why not abandon mortgage?

Question

i want to abandon my mortgage i can afford to keep it my condo investment but i don't want it..............what are the downfalls other then bad credit?????????????

Answer 1

The bank will sell your condo at auction, get what they can for it, and then they will come after you for the balance due on the mortgage. If you cannot pay it, they will garnish your wages, your tax returns, and any other income or investments you might have until it is paid in full even if it takes years. Also, you will be renting for a very long time, because with that on your credit, no reputable mortgage company will loan you the money for another house/condo.

Answer 2

Abandoning your mortgage means losing your condo and the entire investment you have in it. If the condo is worth less than the money you owe, then it may be the best option. If the condo has any value beyond the amount you owe, it would be better to sell it, even if you sell it for exactly the amount you owe because then it would not damage your credit rating.

An alternative is to negotiate with the mortgage holder to reduce the interest rate or forgo payments until you can sell the property. Mortgage holders are usually not interested in holding foreclosed property and they try to sell it. If you offer to sell it in order to repay the debt, they may be willing to cooperate.

Answer 3

I just had this same argument with my wife (from whom I'm separated) this morning. She wants to just let the mortgage company foreclose instead of trying to make any attempt to get caught up. She hadn't worked for seven or eight months; she's in serious difficulties because of her 2nd DUI and probation violations; she owes $10,000 on three credit cards; and she's two house payments behind.
Her new job doesn't pay enough to afford the upkeep, taxes, insurance and maintenance on the house. My argument is she's not that far in arrears, and I think she'd be better off to try and stave off foreclosure.
The mortgage company (Countrywide) is no help at all; all they do is keep making harassing phone calls and threats.
I'm sick or fighting with her about it. If she wants to abandon the mortgage, that's her decision - just as it is yours. Personally, I think it's pennywise and pound foolish.
I believe the banks, mortgage companies, and credit card companies have raped consumers for far too long. They sold sub-prime mortgages to folks they knew couldn't afford them; they encouraged excessive credit card spending; and now they're whining because they might lose a few billions bucks. Well, too damn bad. The government should be in the business of protecting its citizenry, NOT its banking institutions. -RKO- 11/16/07

Answer 4

tax liability could arise. If your mortgage let's say $200K and bank sells the condo for $150K and forgives you $50K. Forgiveness of debt is taxable income to you. This is one example. Another way is to keep the condo and try to rent. Take a loss and offset it against other income. You can take loss upto $25K dependin on your other source of income. Let's say you've earned working for somebody else $50K, you took a loss for $25K. your taxable income base is $25K. Of course if you can afford to pay and get a loss. The third way is to sell and take a loss if it's investment property, and take a loss if you sell for less than your basis. than take loss on your tax return- short term(if you own it for less than a year) or long term(if it's year o more). The loss deduction is limited $3K per year, but you can carry it over to the next year.

Answer 5

You say “bad credit” like it’s a minor inconvenience. That default will follow you around for 7 years, making it difficult or impossible for you to finance anything else.

Answer 6

Have you even tried to sell it or, failing that, asked the lender if they will accept a short sell? Either is better than a foreclosure.

Answer 7

why don't you just sell your house..

as for other downfalls, how about humiliation cuz you renegged on your purchse

other than that can't think of another downfall