGHT ON”

  4. Reply
    acermill
    April 29, 2011 at 11:58 pm

    Rather than send a letter, you are advised to contact the ‘loss mitigation department’ at your lender to explain what you propose to do. When you vacate the premises, do your best to leave the premises in good condition. Since it winter time, you also need to inform the lender that you intend to discontinue payment of utilities. That will offer them the opportunity to either provide heat or have the house winterized, to prevent freeze damages.

    The more you do to cooperate with the lender involved, the better off you will be. Document to whom you have spoken concerning these issues, and perhaps send a certified letter to the lender detailing your conversations, so that they cannot deny that you have contacted them and attempted to work with them to the best of your abilities.

    Sad to say, even though you will be as cooperative as possible, you will undergo foreclosure actions and your credit will be trashed for several years down the road.

    Good luck.

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