Sign in to follow this  
CookieJar

Moving out aka exiting gracefully

Recommended Posts

After reading tons of posts here on the Mortgage section
I am pleased to know that 1) We are not alone & 2) We're not as bad off as some people.

Background:
Bought house late 2000 with proceeds from divorce used as down payment.
Remarried in 2003 and refinanced in 2004, taking $ out to build a 24' x 36' attached covered patio/workspace addition.
2008 cut up all credit cards and stop paying those bills as I had lost my job and couldn't pay them.

Current:

Hubby & I want to move out of the city limits and back onto my parent's land, to be closer to them as they are declining (in their 80s)


Mortgage payoff: $120,000
+ two Abstract Judgements totally $21,852 from credit card debt (see above).
These don't seem to be attached to the property but will be nagging me for 10 years (from Aug. 2001) or until paid off.

Spoke with a no smoke/mirrors realtor who gave us the sobering news that the house
would currently be considered worth $100,000 and rent-able for $800 or $1000.
We figured we would need $1300 to $1400 in rent money to cover our costs.

Realtor suggested that we either pursue a short sale or deed in lieu of foreclosure.

Question:
Since I've already paid the $1500 annual Flood insurance, and continue to pay Home Owners Insurance,
but am unable to pay both this month's mortgage AND the Property tax, which, if either, should I pay?

We have started to downsize and are getting ready to move out, but want to continue residing here if there is a chance of cash for keys or HAFA relocation assistance.
Would not paying the property taxes nix getting that kind of monetary help?

I'm more interested in not being 1099'd than getting any money, so what is my best option to "exit gracefully"?

 

Thanks in advance for your suggestions.

CookieJar

Share this post


Link to post
Share on other sites

Additional info:  I found out during my research that I am not eligible for the HARP since Freddie Mac acquired my loan (without my knowledge!) in 2010, which is after the 2009 deadline.

 

The property taxes are due in a couple of days... Can anyone give me a likely scenario to my earlier question???

 

Thanks!

CookieJar

Share this post


Link to post
Share on other sites

I appreciate that you're trying to exit gracefully and responsibly.  Unfortunately lenders may not want to play.

 

You already have two judgments that I gather you can't pay.  Your credit scores probably aren't good.  If you don't plan to rehabilitate your scores or borrow (not clear how you will move to your "parents land" without financing some sort of home) in the next few years, I would stop paying the mortgage, and insurance.  Send the lender a letter stating you can no longer carry the home and want to explore options for an amicable resolution but will not be making further payments.  The bank will pay your property taxes to avoid having a tax sale (property taxes run to the property, not you), and will place expensive forced insurance (but since you plan to walk away they'll never collect on it).

 

It seems to me that being "1099ed" is the least of your worries.  I'm not sure whether the special rules for home mortgage debt forgiveness were extended in the fiscal cliff nonsense, but take a look at IRS Form 982.  You don't have to file BK to exclude a 1099 for debt forgiveness, you can exclude it if you are "insolvent", which means at the time the debt was cancelled your liabilities exceeded your assets.  You say the house is worth $20K less than the mortgage and you owe another $20K on two judgments.  Unless you have a lot of assets you haven't mentioned, you may be technically insolvent.

  • Like 1

Share this post


Link to post
Share on other sites

Thanks for your feedback. The only assets we have are a "fleet" of old trucks... a mid '30s,  a '46 (neither run) & a '47 and a "newer" 78 school bus that we will be living in on the farm.

 

I'll take a look at IRS Form 982 and see what works best.  Thanks for the tip!

 

We are so tired of the rug getting pulled out from under us! We just want to regroup, get back to the land and breathe.

~CookieJar

Share this post


Link to post
Share on other sites

Don't pay the property tax.  Typically, they have 3 years to go after you for that.  

  • Like 1

Share this post


Link to post
Share on other sites

Thanks Admin!  That's what Hubby said too... 

Gonna squirrel away the shekels in our CookieJar!

 

Also a BIG THANK YOU to Admin for this site!!!   I've visited and gleaned for a few years now and REALLY appreciate the opportunity to do so. It's good to know that we are not alone in this!  Thanks again!

 

~CookieJar

Share this post


Link to post
Share on other sites

It is funny that if you don't pay the property taxes your parents can buy the property at the county tax lien sale for the amount of taxes. Then the bank is f'ed. The county sends them a notice and when the submit a bid and your parents submit one 100 dollars more the county takes their bid. That is something to explore some. The bank won't submit a bid for one penny more than the taxes, you could scoop them by having your parents bid higher.

  • Like 1

Share this post


Link to post
Share on other sites
Guest
This topic is now closed to further replies.
Sign in to follow this