I’ve recently heard several people tell me they were just going to walk away from their mortgage. They said they were just going to move out, give the keys back and notify the mortgage company they can have the home back. Some claimed they were given professional advice telling them to move out and just walk away from the home. Claiming letting the bank have it back would be best and really wouldn’t hurt their credit as bad as a bankruptcy and it wasn’t the same as a foreclosure. It’s amazing how wrong these folks are!!

Walkaway trends started where many homeowners found themselves upside down on their loans, owing tens of thousands more than the current market value of their homes. If they did 100% financing or have very little invested in down payments, some owners reason, continuing to make payments, even if they can afford to, may be throwing good money after bad. These people better beware its going to hurt their credit maybe worse than a bankruptcy or default foreclosure would. Why, first of all walkaway’s will have IRS tax liability. Last year federal legised that allows homeowners who negotiate loan modifications or Short Sales with lenders and have portions of their principal debt eliminated to escape tax liability for the amount forgiven. Walkaway borrows, by contrast, have nothing forgiven, and the IRS may demand taxes on the mortgage balance they never paid. This can be a substantial sum of money. In many cases filing bankruptcy or short sales may be a better route. It may have a faster turnaround time for buying another home when you have things straightened out. I’m by no means giving legal advice; I’m just letting you know you need to discuss selling your home as a Short Sale first before you consider just giving the keys back or waiting on the bank to foreclose. It could save you in a number of ways.

I want to warn people that there are a lot of people out there that are taking advantage of people’s hardships. Web sites are now advertising “I can repair your credit” for $495. Some say they will show you how to hold creditors off and avoid the due process and collection all the other broke folks go through?? Another company is offering, “Send them $995 and they will send you instructions on how to live free for a year and not pay any mortgage payments”. There is nothing legit about these magical offers. They’re rip off’s!!

The best avenue for anyone behind on their mortgage payments is to try to work something out with the lender first. An experienced professional real estate agent can help you prepare you for what the lender will require. Then there are consumer counseling services and attorney’s that can advise you on what’s best for you in the short and long run. Your goal is to make things where your credit lines come back as quick as possible.

I recently read that when applying for a new mortgage after a foreclosure, mortgage underwriters tend to be more sympathetic down the road in regards to people that faced genuine financial hardships leading to the past foreclosure or bankruptcy. Walkway