I hope I am not getting a divorce, but due to the fact that I was told by my H he filed for one, I got a consultation.

I found out 65% of the houses in my hometown that are on the market are forclosures? My atty said, w/o blinking that if you can not sell for at least 20% more that you owe - "turn over the keys and go." Is he just jaded?

I guess the action of fixing up, painting and marketing the houses in this market (to even break even) is being considered "not worth it".
Is it true that it takes 10 years to recover from a forclosure? Maybe the person was talking to me from an onset to clearing the credit report standpoint.

Wow. another very real reason to try to stay out of the court system..

20% seems a bit high to me, but I really don't know the details. If it were me, I'd get a real estate agent to tell me what the selling price would be if I wanted to sell it. Then figure a guess on how long it would take to sell and what payments you would be making the house vs an apartment or wherever you plan on moving to during that time. Also got to figure in the 6% that goes to realtors (it's 6% here, not sure what it is where you're at).

I don't know what the penalty is for forclosure is, but I think I'd honest rather take a loss on the sale if I could handle it then foreclosure. As well, if your H has a 401k money that he would have to give to you, you can use that money without penalty if you chose.

Another thought is that perhaps you can buy the house yourself after the divorce. My ex did that, and although she doesn't have much income herself, she was able to use child support as income on the loan.

My h and i did a bankruptcy not to long after his illness because he was out of work for so long. We did a Chpter 13 which is just a re-org of your bills and you get to keep everything you just make payments to the court and they distrubute it to your lendors.

When the housing crunch happened our attorney suggested changing our case to include giving up the house (because you can pick and choose what you want to keep or not keep) and we did so.

Currently we owe a significant amount more than the houses in our area are selling for and we thought it was the best thing for us to do too.

And the 10 year thing is for bankruptcy. Anything involved in the bankruptcy (any debts that were included) falls off of your credit report in 10 years. You can however still get credit during that timeframe, you will just pay higher interests rates and it re-establishes your credit during the 10 year timeframe so that when the bankrupcty items fall off of your credit report your credit rating is higher.

Well, in my area, 65% of the houses for sale are in forclosure. --NW of Detroit--
Even if we are not divorced (yet- hope not/hope not)and our home is in good standing, the buyers know the forclosure rate.

It does affect the market. Commissions are still 6% here, with county and state tax it is goint to take $30k to sell above and beyond the mortgage. Is it normal to feel trapped?

Plus we have lost 1/3 value in the last 6 years.

(plus fix up/paint and marketing and keeping the place show ready) it seems like a nightmare!

I hope the rest of the country it in better standing than that.

I was just wondering how people here are handeling this. They say the divorce rate has dropped 3% -- they think due alone this statistic.

I know my hubby and i felt trapped.

We owe about $140,000.00 on our home, all of the houses in our area of the same size and such are selling for less than $100,000.00. It would be STUPID for us to keep our house. It will take far too long for the housing market to come back up to where we would break even much less make anything.

If you are divorcing (and i hope not for your sake) i think i would have to agree that is in your best interest to "just walk away".

We too owe about $150k more than the house is worth. So I've been looking at this issue a lot lately. Be careful, with foreclosure the mortgage company can legally come after you for the difference. And given the rate of foreclosures these days, they are getting more and more aggressive with pursuing legal action against foreclosures. The better option may be a short sale, it may still show up on your credit report as a foreclosure but you can fight that. However, even with a short sale you will seriously impact your credit rating and ability to get another mortgage (though not as bad as a foreclosure). If you go with a short sale you must read the fine print very carefully to ensure that the mortgage company agrees to release you from the debt and doesn't simply agree to "defer" the debt. Otherwise, they can come after you for the rest of the debt just like they can with a foreclosure. Laws vary from state to state so before you decided to "walk away" (and it's never that simple) be sure to get good advice from a real estate attorney.

So okay, I've hatched many schemes and so far the best that I've come up with for this is the following. However, it does take a VERY willing soon to be ex- spouse. Anyway, if you can, convince your spouse to "buy you out" which means that they give you 1/2 the equity (which, in this case is nothing) and they assume all responsibility for the debt (someone has to take the fall and why should it be the both of you?). Your spouse starts the foreclosure/short sale process while you continue to live in the house. During the first few months of the process you bank your mortgage payment. (in most cases, the bank won't agree to a short sale if you haven't missed a few payments). while this is going on you start looking for a new home (using your saved payments as a down payment). If you can stand your ex, maybe you can find a duplex and then rent the other 1/2 out to your ex once the short sale is final. The benefit being that the spouse gets to be near the kids, you get extra income and the ex has a soft place to land once the short sale is final. Okay, so you would really need to be on good terms with your ex. but it's the best I've got to trying to figure this one out.

