These boots are made for walking
If you’re one of the 9 percent of property owners in the country or 11.6 percent of property owners in the state of Florida who are either past due on their mortgages or in some stage of foreclosure, the words "walking away" probably sounds really sweet. But before you put on your boots and walk all over your bank, remember nothing is as easy as it seems.
As is true of any disaster, there is always someone who benefits from another’s misery. The newest cottage industry that has popped up as a result of the ongoing mortgage foreclosure saga are companies offering to help guide you through the process or offer advice on just walking away from your home and financial responsibility.
For a fee you can hire a company that will promise to free you from the agony of mortgages you can’t afford and from houses that are now worth less than their value. One company I found on the Internet charges $695 and claims it will provide you with the following services, if "you qualify for our foreclosure program." Some of the points it emphasizes are: stop lender phone calls, no more harassment; help you stay in your home for up to eight months with no mortgage payments; arrange a consultation with its real estate attorney; work with your lender to get you up to $2,500 in relocation expenses; help locate your new home and help in repair your credit. Some companies even offer a walk-away plan and kit which outlines the laws regulating foreclosures and bankruptcy.
What isn’t shared, however, is how walking away from a property and being foreclosed on shatters your credit rating and your ability to obtain future long term financing for at least seven years. In addition, forgiven debt, either in the form of a foreclosure or an arrangement with the lender, can be subject to income tax for the portion forgiven. Also, repairing your credit essentially means removing errors on your credit report, and since harassing phone calls are against the law, both of these issues can be handled by almost anyone.
As far as cash payments to move out of your home and help you relocate, that’s pretty standard in the industry and has been since I worked on bank-owned properties in the early 90s. Basically, all of the information offered for sale is in the public domain and can be found on line or obtained directly from your lender or through pro bono legal services.
Here in Florida, the Florida Attorneys Saving Homes or FLASH has made available a hot line to help homeowners who are already in trouble making their mortgage payments or anticipate a problem. These volunteer attorneys will assist homeowners negotiate with their mortgage lenders in an effort to work out payment schedules in order to save their homes, suggest cash for keys, thereby avoiding a foreclosure judgment or other ways to have a somewhat softer landing. The hotline number is 866-607-2187, and additional information on the FLASH program can be found on www.floridaprobono.org.
Unfortunately, the same people who got in over their heads initially are also the ones who are now falling for an easy way out and walking away. Before you consider spending good money after bad, try working with your lender or with an attorney volunteer who can help you wade through the legal mombo jumbo.
Losing your home is an emotional nightmare, don’t further compromise your values by putting on your boots and walking out on your obligations.