Unless you have a 1 year lease agreement for your property, I believe lenders (atleast in my case) will count the existing mortgage against you when applying for a new loan.

http://ezinearticles.com/?Buy-and-Bail&id=1800212

I believe this was a response to the rampant buy and bail tactics exercised by buyers through 2008.

In the rental market, I believe we're seeing a downward spiral in rents of catastrophic proportions.  I'm not sure if the FHA 3.5% / tax credits could be the culprit, but we are already seeing homes in "fortress" cities like Albany and Orinda offering reduced rents / first month free. This will put additional pressure on rentals in other areas such as Oakland, Berkeley, Pinole, Richmond, El Cerrito, and San Pablo. I'm not sure what your mortgage is, but I'm doubtful you'll find a renter to cover your mortgage, prop tax, and HOA in the foreseeable future

Sorry to hear you have so much skin in the game. Another method to recoup some of your losses might be to not pay your loan, live in the condo, and save the mortgage payments. I've heard of some families who have not paid for 12-18 months and saved upwards of $70k+.

ANYONE........ANYONE!! Facing these issues needs to

be well INFORMED.

What is REALLY going on here?

Try looking at this site:

http://livinglies.wordpress.com/

Then come back here to post what

you've learned.  It will be a service

to all of us currently boiling in

the same kettle.

And try this:

http://www.scribd.com/doc/20916919/Foreclosure-Fraud-Guide-to-Looking-up-Public-Records-for-Fraud

Helpful Guide For All States on how to research your recorded documents at county recorder and determine if there are possible forgeries or fraud when facing foreclosure. The evidence may help you stop your foreclosure or set aside a foreclosure. Forgery is illegal & criminal. More and more evidence is coming forth which indicates some of the notorious predatory lenders took shortcuts and did illegal document recordings and some with possible forgeries.

While I can understand that walking away may be a rational choice at the individual level, as someone who purposely avoided buying a home in the bubble frenzy 3 years ago,  I find it disgusting that distressed sellers are now trying to blame banks and "game" the systems to stay as long as possible in homes they can no longer afford, all while not making further mortgage payments.

Even if banks made mistakes handling the loan docs (as the previous poster correctly pointed out), it was still clearly the borrowers' responsibility to determine what they could afford, or at least read the load documents to educate themselves about the terms before signing.

I really feel no symapthy for people who took out option ARMs and now "surprise, surprise" find out that they can no loger afford the payments after the teaser rate resets. The even worse news is that  all of us have to pay for these mistakes through the government bailouts.

At a minimum, these irresponsible bubble buyers should be flushed out via foreclosure, making room (literally) for the prudent buyers who did the right thing in 2004-2007 and not overextended themselves.

buyer007,

The public is generally UNAWARE of the

nature of what is really driving this

disastrous upheaval of the US real

estate markets. 

Many, many people have lost their

properties and NOT BECAUSE OF

DELINQUENCY.  

I urge you to INFORM yourself. Just

go and peruse the  livinglies website.

YOU WILL BE SHOCKED at what

is actually happening to fellow Americans.

I do agree with you; irresponsible financial

decisions SHOULD NOT BE REWARDED.

But that is not the whole story. In short this

is ENRON on steroids.  It's all being

documented in many places on the internet.

site:

http://livinglies.wordpress.com/

---

R-M-O-N-D wrote:
...I have no moral misgivings about walking away from our home, given the lender's initial deception and ongoing unwillingness to proactively work with us to prevent inevitable problems....  Your thoughts are appreciated.

---

What was the lender's initial deception? Really -- I'm curious.

Are you going to have to move before the two year  period of affordability is up?

Will the measures against buy-and-bail that SoBitter documents be effective against your doing so?

Your $100k is water under the bridge, but a nice fat loan can be a good thing to have in a period of hyperinflation IF its rate is capped. LTV may catch up in time in that environment. How bad can your loan get?

As someone has already pointed out, you could just squat for as long as you can... and then rent. Your mortgage was a purchase money loan, right? No refi?

The lender did not inform us that we had a one time balloon payment on our second home equity loan (which we have since paid).  Although we initialed a document agreeing to this, we didn't understand it.  Of course, our failed understanding is our responsibility.  But clearly, the lender was not representing our best interests.  The lender also emphasized repeatedly that "everyone refinances" prior to onset of the variable interest adjustment.  We should have known better that it's not possible to refinance under the condition that your a) Not building equity with interest only payments and b) Your home is depreciating in value.  But the lender did not explain this to us either.  And because we were working with a new home developer, we didn't have the benefit of a realtor's advice (a big mistake, in retrospect).  The lender emphasized that when the interest rate adjusted, the difference in payment would be minimal and possibly be in our favor.  They neglected to tell us that a possible outcome is that the interest rate adjustment could result in our monthly payment doubling.  Some people feel that "buyers should beware" and that buyers are ultimately responsible for financial decisions that they make.  To some extent, I can understand this perspective.  But where does the buyer's responsibility end and the lenders responsibility begin?    

