kranky
Elite Member
This isn't "working the system", it's just stupid.
He will be throwing away some amount of equity because the house will sell for less than it could have. He is ruining his credit needlessly, and he has no idea when that might come back to bite him - his credit cards might get cancelled, any car loans will be at high rates, his insurance (car/home) could go way up.
If he had just reduced the home price until it sold, he would probably have gotten more than he will get through a foreclosure (because all those extra fees the lender now will incur are going to come out of his equity), and saved his credit.
Now he might consider what happened to my neighbor's buddy Sam. Sam had missed some mortgage payments because of illness. They started foreclosure. Sam ignored the papers. More papers came. He finally got in touch with the mortgage company. At that point they weren't interested so they went ahead with the foreclosure and sheriff's sale.
Sam's house was worth about $200K. It sold at sheriff's sale for $30K - to the mortgage company. Sam offers to buy the house back from the mortgage company for the $30K they spent, PLUS make up all the back payments and interest. The mortgage company said no. The bank filed with the IRS that Sam had income of $130,000 because of the debt they wrote off. So Sam not only got screwed out of his house, he owes income tax on $130,000 of money he never received, and his credit is demolished.
He will be throwing away some amount of equity because the house will sell for less than it could have. He is ruining his credit needlessly, and he has no idea when that might come back to bite him - his credit cards might get cancelled, any car loans will be at high rates, his insurance (car/home) could go way up.
If he had just reduced the home price until it sold, he would probably have gotten more than he will get through a foreclosure (because all those extra fees the lender now will incur are going to come out of his equity), and saved his credit.
Now he might consider what happened to my neighbor's buddy Sam. Sam had missed some mortgage payments because of illness. They started foreclosure. Sam ignored the papers. More papers came. He finally got in touch with the mortgage company. At that point they weren't interested so they went ahead with the foreclosure and sheriff's sale.
Sam's house was worth about $200K. It sold at sheriff's sale for $30K - to the mortgage company. Sam offers to buy the house back from the mortgage company for the $30K they spent, PLUS make up all the back payments and interest. The mortgage company said no. The bank filed with the IRS that Sam had income of $130,000 because of the debt they wrote off. So Sam not only got screwed out of his house, he owes income tax on $130,000 of money he never received, and his credit is demolished.