BTW, with a multi-family/duplex you don't have to come up with as large of a down payment because the other apartment(s) are considered income generating and that gets factored into your loan.

I feel bad for you Americans right now because of this. I can't advise as we didn't have nearly the same problem here and the lower house prices, along with rock bottom interest rates allowed me to buy a much nicer and newer house than I had with my WXH. But regarding the duplex idea - can't you do the same thing, but just get an ordinary tennant, not your ex?

we, we put $200 into building we have lost 240 in 6 or so years. If the market was even SOSO I woud consider paint/fix/market for sale. But it averages 12-18 mos to see (depending on who you talk to) and I could NOT live for another year like this....only for AT best -- breaking even.

My h talked about "buying the other out" HOW??? it is negative/even.....

I was wondering how everyone else in the world was working on this issue.

Yeah, but I have heard that forclosures are not as easy to recover from, (potentially to future enders) it has become an epidemic in Michigan, and I guess they want ot curb it-

maybe I am just wrong on this.

With a forclosure, you won't be able to get another home loan for at least 3 years. Had a house in another state that I had a "real estate investor" taking off my hands. He filed for bankruptcy and stopped making the payments and my house went into forclosure before I was ever notified. This happened last year. Called my lender a couple months ago about doing a refinance on my current home and he said because of the forclosure I wouldn't be able to do anything for 3 years.

The short sale doesn't hurt your credit as much as a forclosure, but the bank has to agree with. Now Obama has a new housing thing that becomes effective April 5, 2010 that gives incentives to the banks for doing short sales. The program also gives the seller $1,500 to move out of the house after the sale is complete. There's more too it, I think you loan has to be backed by Fannie Mae or Freddi Mac and some other conditions, but it could help you get out of the house.

We sold our house 15 days before foreclosure. Luckily, I walked away with 5K in equity (lost about 200K when you add in all the improvements). I also had to file for ch 7 bankruptcy.

1. I'll be able to get a mortgage in about 18 months. With a foreclosure, it will be much longer.

2. My credit score jumped about 100 pts the day my bankruptcy was discharged.

3. I opened two credit cards with a credit limit of about $400 each and my credit score jumped another 20 points.

I've concluded that if one parent works and the other is a SAHP, a divorce is the quickest way for both parties to go from upper middle class to living on Ramen Noodles.

We also sold our home right before foreclosure. We'd owned it for 10 years so we still got some $$$ out of it but much less than if we'd not had to sell in a hurry. Plus we ran up a lot of legal fees fighting the bank and that came out of what was left in equity. Unfortunately we used the rest of the money to pay off other debts.

I wish we had sold it earlier. First, we would have had the luxury of time to put it on the market for closer to retail value than unloading it on an investment shark for $100K less. Second, we filed a chap 7 BK but had to flip it when we couldn't recover from that and flipped to a 13 to put the home arrears in BK protection. But we wound up getting dismissed anyway. So now we don't own a house, still owe bills and my husband is still not working.

And that's not even a divorce situation.

But 20/20 hindsight...I would have put the house on the market MUCH sooner. Whatever you do, try to avoid the foreclosure. That looks awful. This all happened to us about 5 years ago and if we had the $$$ for a down pmt today, we'd be approved for a loan. But not if we'd been foreclosed.

The hard thing about a short sale is that some banks aren't very cooperative. I've been trying to buy a short sale house for over 2 and a half months, and the bank just put it into foreclosure. The thing that makes me so angry is that I put in one offer, waited 6 weeks and the bank didn't accept it. So I put in a second offer the same day they declined, for $10,000 more, and the bank didn't respond for another 5 weeks. Their response was to put it immediately into foreclosure. My offers were not that much lower than the asking price and the home has been for sale for over a year.

My only point is don't set your heart on a short sale. Most don't work out because of the bank.

My intent of starting this thread was to let others in divorce/considering divorce that you are not alone if this issue is staring you in the face.

Heavens no.

There is a lot of shame and guilt associated with this type of transaction, but I think people here may agree that it can not in some instances, be helped.

..and be very very careful about who you trust. eeeeeK Tresmal!