In terms of buy-and-bail measures, we can easily qualify for a much nicer and more affordable home (even after considering our current mortgage) and we can put 20% down with no problem.  We do not fall into the category of "distressed" owners that a previous contributor referred to.  But we do have to move (for employment reasons).  

How bad can our loan get?  Our $1,500 payment could double.  We can cover mortgage and HOA costs through renting for the time being - but not if rates increase substantially over the next few yours.  That's why I'm wondering if its even worth trying to rent the home at this point.  Or just cut our losses and let it go.

Some people might suggest that we're better off putting our monies into our current mortgage, lowering our principal prior to the rate adjustment, and fulfilling our obligation to the bank.  But is that really better for us, financially?  I'm not so sure.  I don't think I'm ready to squat indefinitely, leave our savings alone, and commit to a lifetime of renting.  I still like the idea of home ownership over the long term.  

There was another recent thread on these forums debating the ethics of walking away from an underwater loan even if the borrowers had sufficient funds to continue paying the mortgage. Just FYI.

http://forums.redfin.com/rf/board/message?board.id=BayArea&thread.id=12627

The bottom line.....

Clearly not everyone fully understands reading and 100% knowing ie understanding what it is they are signing up for. Seems this is a very American sort of thing to do given our GOV always seems to bail our dumb asses out when we screw up and fail to fully understand or read what it is we are signing for.

Any other country and the residents of said country view us as complete retards - why in the hell would some one buy one of the largest items in their lives without fully understanding what it was they were signing for? Sure chalk it up to crappy loan agents - easy to do given in the past 6 years I've met loan agents that have less fiscal skill than a 6th grader buying game boy games at Target. But for some reason 1000's of American's failed to read their contracts - do their research and know 100% what they were signing up for and took the loan agents word for it. Hello!!! Loan agents even now make their living based on how many loans they sell once they get their two week pay check there is concern on their part if the loan actually fits the client and is able to survive.

There is Zero benefit to walking away from a loan you have legally agreed to pay back PERIOD! The simple fact that we are even reading questions and threads debating this proves that Americans continue to expect some one else to cover their lack of research. Christ - we have the freaking internet - you take your loan info home and spend all night googling the bits you don't understand till you 100% know what it is your signing for. If its a raw deal you go back the next day and say sorry no deal this is a crappy deal. 

But here is the other aspect how many Americans during the whole housing bubble mainia would ever can the entire deal buying a house they are convinced is the one they "must have" just because the loan they are working on is total crap? Clearly very few people pulled the plug and I'd be willing to bet a fair percentage of people actually knew what they were getting into and still went through with it knowing that they could always find some way out of it. 

Other countries people pay cash avoid major loans etc because they know the GOV will not bail their a s s out and bad things could happen. Americans just get all cry baby and if they kick and scream loud enough daddy/mommy - GOV will bail their A S S  out.

At some point this must stop! Past history shows us massive governments have failed imploded due to the costs its dependants have placed on them. USA is bailing people out right and left now days - and we have people asking and debating the advantages of stiffing their GOV and fellow country men by walking away from their home loan they feel is "unfair" because they failed to do their **bleep** home work!!!!

Don't by a freaking house if you cant read the **bleep** contract!!!

I believe the OP said he didn’t have a moral issue, but for those of you who do, some food for thought.

“A textbook premise of economics is that the value of a home, even an owner occupied one, is “the current value of the rent payments that could be earned from renting the property at market prices.” In other words, when the net cost of buying a home exceeds the net cost of renting, one is better off renting and why strategic default s can make good financial sense.  When a corporation disposes of a non-performing asset it is considered good business by protecting the bottom line, when an individual does the same it is considered immoral and failing to live up to your financial obligations.

What makes this moral suasion so effective is that major socializing agents in the United States tend to speak with one voice. Thus, when the government, or the credit industry, tells individuals that they have a responsibility to pay their mortgage even if they are seriously underwater, the message is seen as “echoing a deep-seated American belief that one should always honor financial obligations,”– and not as an effort to fix the primary burden of the housing meltdown on homeowners rather than the financial industry or the government. More critically, because the media and non-profit consumer counseling agencies promote the same message, the government and the financial industry need not bear the primary burden of moral suasion – nor is the message ever identified with those political and economic institutions that have a vested interest in promoting “homeowner responsibility.”

Regardless of the precise policy prescription, it is time to put to rest the assumption that a borrower who exercises the option to default is somehow immoral or irresponsible. To the contrary, walking away may be the most financially responsible choice if it allows one to meet one’s unsecured credit obligations or provide for the future economic stability of one’s family. Individuals should not be artificially discouraged on the basis of "morality" from making financially prudent decisions, particularly when the party on the other side is amorally operating according to market norms and could have acted to protect itself by following prudent underwriting practices. The current housing bust should be viewed for what it is: a market failure – not a moral failure on the part of American homeowners. That being the case, it is time to take morals out of the picture and search for an equitable solution to the negative equity problem.”